How much debt have you paid off?:
$26,000 - Student loan #1
$11,000 - Student loan #2
$256,000 - Home #1 - a one-bedroom home that we extended to a two-bedroom, two-bathroom home ($130,000)
$470,000 - Home #2 - a one-bedroom apartment
What was it for?: Student loans and mortgage debt
From deciding to become debt free to making the last payment, how long did it take you?: 12 years
What age did you take on your first debt, and how old are you now?: Student loan at 19 years old. I’m now aged 51.
Did you do it alone or as a family?: My partner was on board. I was the driver and motivator; my partner came along for the ride most of the time ;)
Did you pay off debt from your regular income, take on extra work, or change jobs to speed it up?: Yes, it was from our regular income. But we also accepted two one-year contract opportunities that required us to sacrifice our urban life by moving to rural NZ. This meant increasing savings opportunities and the ability to rent out our home back in urban NZ. Both of these opportunities significantly boosted our ability to pay down debt.
Did you sell anything or receive cash gifts to contribute towards your debt payoff?: We recently sold home #1, releasing money to pay off home #2 (the apartment). And more recently, buying home #3 (another apartment). This strategy was a hard emotional one as home #1 was where our hearts were, BUT nothing is forever, and by selling, we could pay down our debt and buy a smaller place that is still in the area we love.
What people, books, websites, podcasts, budgeting tools, debt trackers and resources helped you?:
In the past:
Mary Holm - her books and also her website
Vicki Robin book - Your Money or Your Life
Mr. Money Mustache blog
Scott Pape book - The Barefoot Investor
Simple Savings website
More recently:
Bille Perkins book - Die With Zero. Parts of the book's first half, particularly, got us thinking. In other parts, not so much.
Did you keep an emergency fund while you paid off debt? If so, how much?: Yes, $30,000. This was used to offset the mortgage whilst also being available should we need it.
Did you have any setbacks along the way, and how did you overcome them?: My partner returned to study for three years, meaning we survived on one income during that period. We were very disciplined, living off the smell of an oily rag. The Simple Savings blog helped. My partner's parents both passed away a year apart, requiring two unplanned trips to Europe. We used our emergency fund. Our only car was written off, and our emergency fund and insurance enabled us to buy another car with cash.
What tips/hacks could you share?: Think outside of the box. Don't accept the dominant social narrative of how you are supposed to live and finance your life. Challenge the status quo and dare to do things a bit differently. Nothing is forever, and sometimes you must take a leap of faith that will for sure go against 'the norm'. Trust yourself.
Was there a structure to your debt payoff? i.e. paying smallest to largest, or highest interest rate to lowest?: Taking advantage of BNZ's total money mortgage structure. Only ever paying bills and invoices on the due date and offsetting our emergency fund. Always, always paying our Visa in full. When the exchange rate was in my favour, I used pounds to pay off my $26,000 student loan. Interest-free student loans didn't exist 'in my day'.
How did you stay motivated, and what was the most challenging part of paying off your debt?: My internal motivator was initially around beating the bank and staying one step ahead of them. We were always ready to negotiate interest rates etc. We did fall off the wagon a few times and for a few months, but thankfully we always managed to get ourselves back on track. We used the strategy of delayed gratification. We didn't go without; we just saved up so as not to feel resentful about the process.
How did you celebrate making your final payment?: Our final, final, payment will be on the 5th of December 2022. Then on the 22 December, we start a year's leave to spend time with whānau in Europe. This has always been the ultimate goal, to be able to enjoy life's adventures, people, cultures and ways of life whilst we are still healthy and relatively young.
Was getting out of debt worth it, and what have you learned about yourself?: Totally worth it so that I can be quietly rebellious. All my reading, thinking, and questioning of the dominant social narrative has paid off. We now get to choose whether to work or not and whether we allow other opportunities to come our way. It's exciting!
Will you ever go back into debt again?: Hopefully, no!