The idea of completely getting out of debt takes some getting used to. After all, most of us “need” to carry mortgages and car payments. If we want to go to college, we have to take out loans. Many of us struggle with credit card debt just to cover the necessities.
As a family, we made a decision that we wouldn’t carry any debt that wasn’t necessary. Now, after Financial Peace University, we have learned that no debt is really necessary. That is quite an adjustment.
I look around at all of the things that we would like to have, a family vacation, real furniture, landscaping plants, more lessons and activities for the kids. Getting those things now would require us to go into debt, or at least continue with the debt that we have.
For example, we got a nice little check from the IRS as a tax return. Normally, we try to calculate our withholding pretty closely to avoid accidentally “lending” our money to the government, but we did better than we thought this year and had a return.
It was really tempting to use that money to make a purchase for one of the many different things on our list. Instead, that money is going straight into the mortgage. Previously, I might have seen that as a waste because we don’t get to see anything from it. There was no obvious benefit. But, now I know better. We get so much more long term by paying what we owe early.
A couple of nights ago as we were getting the kids to bed, the phone rang. My husband brought it over to me and put it on speakerphone. It was an automated message congratulating us on closing out our car loan and giving us instruction on claiming the title. We did a little happy dance.
We now own our own car; the bank no longer has a claim. I’m going to frame that title once it come to remind us to keep going with the same intensity. Our gain: we are now making an extra $60 a month in income that was previously being paid in interest on the car.
The other change in attitude is working toward our debt free goals with intensity. There is no feeling of sacrifice if we don’t go out to eat more than twice a month or if we take on extra work to see a bigger paycheck at the end of the month. We know that some hard work now will lead to a much easier life later. For a while, we can definitely live off of the excitement of paying of a car loan that we thought we were stuck with until we needed to replace the car and go into another loan.
Our next goals include paying off the $25,000 second mortgage that we took out for essential repairs to our fixer-upper home, and then establishing 3-6 months of living expenses.