How much debt have you paid off?: $220,000
What was it for?: Mortgage
From deciding to become debt free to making the last payment, how long did it take you?: 5 years, 1 month, 2 weeks and 4 days.
What age did you take on your first debt, and how old are you now?: I have had consumer debt of hire purchases and a student loan. And when I was quite a bit younger, I had a personal loan from the bank to buy a car. As well as a credit card. All up, at one time, my husband and I got up to around $10,000, not including the mortgage. I talk about this in Ruth's podcast How come I'm not rich? We took our first mortgage out when I was 35 ish. When we paid it off, I was 44. *Ruth here: Ronnie, YOU DID IT!!!!!!!! I’M SO EXCITED FOR YOU BOTH! CONGRATULATIONS!!!
Did you do it alone or as a family?: My husband and I worked hard and had budget meetings. We don't have kids.
Did you pay off debt from your regular income, take on extra work, or change jobs to speed it up?: I changed jobs, and I ended up making more money. I went from $31,000 to $56,000. My hubby was on about $70,000, including a second job income.
Did you sell anything or receive cash gifts to contribute towards your debt payoff?: We downsized from our first house and made some money on it, which we put down as a deposit for this house. That is why our mortgage was low, probably by many people's standards. My husband retired and got his KiwiSaver of about $50,000. I got an unexpected payment from a pension scheme that I started when young (but it didn't grow very well), of $20,000. We used our savings to finish off the last part of it.
What people, books, websites, podcasts, budgeting tools, debt trackers and resources helped you?: Dave Ramsey, The Barefoot Investor, The Happy Saver, numerous websites, YouTube channels, and anything I could find to keep me on track and motivated to keep saving and paying it off. I had an excel spreadsheet for the first few years with a very detailed budget, but these days I have everything on auto-pay, so find I don't use the spreadsheet very often anymore. I update it once every six months with changes if it is needed.
Did you keep an emergency fund while you paid off debt? If so, how much?: Yes. All up, we had about $35,000 saved. $25,000 in our emergency fund and $10,000 for those small things like vets, car things, house things, insurance etc. We also set money aside for our investments as that is important to us to keep that growing.
Did you have any setbacks along the way, and how did you overcome them?: No, not that I recall. We did one year decide to pull our savings for our mortgage debt and redo the windows in the house with double glazing so we didn't put a lump sum to the mortgage that year. That was more because I was getting bored of saving and paying off the mortgage. I was impatient to do something major to the house.
What tips/hacks could you share?: Save! Each year check your power, internet, and insurance and find out if you can change companies and get cheaper prices. Any time we got spare money, we had a separate account into which we would shovel this money, allowing us to put a lump sum on the mortgage each year. We would ring the bank and get the "early payment" fees removed so we could put that bit of money towards our payoff too. Every time our mortgage came up for renewal, we would raise the weekly payment by an extra $10 - $20. By the time we were finished, our mortgage was sinking like a stone. Even if we hadn't gotten the huge lump sums from KiwiSaver etc, in the end, I had worked out we would have the mortgage paid off in another 2.5 to 3 years provided we kept putting our saved-up lump sums to it.
Was there a structure to your debt payoff? i.e. paying smallest to largest, or highest interest rate to lowest?: When we had consumer debt we absolutely paid off the smallest to the largest. For me, it was the win of crossing something off my list. That meant more to me than caring about interest rates. For the mortgage, we made sure to celebrate the wins. We would go out for a nice meal each time we got $10,000 paid off. When we got under the $200,000, the $150,000 and then the $100,000, I think we went away somewhere for a weekend.
How did you stay motivated, and what was the most challenging part of paying off your debt?: I was very motivated for the first two years. I found I was getting rather bored of it by year three (hence we decided to get the windows for the house). Year four dragged, and we actually saved enough to remodel our bathroom, but because we were getting near the $100,000, we thought we would be better off putting it on the mortgage. Also, we caught up with Ruth and Jonny, and they motivated me to carry on. Then we were very fortunate that my husband retired, and we could use that money, plus my unexpected payout, to pay out the rest of the mortgage. It was a hard choice to use the money to pay off the debt as we really wanted to do some remodelling on the house and perhaps go on a holiday.
How did you celebrate making your final payment?: We were both quite emotional when we rang the bank to get the final lump sum put into the mortgage. However, about two weeks later (it took about that long to sink in) we had the whole family around, and we celebrated with a huge bucket of KFC, a chocolate cake from Divine Cakes (my idea) and a cheesecake from the Cheesecake Factory (my husband's idea). We don't make a habit of eating any of this, so it was quite a big treat.
Was getting out of debt worth it, and what have you learned about yourself?: Yes, it is so worth it. It can drag while paying it off as you think you would prefer to do anything but pay money on a debt, but it really is so freeing when it's all gone. I HATE OWING MONEY!! Now we have options. And we don't worry about the mortgage rates going up. I have learned to have patience. I also learned to be so grateful for what we have and for the opportunities, both big or small, that come our way. Also, my husband and I communicate a lot better about life.
Will you ever go back into debt again?: Nope. I hate debt. I love helping people. It's wonderful to shout our friends a coffee, or our family a meal. We can give to charities when we want to. It's really lovely to have that option without thinking in the back of our minds maybe we shouldn't be spending this money on this right now. We are still careful with our money (we have to be since my husband has retired), but we do feel more free.
*Ruth here again. Ronnie, thanks so much for filling this out with such detail. This is why I created this page and I’m so delighted to have known you for quite a few years now and seen your steady determination to pay it off. And just like that, it’s done! Let’s have a coffee when I’m next in town! We can argue over who pays then!