How We Paid Off Debt

Mar 21, 2012 by

Except for what’s been accumulated on our credit card accounts during the current billing period, we have no debt. I hope that doesn’t make anyone resent us. I might deserve your disdain, but leave my wife out of this, would you?

What’s Worked for Us

I’ve been thinking about what we’ve done and what’s happened in our lives that’s allowed us now to be debt-free. You might be somewhat surprised by the list (in order of my judgment of importance):

  1. We have no kids. I should say we didn’t choose to forgo kids as a way to save money, though they are costly little buggers. I think the latest estimates are something like a quarter million dollars to raise a middle-class kid to age 18. So that doesn’t include college. Or all the food Johnny will eat when he moves back home after college through age 34.
  2. We haven’t done anything exceptionally stupid. We’ve avoided scams, we haven’t lent money, (except through Prosper—a mistake in my case), we haven’t bought fancy cars or houses with lots more space and amenities than we want or need, we haven’t let greed draw us into making bad investments (though we’ve certainly lost money on some), and we don’t indulge expensive habits, hobbies, or recreations like smoking, gambling, yachting, or day-trading.
  3. We’re cheap. Even before we met, my wife and I always aimed to live well below our means and pinch every penny. I’ve seen friends’ eyes roll when I clarify with the waitress before ordering whether the 75-cent iced tea is included in the “special,” and I once had to excuse myself for a moment from a friendly poker game because I’d lost $1.65 on a good hand. As for my wife, her day is made when we find a piece of meat drastically marked down because it’s within minutes of passing the expiration date. “Rotten meat dinner tonight” I say, yummm.
  4. We’ve always resisted—sometimes for many years—adding a new cost. Another way to describe this component is that we try to keep things simple. We were among the last people I know to get cell phones and cable television, succumbing just three years ago. PVRs, Netflix, HD, TiVo, unlimited texting, satellite radio? Not even on our radar. Understand, I’m not a Luddite, and I’m not saying I wouldn’t enjoy these technologies and services; I just so far have preferred to have the money they cost in my bank account. And I can’t think of a single instance when we added a cost to our lives and then I thought: “Wow, this [service or product] is great, I wish we’d done this long ago!” I finally got a cell only because a Skype subscription would allow us to ditch our landline. But I don’t have a smartphone, and I have to say I’m stunned by how much people spend to run an iPhone. Don’t get me wrong, I know it’s a very handy and lovely device, and I’m sure I’d enjoy owning one and probably will someday. But still… see #3 above. I know very well that once we take on such costs, we’ll never get rid of them. So we dig in our heels and resist, resist, resist. Also, I take as a personal challenge to come up with ways to cut each year our necessary expenses like utilities, insurance, gasoline, and groceries. (And it’s not just about buying nearly expired food.) For example, I’m plotting now to terminate our outrageously costly cable service that offers mostly garbage in favor of purely on-line content. I think we’ll save money, and I know we’ll get better programming.
  5. We track spending. We’ve made a budget and aimed to track every dollar we spend for the past 15 years. I agree with the adage that you can’t control what you don’t measure.

I suspect some will shake their heads reading the above and wonder: Wow, these people must have mighty dull, deprived lives!

I’m not recommending our lifestyle to anyone; each of us has to set our own priorities, and I respect others’ choices. I’m merely reporting how I think we got to where we are, which is: Middle-aged, working for money only part-time, living in an idyllic setting, financially secure, relaxed, and appreciating lots of “sunshine time” (a term coined by a good friend who, frustrated by being confined to an office on beautiful days, set his sights on early retirement from paid employment and reached his goal at age 41).

For Us: Spending, not Earning

We’ve never had a huge household income or investments that performed spectacularly. We’ve made progress mostly by controlling spending and avoiding lifestyle inflation, not by earning big bucks.

What About You?

What are the keys in your life that have made possible paying down debt? Is your goal to be debt-free? Do you have a timeline?

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