Our Debt Story Part 2: Getting Serious About Debt

Paying Off Debt / Thursday, September 8th, 2011

This is part two of our debt story. You can read part one here.

Getting Serious About Debt

I wish I could say we had some “we’re angry as hell and we’re not going to take it anymore” moment. But it wasn’t like that.

What got the ball rolling is that last fall we sent our daughter to college and paid for her first year – all $17,435 of it — in cash. That felt great because it represented the first time we had saved up and paid for a purchase of that size in cash.

Then we experienced a few big wins:

  • We used some life insurance cash value to pay off two credit cards.
  • We used bonus money to pay off a car loan.
  • We used some more bonus money to pay off a second car loan.
  • I got a large, lump sum for some of my writing that we set aside for our daughter’s second year of college.

And we kept doing the little stuff too. Like

And as we continued to make progress, all of our efforts – both large and small – continued to build on each other. The snowball was picking up steam and – honestly — it was exciting.

The more we paid off debt, the more money we had each month. And the more money we had each month, the more we paid off debt. I know that seems obvious, but experiencing it is really kind of cool.

So Where Does That Leave Us?

We’re not debt free, but we’re well on our way. We still have a home equity loan to pay off. And a business credit card at 0% interest. Both should be gone within a year – hopefully sooner.

We have a mortgage with a little over 13 years on it. It’s at 4.5% and we’re currently crunching the numbers to decide if we want to refinance to a 10 year mortgage at 3.25%.

Finally, we are part owners of a lake condo. Our future plans for that property are unclear, so it’s not part of our debt reduction plan at this point.

Our Plan Going Forward

Our goals are these:

  1. Get rid of the home equity and the last credit card balance once and for all.
  2. Build a larger emergency fund.
  3. Max out our annual IRA contributions.
  4. Continue to fund our car replacement fund.
  5. Pay cash for college educations and home improvements.

And hopefully soon I’ll be able to write the final chapter of our debt story.

18 Replies to “Our Debt Story Part 2: Getting Serious About Debt”

  1. I have to say the experience of paying off debt is cool. I really had a great time doing it.

    I know that it isn’t cool to be in debt, but it was amazing reaching our debt payoff goals.

    Congrats to you and good luck with the rest of it.

  2. Great job! It’s always so rewarding when you are reaching your financial goals! I remember when we paid off the last of our car loan, it was very freeing! We still have a mortgage, but that’s it….and we’re hoping to pay it off sooner than later!

    I just found your blog and I really like it! I am a SAHM right now, but in my former working days I was an Accountant. I’ve always had a love of budgeting and saving money!

    1. Welcome, Willa. It’s always nice to meet a fellow numbers lover. Good luck on paying your mortgage off early. What incredible options that will give you.

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