How much debt have you paid off?: Our mortgage. Which rose to $260,000 at its highest point. And we found it very scary at the time.
What was it for?: Our house in Morrinsville, for which we paid the princely sum of $95,000 in 1997, and our beach place, which was the section for which we paid $65,000 in 2003. And then a “Tiny House” 10 x 6m2 (before they were even a thing) was built onto it in 2007, which was about $100,000.
From deciding to become debt free to making the last payment, how long did it take you?: Decision made in 2012 after watching an interview with Hannah McQueen on Breakfast TV while I was off sick from work. Serendipity. Paid off in December 2020. Eight years from sign-up to paid off. Could have done it in six or seven, but we extended it a tad. At the time, we had 19 years left to pay on our mortgages, and we were going to be paying it off until after retirement.
What age did you take on your first debt, and how old are you now?: 21 when we bought our first house in the UK for £20,000 in 1987. I am 56 now.
Did you do it alone or as a family?: Bought it with my fiancé, now husband of 33 years!
Did you pay off debt from your regular income, take on extra work, or change jobs to speed it up?: Regular income. There was no incentive to pay early in the UK as there were tax breaks for mortgage holders, so most people kept to the 25-year term.
Did you sell anything or receive cash gifts to contribute towards your debt payoff?: We sold our UK house for a small profit and moved to NZ when the exchange rates were bad, so didn’t really end up well off. It cost us a lot to move here, and basically, we started afresh with a whole new 30-year mortgage for $90,000 for the old Morrinsville villa that was a do-up and sucked our cash for the ensuing 25 years! No inheritance or lucky Lotto wins. Just a hard graft. Tears from me at times when we didn’t know if we would have enough. The husband was made redundant twice within three years. Sometimes deciding between how much food versus how much fuel to buy. Hand-me-downs for the kids. No social life.
What people, books, websites, podcasts, budgeting tools, debt trackers and resources helped you?: An innate frugality from an upbringing that involved uncertainty and poverty. Wanting to do better for our children. Never crossed my mind to try and learn about money. We were too busy and tired trying to earn it. Just tried to live as simply as possible.
Did you keep an emergency fund while you paid off debt? If so, how much?: Nope. Never had enough to do that. We had a play with an offset mortgage at some point in the early 2000s, and I really got a kick out of paying it down when we had the money to. Mostly we didn’t have spare, though, and we got rid of the offset when the husband was out of work.
Did you have any setbacks along the way, and how did you overcome them?: Refinanced several times. The house was increasing in value. After we had bought our beach place, it quadrupled in value in four years, and I wanted to sell it and become debt free. My husband wanted to keep it. We foolishly visited the home show and went into more debt after we saw an awesome little cottage we could get built onto our section. Therefore mortgage instantly doubled….
What tips/hacks could you share?: Never bought a new car. Only just got to the point of owning a car that was made this century a few years ago. Don’t buy anything “on the knock”. Know where your money is going. We never had annual overseas holidays ourselves or with our kids except for two big trips back to the UK to visit family in 2000 and 2012. During the latter visit, we saved $10,000 in one year to pay for the flights, which made me realise we could put big amounts of money away if we had the incentive.
Was there a structure to your debt payoff? i.e. paying smallest to largest, or highest interest rate to lowest?: Just chipping away at first. Then via Enable Me, we learned how to split our mortgage into smaller chunks on 1, 2, and 3-year fixed rates and pay off a floating amount each year. My husband got a well-paid but shitty-hours job at Fonterra, which made the biggest difference. For once, we were earning a six-figure salary between the two of us, and we started to get ahead.
How did you stay motivated, and what was the most challenging part of paying off your debt?: The motivation was watching the floating account reduce in size and ticking off time until we could get to the next chunk and start paying that off. Challenging was just shutting our ears and eyes off to those around us who were going on fancy holidays, upsizing their homes, trading in their wives and buying flash cars. We stayed in the same house with the same spouse!
How did you celebrate making your final payment?: We delayed by one year and extended our lending so we could both get major dental work done. The celebration coincided with Xmas and my husband declaring/deciding to retire after a horrible year of surgery, radiotherapy and starting chemotherapy. So really, it was a celebration of life.
Was getting out of debt worth it, and what have you learned about yourself?: It was so worth it. I realise I need an incentive or to see a structure and work toward it. I can’t do it on my own. I am the money driver in our house. My husband is the passenger and not even a good map reader! I would like to be in a position where I don’t need to work but can if I want to.
Will you ever go back into debt again?: One of the first things Enable Me suggested, once we were almost debt free, was to buy another property and rent it out. This was in late 2020. We looked into it for a few weeks, crunching the numbers etc. In the end, we realised we didn’t want the feeling of debt looming over us again, nor the work involved in owning a rental. We sold both properties, bought one in Tauranga, and ended up with $260,000 left over. In hindsight, we could have made a killing with a rental property - who knew property prices were going to go up even more?
Will you ever go back into debt again?: But even when I think about it now - no, it doesn’t appeal.