What has motivated you to pay off your debt?

[llckll]

Hi All,

Currently, my wife and I are trying to pay down our debt. We have a total of 4 debts.

1. Credit Card: $2,500
2. Student Loan: $30,000 $528/month @ 6.825%
3. Car Payment: $22,000 $441/month @ 0%
4. Mortgage: $364,000 $2544/month @ 3.5%

I'll be paying off the credit card with my bonus this week so that's done.

We just started this month and have a total of 9 years to go (maximum) before we're debt-free including our mortgage. It's definitely daunting because we just started and this is the first month! We're using the debt snowball method and will be paying a total of $1,400/month towards the student loan.

So my question is, what has been your motivation as you are or were going through your plans to become debt-free?

Thanks in advance.

[keviny182]

First off, congratulations on paying off your credit card!

Upon graduating from undergrad, I had accumulated about $4000 in credit card debt. Although I would pay a bit off every time I received a pay check, the number would fail to decrease because I would not have enough cash to last me til the next pay check. It was a vicious cycle.

I've always had a goal to have enough money for a house downpayment by the time I am 28. Keeping that goal in mind, I knew that it would be impossible if I do not get out of credit card debit immediately. I started budgeting better and setting milestones for myself.

So in short, I believe it is important to have an end goal in mind. As with everything in life, if you have a clear vision of what you want to get out of it at the end of the process, it keep you on track.

Good luck!

[llckll]

First off, congratulations on paying off your credit card!

Upon graduating from undergrad, I had accumulated about $4000 in credit card debt. Although I would pay a bit off every time I received a pay check, the number would fail to decrease because I would not have enough cash to last me til the next pay check. It was a vicious cycle.

I've always had a goal to have enough money for a house downpayment by the time I am 28. Keeping that goal in mind, I knew that it would be impossible if I do not get out of credit card debit immediately. I started budgeting better and setting milestones for myself.

So in short, I believe it is important to have an end goal in mind. As with everything in life, if you have a clear vision of what you want to get out of it at the end of the process, it keep you on track.

Good luck!

Thanks for the advice. I do have an end goal which is to be completely debt-free in 9 years but hopefully by 7 years if I throw extra cash at it (tax returns, bonuses, etc). I guess I'll just have to take it one day at a time or one week at a time and not obsess over it. Maybe that's my problem. Looking at my budget every day multiple times a day even knowing nothing has changed. Maybe look at my budget weekly on Fridays so I don't obsess over it.

[TheKayla]

Thanks for the advice. I do have an end goal which is to be completely debt-free in 9 years but hopefully by 7 years if I throw extra cash at it (tax returns, bonuses, etc). I guess I'll just have to take it one day at a time or one week at a time and not obsess over it. Maybe that's my problem. Looking at my budget every day multiple times a day even knowing nothing has changed. Maybe look at my budget weekly on Fridays so I don't obsess over it.

It can be easy to get obsessive, but don't. Focus on your spending habits and lifestyle changes that will positively over the long term affect your financial future -- just one decision at a time. Be sure to focus your energy on things that align with your goals that have positive and productive outcomes.

Best way to stay motivated it to keep learning, get involved in communities like this one, and review your progress at appropriate times. Your mortgage also seems a bit high, and you have a somewhat expensive car. What is your income? Why did you have CC debt at all if your income is high enough to support these higher luxury lifestyle things? Have you considered downsizing your home/car/lifestyle and choosing some more minimalistic and simplified options? Can you sell anything you don't use or dont need, not only to simplify life but also speed up debt repayment? I love getting creative with what I can do to earn more, spend less, or get rid of things to better my life in the long-run and to pay down my debt sooner.

[llckll]

It can be easy to get obsessive, but don't. Focus on your spending habits and lifestyle changes that will positively over the long term affect your financial future -- just one decision at a time. Be sure to focus your energy on things that align with your goals that have positive and productive outcomes.

Best way to stay motivated it to keep learning, get involved in communities like this one, and review your progress at appropriate times. Your mortgage also seems a bit high, and you have a somewhat expensive car. What is your income? Why did you have CC debt at all if your income is high enough to support these higher luxury lifestyle things? Have you considered downsizing your home/car/lifestyle and choosing some more minimalistic and simplified options? Can you sell anything you don't use or dont need, not only to simplify life but also speed up debt repayment? I love getting creative with what I can do to earn more, spend less, or get rid of things to better my life in the long-run and to pay down my debt sooner.

Our gross income combined is about $150k, take home pay approximately $8,300/month. We were always typically good in having a $0 balance but the holidays came up and I was getting a bonus. So we decided to use the card and pay it off when I get my bonus which is this Friday. Perhaps we could have not spent it and used my bonus to pay down my debt. In any case, we'll end up with 25,000 miles and can redeem for $250.00 worth of gift cards from Target or Amazon to pay for diapers and other baby items. After paying it off, we decided not to use it anymore. Maybe only for big purchases that we need and then pay it off immediately from our checking (if any of our appliances break down).

The $22,000 car loan is for a minivan we purchased for a growing family. 13 month old, dog, and one more baby on the way.

Not sure if we can really downsize. We bought the house my wife grew up in and has a sentimental value. We do have about $100,000 in equity in the house. We're just going to stay there and pay off the mortgage which is included in our debt-free plan of 7-9 years.

With our current budget and debt repayment plan, we should be able to pay off the student loan and car in less than 2.5 years. I'm using this time frame as my first big attainable goal. I think 2.5 years will go by very quickly with a toddler and another baby on the way.

The good thing is, most of my budgets are on auto-pilot so I don't have to worry about paying them. I also have $155.53 every Monday automatically transferring into my savings account to cover the lost income of my wife. She's a teacher and gets paid on a 10 month contract. Definitely would have been easier if she got paid on a 12 month basis. She does not get paid in July and August so I plan on transferring her pay check amounts on her pay day schedule from savings to our checking in those two months so that our entire budget stays the same the entire year.

There are some things I do want to sell that are not really necessities. I have a radar detector that I can probably sell for $400 and a limited edition Air Jordans that I can sell for $200. Going to take an inventory of other things in our home we can de-clutter and sell to snowflake towards the debt.

In the past, we definitely have gone over our grocery budget every month but going forward, we're using the envelope method and using cash. We also go over our miscellaneous budget so I'm paying extra attention to that budget I keep track of in Mint.

Thanks for your advice and I'll definitely keep engaged in this forum.

[breathemusic]

OP, may I ask if you specifically chose a 9 year time frame for any reason? I mean, I understand the desire to be debt free, but to me, as long as you have cleared all other debts, there's nothing wrong with having a mortgage (as long as you can easily afford it). I'm not saying you shouldn't pay the house off early, and it definitely saves some money in interest expenses. But i never really understood the benefit of pinching pennies just to be able to say "yay, I'm debt free!" I think it's important to budget and save for the future and yes, pay off debts. But just make sure that you're also not giving up your happiness by stressing over not paying the house of X number of years sooner than you legally were required to. If 9 years is a truly attainable goal without driving you crazy or never taking a vacation, etc., then go for it!! I'd just say remember to enjoy your life while you can too.

[llckll]

OP, may I ask if you specifically chose a 9 year time frame for any reason? I mean, I understand the desire to be debt free, but to me, as long as you have cleared all other debts, there's nothing wrong with having a mortgage (as long as you can easily afford it). I'm not saying you shouldn't pay the house off early, and it definitely saves some money in interest expenses. But i never really understood the benefit of pinching pennies just to be able to say "yay, I'm debt free!" I think it's important to budget and save for the future and yes, pay off debts. But just make sure that you're also not giving up your happiness by stressing over not paying the house of X number of years sooner than you legally were required to. If 9 years is a truly attainable goal without driving you crazy or never taking a vacation, etc., then go for it!! I'd just say remember to enjoy your life while you can too.

That's a valid question. I put all my debt in a debt reduction spreadsheet and using the debt snowball method, it creates a payment schedule for you. So with my current setup, I should be able to pay off the student loan and car in two years or so. And then the mortgage by 2013.

I don't think I'm necessarily pinching pennies. We still have a miscellaneous fund of about $600 for date nights and other items and $500 dollars using the cash envelope method. With a 13 month old toddler and another baby on the way, I don't think we'll be taking a vacation anytime soon and 2.5 years should go by fairly quick while still enjoying life and should have all debts paid except for the mortgage. That's why I gave myself the first attainable goal of paying off the student loan and car. I think after this, I can re-evaluate where we are in life and see what to do next.

Appreciate your advice.

[dczech09]

So my question is, what has been your motivation as you are or were going through your plans to become debt-free?

I had three different motivations for getting out of debt:

1.) I see an inverse relationship between acquiring debt and acquiring wealth. I want to build wealth over time and having debt undermines my ability to do that. By paying off debt, I eliminate negative cash flow and replace it with positive cash flow. That allows me to invest, save, and build wealth at a much faster rate than if I were making payments to some bank.

2.) I want to work for myself. When you're in debt, you are not working for yourself- you are working for the bank or any other creditor. So I made a decision not to work for a bank or other lender anymore. That meant getting out of debt, and staying out of debt.

3.) I like freedom! When you're in debt, you are not completely free. You are a slave to the lender. Now that I am out of debt, I am not a slave. Instead, I can do whatever I want to do with money, assuming it is legal of course.

[llckll]

I had three different motivations for getting out of debt:

1.) I see an inverse relationship between acquiring debt and acquiring wealth. I want to build wealth over time and having debt undermines my ability to do that. By paying off debt, I eliminate negative cash flow and replace it with positive cash flow. That allows me to invest, save, and build wealth at a much faster rate than if I were making payments to some bank.

2.) I want to work for myself. When you're in debt, you are not working for yourself- you are working for the bank or any other creditor. So I made a decision not to work for a bank or other lender anymore. That meant getting out of debt, and staying out of debt.

3.) I like freedom! When you're in debt, you are not completely free. You are a slave to the lender. Now that I am out of debt, I am not a slave. Instead, I can do whatever I want to do with money, assuming it is legal of course.

I never thought about #2. Having monthly payments seemed like the normal way of life. Definitely a new motivator for me. Thanks!

[TheKayla]

Our gross income combined is about $150k, take home pay approximately $8,300/month. We were always typically good in having a $0 balance but the holidays came up and I was getting a bonus. So we decided to use the card and pay it off when I get my bonus which is this Friday. Perhaps we could have not spent it and used my bonus to pay down my debt. In any case, we'll end up with 25,000 miles and can redeem for $250.00 worth of gift cards from Target or Amazon to pay for diapers and other baby items. After paying it off, we decided not to use it anymore. Maybe only for big purchases that we need and then pay it off immediately from our checking (if any of our appliances break down).

The $22,000 car loan is for a minivan we purchased for a growing family. 13 month old, dog, and one more baby on the way.

Not sure if we can really downsize. We bought the house my wife grew up in and has a sentimental value. We do have about $100,000 in equity in the house. We're just going to stay there and pay off the mortgage which is included in our debt-free plan of 7-9 years.

With our current budget and debt repayment plan, we should be able to pay off the student loan and car in less than 2.5 years. I'm using this time frame as my first big attainable goal. I think 2.5 years will go by very quickly with a toddler and another baby on the way.

The good thing is, most of my budgets are on auto-pilot so I don't have to worry about paying them. I also have $155.53 every Monday automatically transferring into my savings account to cover the lost income of my wife. She's a teacher and gets paid on a 10 month contract. Definitely would have been easier if she got paid on a 12 month basis. She does not get paid in July and August so I plan on transferring her pay check amounts on her pay day schedule from savings to our checking in those two months so that our entire budget stays the same the entire year.

There are some things I do want to sell that are not really necessities. I have a radar detector that I can probably sell for $400 and a limited edition Air Jordans that I can sell for $200. Going to take an inventory of other things in our home we can de-clutter and sell to snowflake towards the debt.

In the past, we definitely have gone over our grocery budget every month but going forward, we're using the envelope method and using cash. We also go over our miscellaneous budget so I'm paying extra attention to that budget I keep track of in Mint.

Thanks for your advice and I'll definitely keep engaged in this forum.

Those main expenses all sound good then, especially since you have a decent amount of equity on the house -- I agree with the other posters, as long as you feel comfortable with the payment, stick with it. I'd say the car/SL is the most important as it's just costing interest, and for the next vehicle, try to save up ahead of time in cash for sure. Otherwise, 2.5 years is great -- with any other bonuses or unexpected income that can be thrown at that, perhaps you can get it knocked out even sooner! Be sure to up your savings though after that for future car replacements or other big purchases, so you can avoid the same debt in the future. At this point, like you said, motivation is key!

[autoxer]

One thing I routinely do is calculate how much interest I'm paying each month, just for the privilege of borrowing that money. Reducing that waste is a big motivator for me.

Between your mortgage and student loans, it looks like you will pay $ 1,232.00 this month in interest. That's almost 10% of your income going directly to profit at the big banks.

[cardtrick]

Being debt free helps me sleep better at night. But if the interest rate on the debt is low enough, I wouldn't mind being in debt. I don't plan on making any extra payments towards my mortgage because of the interest rate. In no other situation can I borrow that much money for 30 years at 3.75%. The US government is currently paying 3.88% to borrow money for 30 years. And my interest payments are tax deductible. So, why pay it off early?

[snafu]

Like autoxer I try my best to limit paying interest. I understand the lender needs to profit, I just don't enjoy paying so much more than the asking price for purchases. It's my choice to borrow or not and pay the fees/interest applied. Mortgage amortization schedules are not a simple interest loan . The interest is collected before paltry sums are applied to principal. @breathemusic, I doubt the income tax deduction equals the total sum of interest paid. When you work on income tax you might verify the dollar value of interest paid and the sum directed to principal for 2013.

While a typical savings account might pay up to 2%, a CC can charge as much as 22% interest based on a rating score. Can you imagine all the people who charge gas but can't pay the balance when due...they can be paying a huge sum in interest for an item that has been long used up! Most often 0% interest loans had the cost of credit added into the price of the item. Over the years I've asked owners/managers at smaller home improvement stores, furniture and appliance stores if they'll discount the price of my major purchase if I pay cash. I usually get a 4% - 5% reduction and free delivery. I figure it's ok to ask as the worse they will do is say no.

[figuringmoneyout]

I paid off about $25K in credit card and student loan debt, finishing last year. I was motivated by a lot of factors. Mainly I saw how debt negatively affected family - a half-sibling who was depressed and committed suicide over debt, a parent who lost a house because of foreclosure. I never wanted to find myself in such a horrible situation so I decided to make sure I couldn't be becoming debt free. It's definitely relieved a lot of stress and pressure in my own life.

[PRICEPLUS]

"Out of debt, out of danger"!

Don't be indebted to anyone and life is so much simpler. Use it up, wear it out, make do, do without!

I am a person not a "consumer". Consumer makes me sound like a locust or some other sort of destructive pestilence.

I grew up poor and I don't want to go back there! Just that simple actually!