Some people define debt-free as having only a mortgage. That’s not debt-free. A mortgage is usually an enormous debt! I’m talking about living completely debt-free.
My husband and I have lived on one income since the early 1980s. The only way we were able to do so is by borrowing as little as possible, and paying off what we borrowed as soon as we could:
We bought our first home in 1981 for just under $70,000 with a 13 ½% mortgage.
We began prepaying on it soon after. When we sold it in 1988, we cleared
$70,000, and put all of it down on our next house.
That house cost
$140,000. It was new construction, and the sales agent at the office where they
sold the houses expressed her disbelief that we were putting down so much money.
She wondered why we didn’t go out and buy a $350,000 house instead, since we had
a 20% down payment on one.
We bought our first car together in
1980. We had the cash for it ($900) but took out a small car loan at our bank in
order to establish credit so we could eventually qualify for a mortgage. It was
a 12-month car loan and we paid it back a few months early.
After
that, we only bought two cars with car loans. Both were new cars, and we kept
them for many years. We paid off both car loans early. In the years since then,
we’ve bought one new car, two late-model used cars, and one very old used car
and paid cash for all of them.
We do use credit cards, but only
when traveling, for gas, for online orders and for large ticket items. We always
pay the full amount at the end of the month. We don’t even look at the minimum
payment amount.
These transactions may seem trivial and ordinary, but together they saved us many thousands of dollars over the years, and resulted in our becoming debt-free in 2002, when we paid off our mortgage.
The Joy of Debt-Free Living
It’s hard to describe how wonderful it feels to be truly debt-free. Since the housing bubble burst and the economy began its descent into recession (and possible depression) territory, we’ve seen the devastation that has occurred among people who borrowed far more money than they should ever have been allowed to borrow. I can’t imagine what it’s like to have cars repossessed, homes foreclosed on, and treasured possessions sold to raise cash.
We were sad when my husband’s business closed down, but we were not in financial distress. We chose to sell our house and rent a smaller one (by then two of our kids were out on their own anyway) while we considered our next step. What would we have done if we’d owed a lot of money on our home, cars and possessions? We would have been wiped out.
Instead, our frugal ways bought us time to decide our next step. No one can take away our possessions because we own them. We have options. For that, we are grateful.
First Steps
If you’ve found yourself with more time than money, and you have debt of any kind, spend some of your time figuring out how to change your financial situation:
Sell whatever you can and use the cash to pay off your debts.
Commit to paying for things with cash instead of credit
cards.
If you have equity in your house, sell it and rent some
place cheaper. Move to another city or state if you have to.
Nice
car? Sell it, pay off the loan and buy something cheaper.
The more debt you can eliminate, and the more cash you can accumulate, the better off you’ll be, and the freer you will feel. As I said, it’s hard to describe just how good it feels to be free.
