Debt Free Kiwi #38

How much debt have you paid off?: Probably about $340,000 over time. Mostly student loans, a mortgage and small credit card debts and Hire Purchases taken on early in life.

What was it for?: A house, some travel, Polytechnic study, one stereo and one scanner.

From deciding to become debt free to making the last payment, how long did it take you?: My student loan I probably cleared in about nine years, our mortgage we paid of in about eight years.

What age did you take on your first debt, and how old are you now?: I took on my first debt at age 18 and I am 48 now.

Did you do it alone or as a family?: As a family. My partner and I have been together for 27 years.

Did you pay off debt from your regular income, take on extra work, or change jobs to speed it up?: Regular income

Did you sell anything or receive cash gifts to contribute towards your debt payoff?: No

What people, books, websites, podcasts, budgeting tools, debt trackers and resources helped you?: I was into Mr. Money Mustache a decade or so ago. I read Rich Dad Poor Dad in the late 90s.

Did you keep an emergency fund while you paid off debt? If so, how much?: Yes, in various forms. For a while we had a revolving mortgage, and then after that cash savings. It's a bit hard to say how much, especially recently as we tend to budget for expenditure over very long terms. About three years ago we set up a system to track what we are "saving for" in terms of various budgets like a trip, or a new car, a major home improvement or a rainy day saving. Based on this we hold about ten months worth of cash in a term deposit.

Did you have any setbacks along the way, and how did you overcome them?: Yes, we had an initial plan to pay off the mortgage in five years, and then in the first year a relative overseas died and we had to travel, so we re-baselined our plan. We have had life hurdles but have been fortunate to be able to absorb these within the resources we had available.

What tips/hacks could you share?: I have a spreadsheet that I have been using since 2007 which tracks (almost) every expenditure we have against our various budgets. We re-baseline our budget every year. At any given time we can tell if we are under or over budget on any given area of spending, like food, and if we are saving enough to pay an annual bill like House Insurance. Also don't trust banks to calculate compounding or revolving mortgage values correctly. Always double check their math if you can. Years ago we received a decent credit from Kiwibank because they got it wrong.

Was there a structure to your debt payoff? i.e. paying smallest to largest, or highest interest rate to lowest?: I let the student loan pay itself through deductions. The mortgage was our only real debt and we used a couple of different structures to help us minimize interest payments.

How did you stay motivated, and what was the most challenging part of paying off your debt?: We both felt very uneasy about being in debt because we didn't (still don't) feel secure in our work / what the future might bring. We wanted to be able to walk away from our jobs / be made redundant if needed.

How did you celebrate making your final payment?: Most likely we went out for Thai food. Getting the bank to recognise that we had in fact paid off our mortgage wasn't as straight forward as we thought.

Was getting out of debt worth it, and what have you learned about yourself?: Yes absolutely. Being debt free is one of the corner stones of our existence. We know we don't live the lifestyle of many of our peers. But we are OK with that (mostly).

Will you ever go back into debt again?: No.

Debt Free Kiwi #37