Thread: Its finally official

Yep, I am now officially debt free. Everything is paid for. My last payment on debt is already set to go out tomorrow (auto payment). No car payments, no credit cards, no loans, no medical bills, nothing.

It took around 19 months to do but Im so giddy now its not even funny. When I come to work, Im working for me now, not for someone holding a debt over my head. I cant think of a better time to have become debt free either with the economy as it has been. We've already managed to put enough away to cover a couple months living expenses if anything were to happen on the job front but me and the wife are with pretty stable companies, in fact in a couple weeks my job is getting more work to do so I dont see anything happening there for the foreseeable future, I just got a raise to on top of the bonus I got.

As much as I would detest and abore doing so, if it came down to it for whatever reason, me and the wife have enough in 401k and Roth IRA investments that we could probably survive at our current spending levels for at least a year if not longer when you factor in all the penalties and taxes from dipping into such things.

Ive waited a long time to say it but the day has finally come. Me and the wife have agreed that once we get our taxes filled out and get our return we are going to go buy us a flat panel TV and stand in celebration. We've already got it all picked out too. 42" for the living room and then a smaller one to be put in the bedroom.

We are saving for a house now and I dont know if we will take out a loan for that or just save until we can pay for the thing in full. We are still batting the idea around. On the one hand if we buy a house now, we get the $8,000.00 tax credit which, once we have, we can turn around and put that back into paying off the house even faster. But one thing Ive learned along the way, buying a house for purely for the tax incintives is a bad idea, so we're trying to decide if we want to wait the couple years or so it would take for us to save up and just pay for the thing and have no mortgage.

Anyway, I just thought I would let everyone know and hopefully encourage others that it can be done. If I were to tell you the numbers behind the debt we cleared in such a short time I think it would astound most. And as improbable and impossible as it seemed, we were able to do it. It took a lot of sacrifice (waiting to get my car back on the road being one of them), and it most definitely took a solid committment to see it through to the very end, but here we are.

Congratulations!

Congrats man

Originally Posted by dpaul007

Congrats. I'm also in the process of buying a house. You get out of debt and just get sucked right back in. It's only money, right?!

Well of all the forms of debt one could have, a mortgage is probably the best there is if there is such a thing when speaking of debt. It may not seem like so now with the housing market as it is, but a mortgage is something of a forced savings account. Yeah, you are the one paying the interest on the account, but ultimately the house (unless you just signed up for a really horrible mortgage such as ARM's, 80/20's, interest only, etc) will most likely grow in value.

Right now, the house we are looking at is being offered for roughly $20k BELOW current market value, and I had a market analysis to make sure it has stayed ther (a customer of mine is a realtor) so there is that built in equity to the deal as well. Interest rates are at all time lows (15 year fixed is around 4.6% or so). So there is a lot of good reasons to buy a house now, I just need to convince myself to do it.

I rent right now. But probably a year after me and the wife moved in, the owner started trying to sell us the house. Super super nice guy. I know him, I trust him and he's kinda spoiled me in that if I ever had to move and rent from someone else I would find it very difficult to do knowing odds are I would never find a landlord like him again.

Since I have been in this house he has replaced the hot water heater, the heating unit. The roof was replaced just a couple years before we moved in. The A/C unit is less than 10 years old if I recall, and there are a few other things that he has taken care of. The house was in great shape when we moved it, its just thing broke down while we've been there and he's been Johnny on the spot in getting whatever was needed taken care of.

Its not the house we want (we want to build a custom house. Already have plans drawings and so forth) but we can get it cheap enough, be out from under the mortgage in around 9 years. I feel confident in saying that by then the housing market will be back on its feet and we could sell the thing and then go build what we want. If we buy it we plan on doing some renovations, which of course would add some value to it as well.

As it stands now, I could get the loan and be done with it as I said in about 9 years. However, I could save longer (closer towards the end of the year) still get the tax credit and at the rate we can save now probably put enough of a down payment on the house to where I can avoid PMI. Additionally, that in turn would lower our monthly payment to such an extent that we could put even more extra towards principal (I figure we are used to pay a certain amount for rent, we can continue doing that for a house payment even if our payments are not that high) and that in turn would have us out from under the mortgage in seven years or less.

Ive done some mortgage calculation scenarios in which we put all we can towards the mortgage payment (just putting minimum amounts in savings) and would have the thing paid off in 5 years or less.

After what we've been through to get out of debt, I could handle 5 years of working towards that. Furthermore, it is self-imposed, so if something came up in which we needed extra money, then we just dont send in extra on the mortgage.

So those are some of the scenarios we are tossing around figuring out which would be best. My most immediate focus is getting the GP back on the road, after that, its getting a house. I got until December 1st, so Im in no immediate hurry but I like to have things planned out.

Fu*k my life.