Today just might be one of the best days of my life. Because, after years of hard work, I can finally say the following words.
I am debt free.
Do you hear the trumpets trumpeting? Can you see the confetti canons canoning? Because that’s right, the final debt has been vanquished. The books are all in the black. While I’ve been anticipating this day for some time now, the fact is that day is here! And I couldn’t be more pleased. And excited. And relieved.
[title type=”h5″ class=”tfuse”]The story[/title]
When I graduated nursing school in 2007, I had few assets but over $65,000 in student loans, a car loan, credit card and personal debt. It was obvious I needed a plan in order to get myself in financial shape. Heck, that was a good part of the reason I’d gone to nursing school in the first place, to ensure I would make enough money to get my financial life back on track. So, a month or so after graduation, as I was settling in to a new city, I went to work.
By this time I had started paying attention to personal finance blogs on the interwebs, which was giving me foundational knowledge of where to start and how to organize myself. Once the paychecks started coming in, I had a list of priorities of how to spend the money I had.
[title type=”h5″ class=”tfuse”]Spend less than you earn.[/title]
This was hard the first few months, when we were trying to build a life and furnish a new townhouse. But we did a bunch of things right.
– We found a great deal on a townhouse where we were paying far less than market value in the area. Diligence.
– The cable company forgot to turn off the previous occupants cable. Luck.
– We developed an eye for finding treasures to repurpose/refurbish on Craigslist and from thrift stores. Creativity.
– We basically gave up eating out at restaurants. I’ll admit, the first few years were a whole lot of spaghetti, but over time we’ve gotten much more skilled and creative with our cooking, to the point where I’m mostly disappointed or indifferent to restaurant food. Over-priced and under-seasoned, most of it. To me, eating out no longer represents a good value for my money.
– We took only a few short vacations those first few years, and made sure we saved up enough money to pay for everything before we left. This way there was no reliance on credit cards to get us through which would then have added to our debt load. Debt was only allowed to move in one direction – down.
[title type=”h5″ class=”tfuse”]Pay down the debt[/title]
Since we kept our expenses low, there was excess every month, and I focused intently on paying down the debt. I did as the experts told me, and lined up my debts in order of the interest rate. I made minimum payments on all of them, and put anything and everything I had left over towards the highest interest debt.
This was really hard at first. I was paying hundreds of dollars of interest every month, so even after making what seemed to me to be large payments, my total debt hardly seemed to decrease at all some months. Intellectually I knew the progress was there, but it was spread out and incremental, and I can understand how people give up and move on to find easier ways to make themselves happy, ignoring the the signs of impending financial disaster all around them.
But I persevered. Tax refunds, overtime shifts, raises, every extra penny I made went towards debt. At first.
I quickly realized that although it was important to pay off that debt as quickly as possible, I was also without any resources if something unexpected happened. Even after I’d paid off my credit cards, my savings account, or “emergency fund” as it were, had only had few thousand dollars in it. So I started siphoning off some of my extra money to build that up. Just a little at first. In fact I made it a game. Whenever I would log into my bank account, whatever the amount in checking was, I would round down to an even number and move the excess into savings. So if the total was $1147.35, I would move $2.35 into savings. This was such a small thing at first, but since I was compulsively checking my balances several times a week, it started to add up. Then after a while instead of rounding down to the nearest $5, I made it the nearest $10. And then the nearest $25, or, when I was feeling particularly reckless, to the nearest $50. What was amazing was that I hardly ever missed that amount when I was paying my bills. But it sure did make a noticeable difference in the growth of my savings account. To this day, I still do this.
I was also contributing to my retirement plan at work. And in 2009 I had the crazy idea to open a Roth IRA as well.
It’s true I could have paid off my debts much sooner had that been my only goal. My extra money was now stretched thinner over a variety of goals. But financial stability is about balance. Spreading out the risks and the gains.
[title type=”h5″ class=”tfuse”]Keep with it[/title]
I really wish I had more to say about this. I mean, overcoming that amount of debt represents a huge achievement in my life, and I wish I could talk on and on and on about it, with lots of tips and secrets to share. But really, the best trick I had was to just keep doing it. I set up a plan, and stuck to it. Now, my money habits have definitely gotten more sophisticated over the years. I’ve dealt with regular and Roth IRA rollovers, had to make estimated tax payments and, once my emergency fund was fully funded, I started saving for future spending priorities like the long-term backpacking trips I like to take every few years. But as far as the debt goes, it wasn’t really anything fancy. It was just making that payment each and every month. The balances got lower and lower, individual debts dropped off one by one, and as the interest payment itself steadily shrunk, the amount that was going towards principle steadily increased.
It was never easy. Using your hard-earned money to pay off debts from things and purchases and experiences that have long come and gone isn’t fun. It isn’t rewarding in its own right. I would have loved to have been putting all that money into retirement savings, or vacation savings, or even towards luxurious indulgences like the occasional concert or theatre show.
But it has taught me discipline. And the value of pursuing long-term goals. And did I mention how freaking excited I am???
So when asked how I paid off $65,000 of debt, I have a simple answer. One payment at a time. It may not be sexy, or revolutionary, but it is the truth.
[title type=”h5″ class=”tfuse”]The future[/title]
I am done with debt. Now that I’m free, I never ever want to be a slave to those kinds of payments again. If I can’t afford to buy something outright, that means I can’t afford it. The end. Decision made. (I’d make the obvious exception if we were talking about a mortgage, but since I change zip codes faster than most people change cell phones, I kinda doubt that will happen anytime soon.) I’m not being mean to myself, I’m supporting my priority of maintaining financial stability. Because now that the goal of debt freedom has been achieved, I can focus more clearly on the next goals: entrepreneurship, financial independence and retirement. Well, that and a whole lot more travel.
I hope you will indulge me one final time, but I can’t stop saying it.
Robb Hillman is debt free.
How about you? Where are you in your battle with debt? I’d love to hear your strategies for dealing with debt in the comments below!
photo credit: StockMonkeys.com via photopin cc
WOW!!!!!!!!!!!! What a wonderful feeling!!!!!!! Congratulations!
You can say that again Cassie. I’m walking on sunshine today!
let’s pretend I’ve had coffee and can spell my name correctly… sigh. CASSIE
Congratulations Robb!! Yeah, been there. It’s always a balance between paying debts and saving, and that means maximizing all tax deductions possible. In fact, that’s one of my biggest tips; if you can, always put the maximum in tax-deductible savings (I don’t know what you have in the US, here in Canada we have RRSPs) and use the tax savings to pay off debt.
Nothing like the relief that comes with having paid everything off.
Frank (bbqboy)
We have definitely taken advantage of tax-deferred retirement accounts, although my Roth IRA is not tax-deferred. As usual, it is a balancing act figuring out the risks and benefits of all your options. But with the debt load gone, I feel like I’m on the right side of the curve now. Relief is an excellent description!
Wonderful news, Robb! Very inspiring, too.
I’ve paid off my student loans (and made a move to find more affordable education); I feel like I’m spinning my wheels a bit, though. Maybe I’ll try looking up some of the websites you mentioned to make the next step toward staying out of my overdraft.
Keep up the great work!
I know not everyone is quite as nerdy as I am, but the deeper I get into understanding the world of financial independence, the more powerful I feel. It feels good to understand the steps I’m taking to be the master of my future! If you really want to dig deep, there are a few places I’d recommend.
J.D. Roth doesn’t run Get Rich Slowly anymore, but he still contributes, and they do a pretty good job of providing different perspectives on how to achieve your own financial education. Mr. Money Mustache is a bit more controversial because he is more hard core and swears a lot, but I absolutely love and agree with his perspective on what is really important in life. (Hint: start reading his blog in chronological order until you get a feel for what he is saying.) Suze Orman has a great podcast (free on iTunes), she can get pretty touchy-feely at times which isn’t everyone’s cup of tea but again I learned so much from her.
I also like Johnny Moneyseed, The Empowered Dollar, and My Money Blog, for different reasons.
The trick isn’t to find one of these gurus and then follow absolutely everything they say to the letter, but to start building your own knowledge and understanding and figuring how these concepts are going to work in your own life. Just getting educated though is a huge step that will put you miles ahead of “most people”.
But at the end of the day, I recommend setting a goal and then going for it. Whether that is building your emergency fund, or researching cheaper places to live, or whatever. Being specific about what it is that you want makes it so much easier to get what you want.
Such a treasure trove of good ideas, Robb. Thanks! I’m so glad we met. No doubt your attitude of abundance has helped you reach your goals more efficiently. How wonderful that we can keep in touch until we’re ever in the same time zone, again. You’re always welcome in Wellington!
Dude – massive kudos. Sheena and I have managed to do this twice in our time together, save a few of her student loans. It is a great feeling, that’s for sure.
Enjoy it!
..thanks for publishing the little tricks; I’ll go over your list with Sheena and see what we can glean from your obviously successful process. Thanks, man!
Thanks Jeremy! Sometimes life sweeps in and we have to adjust our plans, but I’m hoping this debt freedom lasts. It is just such a burden. Student loans are the worst, because they will follow you forever unless you die first, so I was glad to get those out of the picture a few years back. I wish schools educated students better about how student loans work, and how “deferment” should be the ugliest curse word in the English language.
Yeah Robb! You have been an inspiration to Dad and I and several of your siblings. We are debt free!! (and retired and on a fixed income). We have money ‘put away’. Yes, it feels good. Thanks!
Robb, that is so inspiring. I’m working to pay off my debt too, and your plan is simple and elegant. Yay you!
Simple, slow and steady is the way to go. Sticking to the plan is already hard enough, so no need to make it complicated.
Good luck with your plan!
Good job, Robb. I have been debt free for many years and it’s been a good feeling. I did not have much debt before but the little debt I had gave me sleepless nights. Keep the good work up 🙂
What a great place to be at! I can’t wait until I can say that. “Debt free for years.” Wow. That is magical. Congrats!
This is a fantastic, article, Robb! Congratulations and enjoy your financial freedom!!
Thanks Melanie! This is the first step towards accomplishing some big things. I’m sure of that.
Many congrats, Robb! For me, it took selling nearly everything I owned and moving to Japan for three years to get back on track financially. Largely because selling everything to pursue a dream put me in a position to value experience over things and grounded me in a minimalist lifestyle. The freedom to go and do as I dreamed with nothing more than a single suitcase kept me from buying things I didn’t need. I really like your idea to round down and put in savings. Thanks for the great tips and for sharing your story!
Now this is a comment I can relate to! I’m in total agreement about experiences > things. I’ve gone backpacking before, and love the simplicity of not being weighed down with things I don’t really need. But this is the first time I’ve sold all my things back at home, and while a little scary I’m finding it incredibly liberating. No ties! I can really do whatever I want. Thanks for the comment Jodi! 🙂
I can really relate how you may feel the moment you became debt free. I also felt the same when I have finally settled my student loan. It is not a joke and has been a burden to me. But finally, I am also debt free!
Congrats for getting there! Debt is definitely a heavy burden and getting out from underneath it is a wonderful feeling.