Debt Free Kiwi #33

How much debt have you paid off?: $400,000

What was it for?: My wife and I bought our house in NSW, Australia, at the end of 2016. Paid off mid 2023.

From deciding to become debt-free to making the last payment, how long did it take you?: 6.5 years.

What age did you take on your first debt, and how old are you now?: I bought a unit when I was 24 and sold it six months later after a break-up. Broke even but probably took a small hit if I added up all the bank/conveyancer/real estate fees, etc.

Did you do it alone or as a family?: My girlfriend at the time and myself took on a home loan together.

Did you pay off debt from your regular income, take on extra work, or change jobs to speed it up?: We both put in a large chunk of our income (we are both teachers, so not big salaries, but not bad either) to pay off our home. We started off by following the rule my Dad and personal finance guys like Scott Pape recommend, which is to have a 20% deposit. I think this gave us a good head start. I did work in the school holidays as a camp guide, but this cash mainly paid for home renovations.

Did you sell anything or receive cash gifts to contribute towards your debt payoff?: $10,000 from my Mum and Dad to help us get to that 20% home deposit.

What people, books, websites, podcasts, budgeting tools, debt trackers and resources helped you?: Scott Pape, Noel Whittaker, Millionaire Next Door, minimalism content, My Millenial Money Podcast, and Aussie Firebug podcast, to name a few. I constantly used a calculator to see how many years and months it would take to be mortgage-free. Just enter your debt, rate and fortnightly repayment, and you can create a goal.

Did you keep an emergency fund while you paid off debt? If so, how much?: By the end, I was draining it to pay more off.

Did you have any setbacks along the way, and how did you overcome them?: Renovations and wanting our house to be quality, so preferring to pay extra. A wedding. Not a setback at all, but my wife and I kept it low-key, which is our style anyway. Holidays. We had constant angst that we should be travelling and living it up before kids, but also wanting the mortgage gone.

What tips/hacks could you share?: Easily, the most motivation I got was from setting a goal and writing it on a post-it note. My goal was to be mortgage-free by 35. I kept this post-it note in my wardrobe so I saw it all the time. And I still haven’t taken it down.

Was there a structure to your debt payoff? i.e. paying smallest to largest, or highest interest rate to lowest?: Variable loan with no added crap the banks try and get you to sign up with. Never access your redraw facility!

How did you stay motivated, and what was the most challenging part of paying off your debt?: My wife and I kind of stick to things when a decision is made, and we didn’t really waiver. But I got right into shares when we still owed about $100,000, and Covid hit, and I saw all these opportunities. I was so torn. But my wife told me to stick steady. I just learned to set aside some money to invest in shares and some for the mortgage.

How did you celebrate making your final payment?: It was a bit of an anti-climax. We had drained all our accounts. We went to dinner and got a few drinks. But we were both so broke! The best part is the next payday. I knew in 2024, I’d already be debt-free, so I did book a surf trip to Maldives. My wife and I plan to travel to NZ and other places in the future.

Was getting out of debt worth it, and what have you learned about yourself?: Yeah, I hate feeling like I’m going to work just to give it to the bank. Now, I have doubled the amount I invest in index funds each fortnight. I think I’ve learnt that being mortgage-free doesn’t make you want to go and buy designer rubbish and $25 cocktails. The habits are so ingrained. I don’t know if that’s a good thing. I have learnt to put money aside for holidays and not to feel guilt for going out for dinner or buying the odd surfboard etc.

Will you ever go back into debt again?: Probably not. The idea of index funds is so easy compared to taking on debt for an investment property.

Debt Free Kiwi #34

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