I sort of slipped the big announcement into a previous post, but we are now debt-free!
Except for the mortgage.
The funny thing is, I’ve been looking forward to writing about being debt-free for a long time. When I made the final payment on our last non-mortgage debt (a student loan), I had big plans to write about how we accomplished it, and how good it feels to not have any debt. (I was just waiting for the official “congratulations, you’ve paid off your loan!” letter.)
But after paying off that last loan, I turned my attention to our mortgage. And that’s sort of taken away from the accomplishment of paying off all of our other debt – because the simple fact is, we’re still in debt.
A big part of why my sense of elation at paying off the last of our non-mortgage debt has been diminished is that I can see how much more freedom we will have when we no longer have the mortgage. So while I’m still excited that we’ve paid off our other debts, paying off the last non-mortgage debt doesn’t feel that different from paying off the debts that we finished off before that.
I’ll be really excited when we have paid off the mortgage. Because if all goes according to plan, we’ll never need to borrow money again. (Unless we decide to move, in which case we may need another mortgage, or make a big investment, like buying rental property – neither of which is likely to happen, however.)
Here are the steps we’ve taken to ensure we can pay off our mortgage quickly and hopefully never need another loan again:
We don’t just live within our means – we live well beneath them. We are lucky that we can do this, of course, while still maintaining a comfortable lifestyle. But we worked hard in school and after graduation, and made wise choices, to get to this point in our lives.
We pay off our credit cards each month. This goes along with the first point, of course, in that we don’t spend more than we can pay off. Some of my favorite bloggers, like No Credit Needed, don’t believe in using credit cards at all. Personally, I’m okay with credit cards as long as I’m not spending frivolously and can pay off the balance each month. The convenience and rewards are worth it. (And remember that failed all-cash experiment last year?)
We save money each month. One of the first things we did as a married couple was build a nice emergency fund. It’s grown over the years, as our family and obligations have expanded. We continue to add to the fund each month, and this helps to ensure that we won’t need to borrow money in the event of a major financial need.
We set aside some money each month for the next car payment. After we paid off our last car loan, I started making monthly deposits for the sole purpose of buying a new car with cash in four to five years. We may need to draw some money out of our savings account to complete the purchase, but we definitely won’t need to take out a loan to buy the car.
We use the debt snowball method. I love the debt snowball. Ours has grown a lot over the years, and will now be used to pay off the mortgage. A portion of every regular increase in income (i.e., salary raises) and decrease in expenses (e.g., lower insurance premiums) has gone toward the debt snowball. Our nearly decade-old snowball is now big enough that we will be able to pay off our mortgage in about six years. I can’t wait for that day!
Previously: How I’m paying off my student loans