Our Debt Free Story – Why We Paid Off $53,000 in Debt
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Money. Wealth. Debt. Investing. Financial freedom.
Everyone relates differently.
Your individual experiences have shaped your view of money.
Believe me, there are ups and downs in every money journey. The path to financial freedom and wealth does not come easy or fast. There are sacrifices made. Habits changed. Successes to celebrate.
Here is our money story and why Money Bliss was launched.
I could track my money. Oh, I am good at tracking my money.
Also, I was very good at spending a lot of money, too.
All was well. I made more money than I spent and had a little savings (and a student loan that would eventually be paid off).
Life was good.
Fast forward to meeting my husband, who is a true saver at heart. His philosophy was…
“No reason to fix or replace it, if it isn’t broken.”
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Two worlds collided on the concept of money…
We were the typical American couple. We had our ups and downs over money.
Slowly, adding to our saving accounts.
Kept our spending below our income (or close to it). We both got laid off. We both had bonuses. Student loans. We had kids. Added a dog. We had our tiffs over money. Typical American family, right?
Money Bliss (and financial freedom) seemed like a lottery dream.
Specifically, enjoying financial freedom and retiring early.
We had enough with our student loan payments. That $500 a month was holding us back from the life we wanted to live.
Yes, that $500 a month was completely overwhelming.
Key Note…Our interest rate on our student loans were crazy, crazy low! We were grateful to only pay 1.85% on our student loans.
Even though our interest rate was crazy low, there wasn’t enough money to go around each and every month. We were the slave to the lender.
We wanted that cash flow back into our lives.
Against all professional advice and that thing called “positive arbitrage,” we still wanted to live debt free.
Definition of Positive Arbitrage
Positive arbitrage is when money can make more than it cost you. For example…the interest rate is 3%, but it is possible to make 8% in the stock market. That difference of positive arbitrage is 5%.
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Why We Paid Off $53,000 in Debt to Live Debt Free
Living with debt wasn’t okay (regardless of the interest rate).
Society assumes debt is a normal part of life. Debt is necessary to succeed. Ha – it is all lies to keep us buying more and more of their products.
We were done with debt and the lies.
A different life sounded appealing. We were completely done with $500 going out each and every month. Plus we were looking at another 10+ years of paying off debt. Ugh.
That still makes me cringe.
For us, we placed priorities on other things. We wanted to travel. We knew our little kid’s activities would only start costing us more. All in all, we wanted to do something else with $500 per month besides paying our debt payments.
Why We Decided Now was A Good Time
Truly, there is never a good time to pay off debt.
Paying off debt means paying off purchases that are already paid for with loans or credit cards. For items or things that happened in the past. Many times with debt, you can’t go back and change the past.
The need to pay off debt still remains.
For us, that year, was the right time to pay off debt. We had a small bit of extra money each money. We know we could become more frugal for the time we were paying off debt.
The two main reasons we knew it was a good time to pay off debt. First of all, we weren’t getting any younger. Time was not on our side to start investing more into our retirement future. The second reason was our kids were young (4-5 and 2-3, at the time). It is way easier to say no to a little kid than an older child who knows the difference.
Whether or not, we were ready, it was time to pay off our debt once and for all.
Looking Back on Our Decision
Am I happy we paid off debt? Yes.
- Do I wish I paid off the debt sooner? Absolutely.
- Did I learn the true cost of debt? Yes, 100 times over.
- Do I wish I spent the $53,000 on something else? Of course, we are human.
All in all, I am happy we paid off our student loan debt.
Looking back I wished we made it a priority when we were younger. But, that thing called positive arbitrage held us back. Even though, we ended saving $9,300 in interest alone.
However the crazy thing, after our debt was paid off, we were on a faster path to financial freedom. There was nothing holding us back. Nothing keeping us up late at night with stress and worry. All of that was gone.
That right there was the best decision made to pay off our debt.
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The Biggest Lesson
While paying off our debt, I truly understand the true cost of debt. Every single penny of the $53,000.
Many sacrifices made. Difficult decisions made.
Stopping the cycle of debt.
Yes, it may be easier to continue the debt cycle than paying it off once and for all. That is what most Americans do anyway. Do you really win in the end?
I learned the true cost of every money decision I made. Doesn’t matter if it was the $1 I spent each and every day that added up to $365 saved in a year. Or the larger choices of replacing the insulation in our house?
Yes, that is true. When we paid off our debt, I also wanted to improve the insulation in our house at the cost of $2,000. So, we compared bids, started saving, a little side hustle, and the job was completed. This also saved in our monthly utility bills, too.
Now, I am more hesitant than ever about going into to debt because I know the true cost and sacrifice to pay it off. Lesson learned.
Curious, How We Did it?
We sat down and created a plan. In all honestly, my husband was a little reluctant to pay off such a huge amount of money. For all of the details on how we did it, go here.
I go through all of the options we looked at to decide. Plus when we paid off our debt, there was no cool debt apps. Everything was paper and pen with plenty of estimation.
In one year, we paid off $53,000 in student loan debt!
Is it true? You read correctly…we paid off $53,000 in debt in one year.
And we never looked back or regretted our decision. Our debt free journey has begun!
Life. Money. Enjoy. Money Bliss!
Telling Friends and Family
When we were paying off our debt, most people did not know. It wasn’t something openly discussed. The only people to know were our parents and some financial advisers. They thought we were nutso!
After we paid off $53,000 in a year, we took a trip to the beach to celebrate!
Side note: When paying off debt, plan your mini milestones and big milestone to celebrate. Those achievements are key to long term success.
It was easier saying no so many times knowing that I would be watching my kids run on the beach. #bestmemoryever
That is when we opened up and discussed why and how we paid off debt. Honestly, many people did not know that we were completing such a huge money challenge. (which is huge credit to know that living within your means isn’t totally crazy!)
Fast forward, many friends kept asked us how we paid off our student loans. They wanted to learn more. They wanted access. That was the beginning of Money Bliss.