How much debt have you paid off?: $185,000
What was it for?: Mortgage
*Ruth here. I was so excited to hear that they were mortgage free. You can hear their journey in this podcast episode!
From deciding to become debt free to making the last payment, how long did it take you?: Two years and 49 weeks!
What age did you take on your first debt, and how old are you now?: 18 for a student loan. I’m now 48.
Did you do it alone or as a family?: Family.
Did you pay off debt from your regular income, take on extra work, or change jobs to speed it up?: Extra work at regular jobs.
Did you sell anything or receive cash gifts to contribute towards your debt payoff?: No, anything we sold went to our holiday fund.
What people, books, websites, podcasts, budgeting tools, debt trackers and resources helped you?: The Happy Saver. Simple Savings. Dave Ramsey. The Barefoot Investor.
Did you keep an emergency fund while you paid off debt? If so, how much?: Yes, initially, $1,000 each (individual finances with my partner). Then $2,000 each. Now $10,000+ each and just adding $50 a week to it.
Did you have any setbacks along the way, and how did you overcome them?: None that I can remember.
What tips/hacks could you share?: Be conscious that every dollar you earn/save has a purpose. Round accounts down to the nearest $1/$5/10. Offset mortgage. Eat smarter, in season, less meat, less processed food. Grow your own food where you can, split the cost of a cattle beast with friends if you can. Use less - in every area of your life.
Was there a structure to your debt payoff? i.e. paying smallest to largest, or highest interest rate to lowest?: Split the debt over three loans. A float which the aim was to pay almost all our money to. Had a one-year time frame to get it fully offset. Fixed for 12 months and the rest for two years. The aim was to have all savings/sinking funds sitting offset and reducing the interest bill. Then aggressively attack the balance that was not offset.
How did you stay motivated, and what was the most challenging part of paying off your debt?: A visual reminder: I used the floor plan of the house with a grid of 235 squares. That was our original loan balance. Colour in a square every $1,000 paid. Started a forum group on Simple Savings focusing on debt reduction. Having like-minded people keeps you motivated. It got challenging working so much overtime, particularly when I was working 13 days a fortnight and for my partner doing extra 12-hour shifts. We got tired, which made it hard to stay motivated. When we realised we were ahead of our three-year schedule, we did lighten up a bit. Didn’t work less but treated ourselves by buying desperately needed new furniture.
How did you celebrate making your final payment?: With a bottle of champagne. Then booked a family holiday in Queenstown for New Years Eve 2021, including allowing the teens to bring friends each.
Was getting out of debt worth it, and what have you learned about yourself?: Absolutely. We learned if we set a plan we can work together as a team despite having individual finances. Learned that with a purpose the extra work, while tiring, can be worthwhile. Post debt have learned we do not have the same enthusiasm for saving/investing as we did have for debt reduction. It’s just not as fun/challenging.
Will you ever go back into debt again?: Yes, most likely. I did not think I would ever take on debt again while we were aggressively paying off the mortgage however, I feel differently now. We are currently looking for a small block of land in a set area and will need to take on debt to do this. Also want to set up this property for my Mum as she gets older so we can help look after her. This involves debt which we have considered and are happy to take on. Must say though, the higher interest rates are a little off putting. Maybe should have upgraded while money was cheap?