Episode-438- What Debt Freedom Means

Yesterday I made my second large purchase of the year, a 2005 F-350 Diesel Super Duty I got for 30% under its Kelly Blue Book Value, I paid cash.  Earlier this year I bought a new RV (a Shamrock 21ss) I also paid cash.  I almost feel guilty about this but it got me thinking, 8 years ago my wife and I sate down face in hands looking at over 25K in credit card debt, medical bills (which grew before they shrank) and more.

We thought “how did we let this happen”, we thought about just letting things keep going and paying a “little bit more” on a few debts.  Our income was great, our house payment was low, it would all be okay, a meeting with a “financial liar” confirmed it wold be fine.  The liar even suggested we take out some home equity since we had so much if we were worried about low cash reserves.

In my head the wisdom of my grandmother screamed out over the words of this clown who had the arrogance to claim he understood money.  My wife and I began a journey, one many of you have followed as well.  I have discussed he journey and the how and why behind it, yet until today I have never discussed the freedom that lies on the other side.

In January I walked away from a six figure salary to do TSP full time.  It was a hard choice but we had paid all debt by that point and began saving money heavily.  We jumped from stocks before the crash and had not taken the hit.  Something totally unexpected occurred though, despite a massive reduction in my income, we actually seem to now have more money.

I have started to really understand why this is the case and a lot of your “post debt” emails took on a new meaning for me as of yesterday.  So today while I will talk a bit about debt, I am going to talk far more about what completing the journey will mean.  If you are going fight a difficult battle you need to realize what victory will mean.

Resources for today’s show…

Remember to comment, chime in and tell us your thoughts, this podcast is one man’s opinion, not a lecture or sermon. Also please enter our listener appreciation contest and help spread the word about our show. Also remember you can call in your questions and comments to 866-65-THINK and you might hear yourself on the air.

Please Comment with Your Debt Stories Today!  – I want success stories, your stories about where you are on your journey and anything and everything in between.  Note – If you are a spammer that wants to plug some debt help bullshit, don’t bother posting.

37 Responses to Episode-438- What Debt Freedom Means

  1. Sometimes it can be a challenge to explain what financial freedom really is like. I compare it to discussions I have with Chinese nationals about what the US is like. If you haven’t ever experienced something it is hard to visualize and many Americans have been in debt virtually since they moved out of their parent’s home.

    The debt industry pumps their drug and so many parents are “helping build credit” by getting their kids credit cards in high school – of course Chase loves to make sure nobody escapes without one.

  2. Wonderful show, Jack. At your request, I’ll share a little of our story… back about 15 yrs or so ago, we got involved in a MLM business. Now, we got sick of the constant recruiting, but even more sick of the deception about how the money was made on the backs of all the newcomers… that’s another story. But… we did get the message then that debt was to be avoided if we wanted true financial security. So… we never again financed an automobile — always paid cash. We never charged more on credit cards than we could pay at the end of the month (I know this wasn’t the best alternative, but it’s the one we took). The only debt we had was on a mortgage (and occasionally on land investments).

    We’re now in the process of moving on to the next level. Our attitude about the type of home we want and the mortgage itself has even changed in the past 1 1/2 yr (since listening to the podcast). We are going to sell this albatross (our current big home in a neighborhood with an HOA) and buy a home we can pay for with cash and not owe anyone anything, anymore! We look forward to that feeling of freedom you describe, even though we aren’t there yet.

    Thanks for helping us move farther along the road, Jack.

  3. Brian Norton

    Jack-

    Great show. No problem ever with using my name.

    We have been walking your debt free path for about 5 years now, and are we HAPPY!

    About 7 years ago we were expecting the 1st of our 3 beautiful daughters. I just got a nice bump to become a Regional Sales Manager at ConAgra (yes they are evil)and my wife was advancing very rapidly at Nordstrom. We were always frugal with large ticket items (bought the cheapest house in a great neighborhood, only bought 1 \"new\" car ever. Every year we were making about 20-30K more than we did the year before and somehow there was no accumulation in the savings account, just stuff.

    Starting a family was what got us to evaluate what the hell we were doing/thinking. Since we wanted to raise our kids ourselves my wife quit her corp. job to be a full time mom. I changed jobs to work for a smaller start up and sell a product I actually liked and believed in. We took about a 40% pay cut.

    At this point, we just needed to cut out our high end vacations etc… and the budget kept rolling debt and all. We kept on betting I\’d get raises and bonuses and it all worked – with NO room for error. We were lucky and I was good (at selling).

    2 years later baby\’s 2 and 3 came as a package deal. I was still travelling a bunch, and after a year with 3 under 3 and my wife single handed at home, we needed help. The only way to afford help was a reduction in expenses.

    About this time we went to a Dave Ramsey live event. We got it and set about to kill the debt (and quit generating new debt), so all our income could be used to build a future for us and the girls.

    We sold 2 cars, and everything else of value that I could find a buyer for on e-bay. With the savings on the car payments and insurance, we could afford a nanny to help while I traveled.

    Then the next revelation, if I did the same basic sales gig with WAY less travel, no need for outside help. I found another great sales job that I could work 1/2 the hours for 75% of the pay. We opted for another pay cut, on purpose, because now we had no real debt, our mortgage was 1/5th my monthly take home, and we were starting to accumulate some significant savings.

    By getting out of debt, we were in a position to make decisions about what we wanted to do, not what we had to do. My old boss, who I\’m still great friends with, said it was a hell of a lot harder to manage me (his #1 producer) because he knew that any day, of my choosing, I could decide not to work there anymore – and he is right.

    Long story short, by us consciously destroying our debt, and spending every penny- on paper- on purpose EVERY month,we were able to create FREEDOM for ourselves and TIME to spend with our kids.

    The folks that give you grief over doing shows on debt just don\’t get it yet. There is no true freedom when you HAVE to work to make a payment. Killing debt is exactly as your tag line reads, helps you live a BETTER life, if times get tough, or even if they don\’t.

    Cheers!

  4. Jack, I normally download your podcast, hook my mp3 to a little set of external speakers and do my housework as I listen in. Today, I stopped, sat down and took some time to fully absorb the message.

    There’s no way I could tell my whole story without causing WordPress to explode.. so I’ll try to give the abbreviated version.

    My husband and I had finally gotten our dream home and property. We had 40 acres secluded in a rural community, had begun to plant a pecan orchard, designed and built our home (doing most of the work ourselves) – and best of all, the house was paid for. We still owed a small amount on our land, but we were on our way to financial independence. We already had the dream of adding solar and wind power, which would have worked great in our location — and we had designed to house for that very purpose.

    As fate would have it, terrorists decided to hijack some planes and fly them into U.S. buildings. My husband’s job was directly tied to the airline industry, so when 9/11 occurred, airlines began to lose money.. they began to cancel orders for devices like airline ticket printers and bag/tag printers, and along with his other work companions, my husband found himself out of a job.

    We tried to hold on to the farm, but knew that if we didn’t find suitable work, we could lose our place. Rather than let that happen, we put together a plan. We decided just how much time we had to look locally for work, and if it didn’t work out, plan B was to sell the farm and move to another place with more opportunities. Technical jobs were scarce, so we did end up selling our farm and moving to North Texas.

    It was really hard. We left our friends, our families, and most of all, our dreams. How could we have worked so hard and then be forced to walk away from it all? I think that was the point where we realized that even though we had made huge strides in eliminating debt, we had not done enough to make it possible to sustain our farm in the event of this type of crisis.

    I was the first to find work, so I moved up here a few weeks ahead of my family. It was the first time I’d ever been alone. My husband stayed behind and sold the house, but once he joined me, it took another year (and a career change) to find a job.

    We were able to buy some more land, build a new home, and even do a lot of things that we weren’t able to do at our old place. We incurred some debt along the way, and are now working to rid ourselves of it. We have no car payments, we just paid off our credit cards, and are now turning our attention back to the things that we had worked toward almost 10 years ago.. it was quite a setback to say the least.

    What we have taken from this experience is something that I’ve heard you talk about in the past, and I always just nod my head in agreement .. a “disaster” doesn’t have to be a meteor falling from the sky.. it can be as simple as a plant closure that leaves you without a job. I’ve also learned the difference between “wants” and “needs”. When Robert lost his job, the first line of business was to cut off all unnecessary expenses. That included things like magazine subscriptions, cable television, etc.. We never picked those subscriptions back up and we still do not have cable. YES, my kids sometimes complain (now that they’ve visited other people’s homes and realize that there are more than 3 channels… LOL) but we spend a lot less time in front of the tube and more time working/playing outside.

    And that’s my short story.. aren’t you glad I didn’t go with the LONG one??

  5. Rob McDonough

    Thanks Jack for the great show! I notice your Arkansas accent while you were speaking and never heard it before – anyway, sounds awesome!

  6. Jack,

    I agree with everything you have said regarding debt. The times I have been in debt I quickly get out of it just because I hate how it makes me feel. I am one of those individuals who has stayed pretty much debt free all of my life (35 years). I may have lived a different then others but I feel I have a wealth of experiences without spending a lot of money. I stayed in my hometown to get my Bachelors Degree (I received scholarships that barely paid for tuition and books for most of the 4 years). I shared a house with other fraternity brothers and kept my expenses under $300 a month because that is pretty much what I earned in my part time job. I had no car and didn’t take the extravagant spring break vacations but I had fun. After college eventually I went into the Coast Guard. At my duty station I bought a $750 pickup with some rust (I could see the road under my feet) but ran like a champ. It that lasted for my tour in Kodiak, Alaska and survived a trip down the ALCAN. In Honolulu, Hawaii with the CG I went through another couple of junkers, which were just bad buys, and finally bought a used car with a loan (still have it 10 years later). After divorce.. (longer story)…paid off the car, got out of the CG and went to grad school in Boulder, Colorado. The TA job and GI bill didn’t make me a poor grad student. I also saved money by sharing a house with a couple of working professionals. Now working I am working for NOAA. I bought an almost new truck last year and paid off the 3 year loan for 1/3 of the truck in 7 months. It is nice to be debt free. I feel it has given me the freedom to start over in during different times in my life without worrying about the bills. I only have to worry about how I am going to get through the next month. Of course I have a family now which changes a few things. I don’t have the six figure job to completely secure my financial future but I feel but I think having no debt is better than having a big 401k or retirement savings (even though I have some) and still have debt. I already have enough for a decent down payment on a house. Unfortunately I get transferred around with my job every two or three years so it is hard to make the house or land purchase I would like. I have thought about buying and hoping to sell later so I could at least live rent free but right now I am glad I didn’t because of what has happened with housing here in Florida. I think once I am settled (not sure where yet) a house or land is the only thing I will go in debt for again ( or maybe have enough to pay in cash). Thanks for all you do. I hope my story wasn’t too long or boring.

  7. robertdseals

    Hello Jack,
    Here’s my story. I’m married with two kids (15 & 10) and we are in debt. My wife is in charge of the money, but truth be told, I should be doing more to control the spending and saving. My wife isn’t really on-board with the modern survival but I’ve started a raised bed and am looking into some solar heating. I’m going to start doing a little savings and I hope to build from there. Thanks again for the show.

  8. robertdseals

    P.S. Looking at my post I think it painted my wife in a little bit of a negative light, so I want to make it clear that she is the love of my life and the best thing that’s ever happened to me!

  9. Very inspiring Jack. You\’re awesome!

    We have 3 credit cards almost maxed out, AND a heloc…Just short sold our home to reduce expenses, it is still hard but at least we have more choices now with what to do with our money.

    Right now financial goal number 1 is to STOP digging the hole bigger. Will be doing happy dance when have a month we don\’t dip into credit cards.

    You are exactly right about the withdrawals and the depressing feeling that comes when you tell yourself NO to something you want to buy very badly. But it\’s better than the feeling of going through your statements and kicking yourself for poor choices. The good feeling is when you get past those withdrawals and get happy with what you have, or even get rid of some of your crap.

    I have found that decluttering my house is one of the best cures for those withdrawals. And listening to good stuff like this podcast :)

    Good luck to all ya\’ll who are also trying to get out of debt.

  10. My Fiance and I just purchased our first home. We got a 30yr fixed @ 5.25%. We went in with 20% down. I’m 30, and luckily I don’t have that much debt right now. 1,500 on a CC, and 14K owed on a car. I’m going to push myself harder on paying off the card so I can roll that money to the car, then to the house. My fiance has about 25K in student loan debt, but she is still in college, so that’s off the table for the time being. I want to look forward in my life not being a slave to debt, and hopefully by 40 have everything paid off. At 172K owed on the house, not a HUGE task, but a daunting one for now… gonna start small and work forward….

  11. Jack – Your show was exactly what I needed to hear today. I especially like the part about knowing what to do when your finally out of debt. When I married my husband he was 12 years my senior (37 years old) and about to retire as an E-8 from the Navy.He had spent his life, and all his money on toys and fun and had no savings and a ton of debt which I didn’t learn about until we were married and I was expecting our first child! Anyway, we ended up filing bankruptcy and were completely out of debt. My husband retired and we moved across country twice in 1 year for new jobs. He started making good money so we bought a new vehicle and a home at the top of the market then got a HELOC on top of that. To make things worse we got credit cards and racked up even more. I felt awful. My husband accepts it as always going to be this way but I am a fighter! He put me in charge of the money and now are just a few months away to having the credit cards paid and then we are going to fix up the house and try to sell it next spring so we can get a rural property and live beneath our means. I’d like us to be debt free by the time he is 50 so we can start planning for our retirement and our boys’ future. This time there is a plan for what to do when ALL that money comes rollin’ in! We don’t have to be another face in the crowd…we want to be weird!

  12. I’ve told a bit of my story here: http://thesurvivalpodcast.com/forum/index.php?topic=89.msg98792#msg98792

    Interestingly the only debt we have is the “death grip” of mortgage and basic living expenses, though a single income providing for 6 people certainly has us “firing on all cylinders”. The battle we’re in the middle of is for time and freedom. A big part of that is finding a way to turn my art business into something sustainable, and making the other work remote.

    We’re still plotting our escape route, but it’s getting closer…

    … for instance, last year I couldn’t have done gardening during my lunch hour – this year I can!

    Great show Jack.

  13. rockinstroll

    Great show…great responses, too. I got a flyer from my mortgage company, reminding me of some “options” available to me. Do a cash out refi, refi to a 30 year (I already have a 15 year, wtf?), or use all my equity to buy a new, more expensive house. There wasn’t one option there to help me kill the mortgage! Thanks to the Survival Podcast, I know now these types of reminders are all just part of the banking scheme and none of these options will help me to be free. Thank you, Jack, and everyone that makes suggestions and just shares their story.

  14. I was really fortunate in that I had my mom and 2 older sisters as examples. They have all been working on paying off credit card and student loan debts for years. I decided I wasn’t going to do that so as soon as I graduated I got rid of my student loans ASAP. I lived on the cheap and got $20k paid off in less than 3 years.

    3 years later and now I’m 28. I bought a 2010 model truck with cash 6 months ago. About a month ago I was asked to do something at work that I thought was wrong so I quit. I don’t have another job yet but I’m not worried. I don’t have many bills and I’ve got over 6 months worth of cash on hand to give me time to find a job where I can actually feel good about what I’m doing.

  15. great stories everyone, and thanks for another great show Jack. i’m so close to being debt free, (except for the mortgage), i can almost taste it. just 15 days from now and my wife and i will have paid off the last little $370 of about $27,500.00 worth of debt. it’s killing me being so close. time seems to be standing still.

  16. I have been pretty debt free most of my life mostly due to my life being lived paycheck to paycheck. Recently quit a good paying job to move to MO. Bought a modest home in a small community after the market tanked with what little savings I had managed to accumulate. I would still be stuck at the job I hated in the death trap city if I had been mired in debt.

    The one thing that always strike me as funny is people’s reactions when I tell them I have never had a credit card in my life. They always ask how do you survive? My response is always the same; Credit cards are the modern day slave trade.

  17. Jack-
    What an awesome show. I still get caught off-guard when I hear my (our) song in the bumpers ;)

    I can tell you right now that I would not have been able to start Revolution Rock and Roll if I was not debt free. When I came up with the idea, I knew I would have to invest some cash to upgrade my studio, pay hosting fees, etc… But honestly, I didn’t think twice about it. Five years ago, I might have whipped out the old Visa and gone to town thinking I was “investing” in a business. But look at the path that takes you down! You start your business IN DEBT. Then, you feel undue pressure to generate revenue which can lead to poor decisions. Because I started this thing with no debt, I was able to open my mind up and think about giving some of it away. Now, I am much more exited to write the first donation check than to take any profits for myself.

    A word of hope to folks just starting down the debt-free path. Be on the lookout for more subtle changes than a lower monthly debt obligation.

    One thing that happened to us when we started telling family and friends what we were doing was the community around us came together in support of our decision. I sold my truck which had a payment and paid cash for a “beater” vehicle. When our in-laws saw me driving this thing, they offered to GIVE us my wife’s grandmother’s car that was sitting in a driveway with 60K miles and had not been driven in a year. They were going to sell it. I am sure that this opportunity for a “free car” would not have come about had we not taken the first step. Other famliy and friends helped out along the way and we were able to clear our debt (except for our house) in less than two years.

    It truly is a great feeling. I can start a podcast or a business. I can get laid off from my job and take my time looking for another one without too much stress because I have an emergency fund.

    I see being debt-free as true freedom in our society. It is a necessity for survival. Like Dave says “You need to live like no-one else so you can live like no-one else!”

  18. Jack,
    I’ve been debt free for 2 months and it is great. Your show has built on an inborn knowledge that debt is slavery. I own a great house in Austin, 3 cars paid for (2 of them old, but still work great), and now am executing a plan on how to spend our excess cash.

    First, I work as a strategist at a big company. The future is unknown and we must plan for a wide range of possible futures. In business, as well as life, we limit risk by eliminating debt, which allows us to choose from a wider set of options. Being debt free opens up the paths we can choose.

    We are working on three paths now. 1) Investing for income generation outside of the volatile stock/bond markets, 2) Reducing expenses through energy efficiency, and 3) Searching for a retreat location.

    Thanks for your great advice. You are making an intergenerational impact as I am teaching my 4 children the same principles you hold dear.
    Thank you

  19. I graduated college with about $14,000 in student loans and about $13,000 in credit card debt. I went into a field that I enjoyed, but it didn’t make a lot of money. I spent ten years making minimum payments on everything and I was not able to make a dent in the debt because there was no slack in my budget. The credit card companies knew that they had me and jacked my rates up to the max. I borrowed $4000 from my retirement account and paid off the smallest bill. Then I used balance transfers and calls to my credit card companies to lower my rates. Once I was able to pay more than minimum, I could get a better rate. I used the snowball method of paying off the lowest balance first to create more slack in the budget. I paid off my cards in about 3 years and killed the student loans in about 2 years. The rate that I could pay really accelerated toward the end and I was making $500 extra payments on the student loans each month. I got out of debt about 4 years ago. I went through a layoff about a year after getting out of debt and it made the situation a lot less stressful. Now I am experiencing the same situation that Jack was discussing. I’m not making that much more money but I get to keep most of it. I am currently spending a lot on preps and long term purchases that will help me if we go through a prolonged depression or hyper inflation. I still use credit cards but I pay the balance each month.

  20. Jack,

    Love shows like this. Next paycheck, I will have paid off my credit cards!!! I had almost 4000$ and growing on them, and I knew I had to get it under control before it became hopeless. I bought my first house this past year, and with the 8000$ new buyer tax credit, I was able to knock out most of the credit cards, and pay back the 55000$ I was loaned on the downpayment. (If any, this year was the year to buy a house for the first time.) I got a KILLER deal on my house, and now I have that debt, but I feel it is worth it. I do need a new car, but I won\’t be buying one until I got at least 3 or 4 grand in the bank to buy a nice used one. No more will I be financing my buys with those dreaded credit cards.

  21. Jack,

    My GF and I are working through our debt right now. We’ve been at it since the end of Dec. and have paid off just over $4500. Every Tues. and Wed. I drive 45min to pick up my daughter from school. With the long drive I made a habit of listening to talk radio and tuned into Dave Ramsey. What we was say made alot of sense when it came to debt. About the same time Glenn Beck was talking about the need to become debt free. One comment from him made all the difference. He was quoting the bible and said “The borrower is slave to the lender”. Tha quote has changed our lives.

    By Dec 9th we will be FULLY out of debt. Along the path we will have paid off over $15000. The feeling that we already have with paying off 5 smaller debts is amazing. Without question, having financial peace is one of the keys to living truely self-sufficent

  22. Jack,

    First of all thanks for what you do. I’ve only be listening for about 2 months now but your podcasts have been a huge inspiration to me. My wife and I are at the beginning of our quest to become debt free. We have cc, 2 vehicles, student loans, medical bills, and a mortgage. I’m not going to give the damage but its a lot. Very overwhelming at times when we think about how it is we got to this point. We just try to stay positive, stay focused, and continue working hard to reach our goal. We’ve finally realized that the first step to freedom is becoming debt free. All the other things have to wait. Just thinking about the day when we finally pay off our cc, medical bills, and vehicles (leaving only students loans and mortgage) gives me inspirations to keep going. The day we reach that milestone will be a wonderful day. Thanks again!

  23. We are saving ~$2,300 per month by paying off our mortgage. We started by paying down a large portion of the mortgage and got our mortgage payment reduced by ~$900 per month. In March, we paid off the remaining balance increasing cashflow another ~$1400 per month. By freeing cashflow, we can now start saving and have the cashflow for unexpected things like the $1100 to replace the refrigerator that died, $600+ in car repair bills, and $800 in HVAC repair bills. In the past, these kinds of unexpected expenses would have required us to borrow or to beg money from family members. It also means I’ve got the cashflow for some more expensive preps – primarily ones that allow energy independence from the grid.

  24. Per Jack’s request at the end of the show – we started with $416,000 fannie mae maximum conforming 30 year fixed mortgage debt five years ago (yes we were dumb and bought near the market peak and spent too damn much and this property is worth $350,000 today down from the $550,000 we spent). 5 years later no mortgage plus a $200,000 second property paid in full. We also paid my wifes MBA loans off in the past 5 years and went from being an armed gun nut to fully prepped in the same period.

    We still have some of my MBA and Phd student loans. Give me some more time and they will be killed off too…

    Cut the waste, kill the debt, and you can get it done for yourself in 3 to 10 years. If two work, dedicate the entire income of one to debt payment and live off the other’s income. Then cut more waste out of the expenses and reallocate the savings to debt payment and preps.

    As an example of stupid waste, I used to drink 7+ soft drinks per day bought in case volumes at Costco. Replacing these with home brewed tea, I save $42 per month or $500 per year. We all have wasted money on stupid things that we don’t need (some of which literally hurt us).

  25. Likewise, when you start down this path, you may find that relatives (especially older wealthier parents / grandparents) become more willing to help you. This was certainly true for us. We got one hand-me-down (free) jeep with 60000 miles on it when one parent bought a new vehicle and got gifts that helped pay down the mortgage.

    Also, we never borrowed for cars or fell for the new car trap.

  26. Brutus R Yates

    I just got done listening to this podcast (may 21 now). we are not debt free yet but we are getting there.

    I’ve worked my way out of $40 to $50k of debt twice in my life and in the past every time I paid off the debt I had new debt with in months. I was buying junk I did not need and soon buying more junk than I had cash for and then ended up in debt again.

    What changed is the second time I paid off debt I got engaged a year later. The soon to be wife was in the middle of a career change from Industrial Engineer with a Masters and CE to Minister. She was looking at my earnings, what her earnings would be and what we each owed. $39,873 in credit card debt, $8,932 in car loans, and $128,450 in student loans. (her BS, Masters of Engineering and Masters of Divinity)

    We realized that after she got out of school, there was no way we could live on what she and I would be making. We had no savings, we hardly had any room left on four credit cards, maxed out two others and an average of $200 in the checking account. While we did not do the face in our hands thing, we did sit there and question our sanity about the idea of getting married.

    At that point my dad stopped by and dropped off two books he had read and wanted us to read: The Richest Man in Babylon and Total Money Makeover. I took one and she took the other and we both kept telling each other \"You have to read this!\" and \"I want to do this!\"

    This was in 2004. Since then, she graduated, got ordained, and after a year of looking she found a church in another state. we have gotten our debt down to $0 for car payments, less than $7k for credit card debt, keep close to $1,500 in savings for emergencies, have had two kids with a third on the way, covered the cost of a move to a new place, are sending me to college with out student loans, and have her loans down to $101k.

    It has not been easy. I have to work part time in the school year and then only overnight 12 hr shifts. I had to give up my addiction (comic books) she had to give up her\’s (on demand movies). we did the debt snowball thing, cut out soda\’s, eating out all the time, movies, buying books, did not get a new car when we paid off the old one, scrimped and saved.

    We did not have everything go to plan. We had a kid we did not plan to have so soon after getting married while she was at school. (more bills) It took longer to find a church than we planned. Three times we had to pay the minimum on the debt to replenish the emergency fund. Moving cost more than expected. Her \"self-employment\" taxes were a new concept to us and did not get budgeted at first. Serious big shock!

    We still budgeted for family vacations, we just save a little cash each month for a year and make sure we don\’t touch the savings!

    It has not been easy. But knowing that we were writing checks each month of $643 just to cover the interest motivated me. She was motivated by the knowledge that we were looking at a 40% pay cut in two or three years, and now she wants to get that remaining $370 a month that goes to the last non-student loan debt so we can start really saving!

    We could pay more if I stopped going to school, did not go out to eat once a month (limit $40 including baby-sitting), did not have a baby now and got rid of our annual vacation. But we are choosing to get me better able to earn more, have another baby and enjoy life a little bit.

    We hope to debt free (not student loans) by this time next year and are very clear about how debt is bad to our kids. I am going to do my best to make sure that our kids don\’t have to pay off debt over and over like I did.

    We are still making little cuts, getting rid of stuff, trying to live a less cluttered life. We are also excited that this is year four going on five with out using credit cards.

  27. No debt other than the house and some investment property.

    I recently climbed out of debt that was due to lack of focus compounded by medical emergencies.

    Zero debt means fewer arguements with the spouse.

    Zero debt means freedom to look forward to savings and investments.

    Zero debt has made even going to work more enjoyable.

    I hope to be in a place within the next year of 12 months of household expenses, an amount equal to my health care deductible, and six months of food and medication stored as well.

  28. J.R. Morelli

    I’m 23 years old and have never had debt, never had a single credit card. I grew up watching my parents stress out over money and as I got older I came to learn that it wasn’t that we didn’t have enough money, it was that we had debt. Without even knowing to think about debt as a cancer I could see as a child growing up how bad debt was. Now that I know more about debt I’m extremely grateful for the state of mind I’ve been blessed to grow up with to never go into debt.

    Here’s cheers to many more years of living free debt! ;)

  29. J.R. Morelli

    Ahh, heh-heh, \"free *of* debt\" that should have said.

    Cheers.

  30. Both my wife and I are students. We have School Loans that are 0 interest until we are done with school. We have money set aside to pay off the loans. So It looks like we have a lot of money when we only have a few thousands if we had to pay off the loans today. We put that money in a CD account it was making around 3% interest which was really nice while it lasted. Now it is only 1%. We are thinking about buying a house. but we don’t know where the market is going to go. and in a few year 3-4 will be done with school. We may need to move to get a job. Any ways glad to be more or less debt free. I wonder if we should go into debt for the house right now. Would we be better off doing it later?

  31. My situation seems pretty dire right now, but I’m focused and determined to dig myself out of the debt pit. I have credit cards, student loans, a mortgage and a car loan that are completely overwhelming. Online reports say that my house is worth about 1/3 of what I owe (I live near Detroit, so no big shock there).

    The podcast is an inspiration and a good source of information (I’ve been listening for about 6 months). My goal: debt free with a retreat location in five years… or less.

    It’s hard to see, but I know it exists.

  32. I got married, and purchased a home, and had a daughter all in the last 2 years. I owe a lot to the show, because as it turns out this all went down as the show started, and continues to grow. My wife and I listen to the show in the car and I know it helps to hear financial talk from someone other than me every once in a while.

    We got married and had a great wedding without going into debt, although we did put 2K or so on the evil card for our honey moon. We purchased a home, but only used one of us to qualify. …what this means, if one of us is without a job we can still pay the mortgage. Thankfully we did this, as shortly after we had our first daughter. Because we had a small amount of debt, and made a reasonable purchase (under 130K) on our home she was able to spend the first 7 months of my daughters life at home, with her.

    We do have some debt, about 6K on a credit card and 2K on a card from a furniture store. Because of this my wife has taken a contract position, and is working her butt off to make money to pay this off.

    The real stinger is out student loans. my wife and I owe about 60K combined for our college education. as soon as we kill our revolving credit we need to kill this beast. we would like to pay it down in 8 years or less. (5 would be ideal).

    We are in a real pickle, the wifes job is in a city 4 hours away from our home. So we are going to have to sell and move. BUT we stayed flexible and we think we can make this happen. She has a great earning potential as she is an exemplary employee. She will climb the ladder and do well very quickly and we wish to take EVERYTHING we have extra to kill our debt.

    In conjunction with this move, I am using this crossroads moment to follow my passion, which is art and photography. I am in process of building my portfolio so I may create a website to showcase my work. The business plan I have in mind puts me as a contributing member to the family income in 12 months or less… and I have a remarkable chance to follow my passion. Because we have some money saved, and we are not tied to a home that is 300K and over valued that we are upside down on, we can stay flexible and make this move.

    it comes with risk, and I sometimes think I should just stay in corporate America and get a job to kill the debt faster instead of taking this opportunity to get my photography business off the ground. I don’t know what to do. Follow my passion, and get to spend time with my daughter instead of shipping her to a day care, or kill the beast? It will die either way, I just know it goes faster with 2 income streams coming in.

  33. 10 minutes ago I Just knocked out the last 2k of a 25k student loan I started working on 2 years ago. Woooo whooooo!! I only make 40k a year and tithe 10% of that! I was gonna only do 1k and wait 2 more weeks to do the last 1k but this show got me more excited about doing it.

  34. YEA JOHN! Congrats! I’ve been so inspired with each update to this thread. It gives me hope that we really can recover as a nation- there is just so much BAD NEWS out there these days, but learning to empower myself and my family to live outside of the ridiculous rat-race we’ve created for ourselves in this country has empowered me in so many ways. Looking forward to reading more success stories and seeing updates to each persons’ situation as they move along their own path of debt recovery.

  35. Rob and John:
    Thanks for sharing your stories, I’m kinda in the same position as you’ve been. I’m just finishing my second year in college and have accumulated $20,000 in student loan debt so far. Since I started listening to this podcast I’ve decided not to take on any more debt and I have started working at a part time job to be able to pay the bills. I may not be able to pay the debt off while still in college(2 years to go), but I’m fairly confident that I’ll be able to pay it off in 2-3 years when I graduate.

    What’s even more awesome is that I’ve talked to my sister about my debt repayment plans and she got so inspired that now she’s thinking about doing the same thing and paying the debt off ASAP. That makes me feel great!

    I’ll probably get a mortgage in the future, and I plan to pay it off as fast as I can.

  36. Two years ago in mid-June I walked out of the DOJ court room having sat with a bankruptcy lawyer and the court trustee. Because of policies of my lender on my house I am spinning my wheels making payments. I have about a week’s pay I can put my hands on and that’s about it. I am working on the journal for the month and will figure out a way to destroy the mortgage. I have about $8K in loans that I will be taking out as well.

  37. Jack, thank you! This episode was needed by not only you; but for myself and my wife to re-invigorate our reasons to get out of debt and what being out of debt means. We’re selling the house and moving across the country to do so (partially); but we needed this episode!
    Before we move (to cut costs) we’re selling unnecessary crap around the house, cutting down on the possessions we have as well. We’ve also realized we (after cutting back as much as we can figure) are sliding backwards financially about $600/month; the reason, we have a house we can’t afford.
    So, thank you for the reminder why debt is a cancer and why this is so important!