Tomorrow is Independence Day in the United States, a time for friends and family to gather and enjoy the early summer. I’m taking a l-o-n-g weekend, and won’t return until Monday. If I’m lucky, I’ll get a chance to play in the sprinkler.
In the meantime, I thought it would be fun to devote a thread to financial success stories. People send me e-mail all the time to say how they’ve taken control of their personal finances. I love to read these tales, and I know that other people do, too. (We even have a section of the forums devoted to them.)
For example, here’s what one long-time reader wrote a few weeks ago:
I paid off a credit card today! At times its balance had been as high as $12K, but with the severance pay from my old job, signing bonus from new job, and various other resources, I paid it off completely today.
The next step is to move the existing balance on my other credit card (about $8K) onto the now-zeroed card at a low balance transfer rate, and then pay down that last balance. It feels really good to have this thing off my back after so long.
Do you have a financial success story to share? Big or small, it doesn’t matter. Tell us about it! You have all weekend to do so. Have a safe and happy fourth, everybody…
This article is about Odds and Ends
I’ll start.
When I paid off my debt six months ago, my big worry was that I was going to simply revert to my old spending habits. I was afraid I’d take my new-found positive cash flow and squander it on videogames and comic books.
I’m proud that I’ve been able to resist this urge. (In fact, as I’ve shared, I may have become too tight a penny-pincher.) I’m a guy who had never saved a penny in his life. “Why don’t you open a savings account?” Kris always used to ask me. “What for?” I’d say. I don’t have anything to save.”
Well, now I have a few thousand dollars saved, and that feels even better than paying off my debt. I can’t wait to save more!
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With tomorrow’s paycheck, I will have reached my 401(k) annual maximum and gotten the full company match for the year.
(I know that messes with dollar-cost averaging a bit to do all the contributions early in the year, but it makes me feel better to get the money in ASAP every year, because I work in a layoff-prone field.)
Onto the 2008 Roth IRA contributions!
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I’ve been debt free for more than 2 years. When I started my site, I just wanted to get out of debt. Now, I’m learning to manage my finances and I’m actually ‘doing’ the things about which I have always dreamed.
Like you, I never saved.. and lived paycheck-to-paycheck. Now, I have an emergency fund, I’m funding.. let’s see… FIVE retirement accounts.. and I’m having a blast writing about personal finance and debt reduction.
JD, your site is awesome, but your story is even ‘awesome-er’. Rock on!
NCN
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I admit I’ve been very lucky. I met (and married) the nicest guy in the world. Between the two of us, we paid off the house mortgage and put $30k into a CD. My mother passed away and I have been paying $100 a month on her life insurance. After expenses, I’ll have another $60k to put into CDs or some other savings account. I have some money in a 503b. We plan on starting a retirement for the husband and my getting a job after quitting a well paying but health deteriorating job.
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I’ve been lucky too. Even though I just got my first steady job nine months ago I have very few expenses–my parents gave me the gift of a college education and a car with no loans whatsoever (through their own saving discipline) and now rent a house to myself and my brother at the bare minimum rent they could reasonably charge (their annual property taxes divided into monthly payments, basically), so my only expenses are utilities, car maintenance, food and whatever I charge up. So far I’ve been able to save about a quarter of what I make, which on my rather small salary has already amounted to almost $6000; just yesterday, thanks to this blog, I opened an account with ING to stop getting stiffed by my bank’s miserly interest rate. Once I make some large purchases I’ve been saving up for (heating oil before prices spike again, new glasses, that sort of thing) I’ll start seriously looking into retirement-savings options.
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This is a not-yet-but-almost-there story. July 2007 had debts of 17K, from 5K left on a car loan and 12K taken to put in replacement windows. In the meantime we had additional expenses among other things of a pet dying (almost 1K) and tooth breaking (1300 for crown). However as of this month we paid all but $3200 of debt. As we have 3K in an emergency fund, it is a feeling of relief that theoretically we could pay off the remainer next month if we choose. However I believe we will take it easy and continue our schedule of paying it off as we have been doing and should have 0 debt before the year is out.
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I’m not completely debt free, but 16 months ago I had $9,000 of credit card debt because of medical bills. Between trying to pay that off and living expenses, my parents have graciously allowed me to live with them for a bit. A friend of mine is an accountant and since I’m terrible with numbers she created a very simple budget for me to use, that helped immensely. My goal was to have the debt down to $2,000 before getting an apartment with my fantastic boyfriend, and as of 7/1 my debt is $1,970. Reading your blog, and a few others, really helped me stay on track and not get back into a ‘voracious consumer’ frame of mind. [my debt was enlarged by shopping, but I find I can't shop and pay down a credit card at the same time]. I also now have an ING savings account, and a great pension plan.
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I am finally credit card, equity line, and student loan debt-free after paying off over $155K plus at least that much in interest! Sheesh! I don’t like to dwell on that interest part. I feared that when it was all done, the experience would be anticlimactic. But, it wasn’t. It was totally amazing! I walked around as if on clouds for days! Just thinking about it makes me feel all light and bubbly inside. Now that I’m addicted to this feeling, I look forward to finally saving some money. Which I know I’ll be able to do b/c of the new frugal habits I adopted to finally get rid of my last $50K in one year, which I wrote about at http://shanelyang.com/2008/04/23/how-i-paid-off-50000-of-debt-in-one-year/
Subscribing to GRS helps me stay on track and keeps me motivated. Thanks, J.D.!
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Five years ago I graduated school with two credit cards carrying debt and two student loans. Last week I paid off the last student loan and now I only have my mortgage to tackle.
I have four months worth of living in my emergency fund, three times that amount in my retirement fund, and twice that amount just sitting around waiting to go into an ING GIC or something.
I’ve recently incorporated a small business in addition to working full time and I’m still pondering what to do with the extra revenue.
The plan is to have the mortgage paid off, RRSPs maxed out, and my new business running well enough to support a semi-retirement in the next five to eight years.
I’ve enjoyed reading your blog, thank you for the tips!
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Mine is another in-the-works story – the $60K in student loans is still there (sigh), but the $10K emergency fund is only two paychecks away from completion. After growing up with very little money and parents who never had any savings account, seeing that kind of a balance in our emergency fund makes me want to cry. I can’t believe it took me until my 30′s to understand how good “money in the bank” feels.
After the EF is funded, the extra money that was going to it will be redirected to the car payment, paying it off by year end. After that, the student loans and after that…those Roth IRAs and 401(k)s are going to be bloated!
But best of all, all of the credit card debt is GONE! (As are the accounts themselves.) That debt hung over the early years of our marriage, and it’s just heaven to have it paid off. I can only imagine what it will feel like when ALL the debt is gone!
Thanks, J.D. – I had taken a few baby steps before I found your site, but you’ve really helped a lot!
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I have been working on my debt for awhile, but not until this year did I really start working hard on it.
My wife and I got married last year and after going through a financial class at church we decided it was time to work hard on it. I had accrued over $14,000 in credit card debt from school bills and had it down to $9,000 the first of the year. I am proud to say that we cut a lot of corners and ate lots of hungry man meals and taco bell in order to say that last week we paid off the credit card completely. Needless to say, we are extremely excited.
But now we have a dilemma as to what to do next. We have furniture that will get paid off the end of next month, and we are looking at having a baby here in the next couple of years as well. We just bought a house last year, so we are early in our mortgage and I think it is the right time to start paying it off so we can get to the principal quicker instead of paying toward the interest. But we only have $1,000 in savings right now. So it is just a question of what is next. Ideas? Oh yeah, and we have a single car payment on a car that has $13,000 left on it.
Any guidance would be appreciated.
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Thanks to everyone for sharing; this is just the sort of inspiration I need to keep going.
My husband and I started our war against debt 2 and 1/2 years ago just before we were married. We started with $42,000 in student loans, $8,000 in Credit Card Debt, and 2 car payments. We paid off the credit card debt 10 months ago, paid off the first car last month, the first $25k student loan is on the chopping block for December of this year and the second will follow in August of next year along with the 2nd car loan. In 14 months we will have no credit card debt, no student loans, and no car payments!
We’ve done all this while still enjoying our lives (and not eating beanie weenie every night). We bought a house, got married, took an amazing honeymoon to Italy, and continue to do the things we enjoy.
To anyone out there who’s just starting their journey to being debt free: set your goals, make a plan and keep at it. Great sites like this one can lend you the inspiration you need every day.
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I don’t have any debt, but I am proud to be well on my way to my financial goals for the year: a modest emergency fund for 3 months, and the rest of a 30K downpayment to purchase a home. We’re planning a cross-country move in a few months and it feels great to have this slush fund prepared for extra moving expenses.
Three cheers for slow and steady!
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I first have to start with a big THANK YOU to JD for sharing his story and inspiring me finally get my act together.
I’ve followed this site (and a couple of others) and with their suggestions/motivation I’m happy to report I’ve paid off $6k of credit card debt since January and moved the rest to low interest cards. I’ve got a bit to go before I’m debt free, but I finally feel like I have somewhat of a hold of my finances.
Knowing there were other people in the same situation and are now out of it is a huge help. Best of luck to others who are also wrestling the debt monster.
Oh and happy 4th!
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@TosaJen
Just a note – you are likely passing up the employer match for the 2nd half of the year by contributing it all early. If the layoff risk is a big factor or if they will still match the total rather than just each paycheck, then I understand.
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Well, my news isn’t quite as great as some of the above posters’, but I’m extremely happy to report that as of this morning my car is paid off! My goal now is never to buy a car on credit again. I also have saved a small emergency fund ($1,000) and I have never carried balances on my credit cards. The only debt I have now is my student loans, which I will begin paying down aggressively with my next paycheck.
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This is a great thread! In the last 9 months I have paid off my car loan and credit card balance (neither of which were very large.. total of perhaps 5k paid off). I have about 12k in student loans, but they’re at sub-3% so I’m not paying aggressively on them at present, though I don’t like that they exist.
Right now I’m focusing on getting my emergency fund back up to 4 months’ living expenses (it’s been sitting at 2 1/2 months’ worth for a long time) (I’m single, no dependents). After that I plan to make a Plan: I want to figure out how much I’ll save per month toward travel, a house down payment, and paying off the student loans.
My loan payments are just under $120/month so it barely seems worth it to get aggressive on them, especially since I don’t have a down payment built up and would like to have the option to buy some day in the far distant future. It’s a struggle to prioritize between future good and getting rid of non-onerous debt.
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Have a great long weekend and a happy 4th! I’ll back to read on Monday morning.
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Two years ago I graduated with $175,000 of graduate school debt. I’m down to $126,000 this month, and by the end of 2008, I’ll be left with just the student loans that at 5.3% or less.
It’s still a long road for me, but this website is my main source of encouragement to keep up the payments and curb the spending. Thanks JD!
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I was 23 yrs. when I came across this website on Nov.’07 with $0 savings and about $2K-$3K on CC debt. I lived paycheck to paycheck while going to school. I researched old articles about ROTH IRA, saving etc. After about 9 months, I have $700 left in my CC to pay (0% interest) and I have a ROTH IRA with $7K. I have a depleted ING emerg. account which I will replenish a.s.a.p. My FICO is @ 736 as of last week (it never was horrible) I have called my CC Co’s to extend my credit line to better my FICO :
CHASE $10K limit – owe $700
AMEX $5K limit – owe $0
Thx to this website I educated myself and have made small changes that have amounted to great results. THX JD and a happy 4th of July to everyone
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While not yet debt free (next year, all loans are due to run out) we have money in the bank, something in 25 years of marriage we’ve never had, and yes it is a wierd feeling!
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Great idea, JD…time to celebrate all kinds of independence!
Since my ex left me on my birthday 2 years ago (now, down’t feel sorry for me…it was the best birthday gift he EVER gave me!), I’ve paid off $18k in Home Equity Line of Credit debt that I incurred on his behalf, paid off $5k in credit card debt, funded my 401k so I could get my company’s generous 7.5% match, and saved $6k in emergency savings. I am debt free other than my mortgage balance, which less than 1/3 of my home’s market value.
I’m probably your biggest fan, and will mud wrestle anyone who argues that with me. Your articles and daily inspiration steered me to my own independence.
Eternally grateful,
PB-
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My husband and I have been very fortunate to start out as newlyweds with no debt. However, instead of focusing on debt, I have been able to learn a lot about investing, IRAs and general money management. Many of the GRS readers helped me during an “Ask The Readers” blog post about my husband beginning dental school this fall and the massive amount of debt we are preparing to take on. I believe we are choosing to not worry too much about dental school and focus on our successes: a six months’ emergency fund, a healthy savings account (that we use for vacations, etc.), a charity account and a 529 for our child that we don’t plan to have for five years. In addition, we both max out our IRAs and I participate in my company’s 401(k). We also have much more of a firm grasp on our overall money flow, because we have gone “back to the basics” of money management and use the envelope system for our budgeting. I already estimate the amount of savings for us will be great.
While we don’t have the “massive paying down debt” story like some readers have, we do have a great example of how money management can affect people in all stages of life.
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bethh,
Student loan debt is still debt no matter what the interest rate. My student loans are large (law school), and also under 3%; I’ll get to them last, but I still consider them debt hanging over me as much as any credit card. (Have you ever looked at the installment schedule and how much interest you’ll pay if you take the full amount of time allowed to pay them off?) I suggest that you get aggressive with them before you start saving for a downpayment. You’ll have an extra $120 extra per month to put toward your savings.
-Michael
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Independence for us is being able to swing it on a small single income after living well on much more than double this, just so my husband has the focus he needs to do well in school.
We are independent from things we don’t need. From cable TV and all its advertising, to a lot of the excess stuff hanging around our lives, we live well without it and we don’t miss it.
Can I make claims like others here, about maxing out IRAs and 401ks? NO. Are we still accumulating debt? YES. Do we have extra money at the end of the month for much more than a movie rental? NO. But we are happy, and confident in the future because we manage our money the way we do.
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I just topped my emergency fund up to a little over $5000.
I’m lucky in that I’ve never been in debt badly, and it’s been years since I’ve paid interest on a credit card, but since my income is pretty low I can’t say that I’m getting rich. Well – getting rich slowly, maybe. But it’s a good feeling to be able to pay for an emergency if it comes up.
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Just today I got a job offer for almost $9000 more/year than my current job!
It has less benefits (no dental, life insurance or 401K), but it’s work from home and will help us in our quest to save for a house. It will also be easier to move across the country to said house since I can now take my job with me.
Thanks to GRS I now know that the right thing to do with my 401K is to roll it to a Roth IRA and of course keep contributing to it.
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At my worst, I had $35,000 in credit card debt. It took me 6 years to completely pay it off, and I’ve been in 100% positive net worth for the past 3 months!
It was an unbelievable feeling to get that albatross of my back. I had been wanting to leave my job for a long time because I wasn’t enjoying the work, was verbally abused, and severely underpaid. Unfortunately, there are no laws against an employer being a jerk. I shut up and put up, and did my best to keep my head down so I could collect my check. Once the debt was gone, though, I immediately started hunting for a new job. I had tried to leave my other job many times previously, but for some reason the interviews never worked out. Perhaps the weight of my unhappiness was coming across. But once the debt was gone, I not only got an offer, I got an offer from two companies competing for me! I believe it had partly to do with the newly found spring in my step.
It has been an amazing transformation going from the low point of “I’ll never get out of this debt, and be stuck at this job forever” to “How am I going to invest my extra money? Which job has better retirement and career options?”
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This July 4th, my family is celebrating the following:
* 100% Debt Free (including the house).
* 6 monts of expenses in our Emergency Fund
* On Track to saving 15% in Retirement savings, (getting match at company’s 401K, the rest going into maxing out our 2008 ROTH IRA’s.
* Started our kids 529 College Plans this year, and we are actively contributing (the government stimuly paynment, when we get it, is getting split three ways to go into those accounts).
The biggest benefit is that we are able to do all of this on my income alone. My wife is a full time SAHM, and be there with our kids (we’ve done this since our kids were first born, but it just feels so great to know we are doing all of this and actually getting ahead, when so many people we know are struggling to make ends meet in our area woith both parents working). It feels *WONDERFUL*
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You are all very inspirational. So many people could learn from each and every one of you. My success story happened 20 years ago, when I had almost $10,000 worth of credit cards. One day, my Mom asked me about my debt and she nearly hit me over the head and said “snap out it”! She told me all about the evils of credit cards and suggested I start paying them off. Luckily, I was living at home and was able to pay them off within one year. I am now trying to save up for a downpayment on a house. Because I’m single and make $42,500 per year, I can’t afford much in NH. Right now, I have $33,000 in my savings. I’m aiming for $50,000 by the end of the year. That is my huge goal. I hope I can do it. Wish me luck.
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I’ve carried a debilitating amount of consumer debt nonstop since 1993. My joint credit-card debt with my partner topped out at around $45,000 in 2004-2005. (More than half of that came from financing our small business entirely on credit cards. It’s a strategy I don’t recommend.)
By going back to corporate jobs and completely changing how we handled money, we paid off that entire debt in just two years. Our only current liability is our mortgage (and we have about $30k equity in our house even in this lousy market). We use one AmEx cash-back card, pay the balance monthly without fail, have 5 months’ worth of expenses in an emergency savings account, and have been contributing heavily to 401ks and Roth IRAs.
PFblogs in general and Get Rich Slowly in specific were a great help and inspiration in this transformation; I hope I can ‘pay forward’ with Pocketmint!
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My success story is simple. Last week, my wife and I went to the bank, initiated a wire transfer, and paid off our house in full. We now own our home and our two cars outright and have no credit card debt. We do have a couple of student loans from my wife’s education, but those won’t be a problem.
I moved into the house in 2002 and I almost always paid a little extra on the mortgage every month, but it was 2004 that we got a plan and got serious about paying off our debt.
We expect to have her student loans paid off in a year or two (saving for retirement takes higher priority). We also have an emergency fund, and with the mortgage payment gone, that fund should cover a couple of years’ expenses.
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Well, here is our story. Two years ago we decided to get out of prison, uh I mean slavery, no, wait a second, debt. Debt that’s it. We had $386,000.00 in debt. I will let that sink in.
On April 15th 2006 we started our journey out of hell, uh sorry debt. We sold our only investment property we had and knocked a big chunk out of it, $180,000.00. That still left us with $206,000.00. We have slowly paid this down over the last two years. Now we are down to $150,000.00. During those two years we have purchased over $15,000.00 of items we used to use credit (Central heat and air, minivan, refrigerator, auto repair, etc).
We hope in 18 months we will be debt free.That is including the mortgage.
Oh, by the way. I should mention we are doing this on less than $75,000.00 a year. That is why we are eating sandwiches…
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January of last year I had almost 25K in consumer debt – it will be paid off next month. I’ve also managed to tuck away a nice cushion in savings (which will increase 5x by the end of the year). And I’m meeting my age “requirement” for retirement, so as long as I keep that up, I’m golden! (could actually retire earlier than expected)
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We saved cash to pay for a new to us car. It took us a year and it only happened because of dh’s hard work and a little help from Uncle Sam. But a couple of weeks ago we wrote a check for $11,500 for a 2005 Toyota Camry. We are thrilled! I never thought we could do it and I am so happy that we have broken the cycle of car payments. We have never paid cash for a car until now!
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We’ve paid off nearly $6,000 in two months thanks to overtime, freelance income, and Uncle Sam’s tax rebate check! We still have a way to go to be credit card debt free, but it sure felt great to make such a huge dent in a short time.
Thanks for this topic – I love reading other success stories as it motivates me to keep pushing ahead!
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A few months ago I suddenly realized that my parents are in their 50s and have no savings whatsoever. That really disturbs me, and I’m determined not to let that happen to me.
After making a commitment to more financial responsibility, I saw my CPA and asked him to give me some basic financial advice. We reviewed my income, expenses, and debts, and came up with a plan to pay off the debts and become cash flow positive in the next year. Using tax refunds and a recent bonus I was able to pay off about $10k in credit card debt, and I have a plan to pay off the remaining $5k shortly.
In addition I’m no longer living paycheck to paycheck, and my checking and savings accounts both have several thousand dollars in funds.
Thanks everyone for sharing your stories, and JD Roth for making me really happy when I see a new blog post here.
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Well…my wife and I recently finished graduate school in 2006, and moved from Maryland to Pennsylvania, and started our web design company. Earlier this year, it occurred to me that we didn’t have any money saved up, so we sat down and put together a plan to save $15,000 in emergency funds, and then pay off our combined credit card debt of $10,000. As of today, we have almost $7000 saved in a MMA, and are on track to hit the $15,000 goal by December. After that, we’ll attack the credit card debt. I must say it just feels good knowing we have some money stashed away in savings.
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On this Independence Day, I’m thinking of all the thinks we can’t operate “independently” of and wondering how that factors in to everyone’s savings plans.
Spefically in two areas:
1. Are there times where you are willing to forgoe savings, even incur debt, to live by your principles? Ex. buying a fuel-efficient car when you have no other commuting choice, buying local/organic produce, supporting a candidate you believe will direct the country properly, buying locally made or sustainable products vs. Made In China…etc. I know I could save money by eating crap food and buying everything at Target…but haven’t brought myself to that…yet…
2. In the face of all the economic “canaries in the coal mines”, how do you stay focused on the long term? I have a hard time envisioning the world as anything but fundamentally different (market collapse, resource wars, etc.) in the years to come. I’m 29. How do I take seriously the idea of saving for age 65 without having any clue what will likely transpire between now and then in terms of inflation, bubbles building/bursting, etc?
These are not trolling questions…
I love GRS and I think there is merit in living simply even without the down the road savings payout…but I am still curious how others deal with it all…
Disclosure:
$0 CC Debt
$8,500 student loans (6.5%)
$19,000 car loan for 40 mpg car (5.25%)
$10,000 savings (3.0%)
Adding ~$1K to savings each month on $75K/yr salary supporting family of two.
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For Aaron Meyer…
I’m not JD but I’m probably older than your mama so here’s my take on this:
“But now we have a dilemma as to what to do next. We have furniture that will get paid off the end of next month, and we are looking at having a baby here in the next couple of years as well. We just bought a house last year, so we are early in our mortgage and I think it is the right time to start paying it off so we can get to the principal quicker instead of paying toward the interest. But we only have $1,000 in savings right now. So it is just a question of what is next. Ideas? Oh yeah, and we have a single car payment on a car that has $13,000 left on it.
Any guidance would be appreciated.”
Two words. EMERGENCY FUND. Get. it. funded. NOW. Six months worth. Skip paying extra on the principal until you have that in place. Furniture payment automatically goes into your emergeny fund. Squeeze your budget until it SCREAMS to get it funded.
You never know when your hubby’s radiator (or x or y or z)will bust and leave you with a 1280.00 repair bill like ours did last week.
Do you need THAT car and THAT car payment? Could you possibly sell it and drive something a little older (that you’ve paid cash for) and use any profit for that emergency fund?
I’m 55, and have NEVER had as much money in savings as I have now. (I’m talking under 10K at the moment. ) I was raised on credit cards, watching my mom juggle payments, and assuming that if I wanted it I should just go buy it. BAD idea.
After an epiphany last summer (after buying Dave Ramsey’s books and helping my mom get her, ummm, problems into a “plan”) I knew I had to do it, too. We paid off nearly 20K in credit cards and started our emergency fund. I expect it to be fully funded by December.
JD, you are doing a great thing in reaching all the 20 and 30somethings out there..not to forget the 50somethings… who learn from your blog every day.
Thanks for helping a new generation reach financial independence!
Oh, and for Dan (39)….incurring debt and foregoing savings to live by one’s principles is a noble idea, albeit foolish, imho. If you are putting your family at risk by NOT having savings to take care of them, how fast will your principles fly out the window?
I was 29 in ’79, when oil was what, 25.00 a barrel, interest rates were SKY HIGH–18% mortages were considered CHEAP, and the President was calling for an ENERGY PLAN to get us off foreign oil, just as every president has continued to do since you were born.
If you’re worried about eating crap and/or spending too much on organic, local groceries, perhaps a victory garden is in your future, just outside your back door.
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I am willing to forgo savings somewhat in order to live by my principles. After all, I effectively forgo savings in order to have the enjoyment that I want (like travel) so I may as well do it for my principles as well. Of course, this is all things in moderation, but the point of having a good basic personal finance underpinning is that you can make other great choices. If you want to.
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9 years ago I was shocked, grieving widow with only a little social security for raising my 11 year old, a $100,000 mortage and no clue how to manage the maintenance on a home. My husband had NO life insurance because he had been sick for 8 years and coulnd’t get it. I borrowed money for his headstone. This month I will sell my house for 100,000 more than we bought it for, my daughter is in a sub-ivy League college, I have a 5 figure savings account in ING Direct, $161 on an American Express card and $50 owed to a lawyer (my only debt), and I’m that much closer to achieving my goal — to become a woman of independent means who is a resource, not a burden, to her family and her community.
I’m so happy to have found this blog and this community to celebrate that with!
I’m now doing the downsizing thing that so many financial gurus recommend — I’m renting a condo yet to be determined with the goal of having no maintenance, lawn care, etc., for at least a year, and rent equal to my former mortage. I sleep better at night, knowing that in the worst case scenario, which would be job loss, I can at least make the rent for the next 10 years if I have to, when my pension from my state job kicks in.
GRS has been a great read the last year, reminding me that I’m on the right track. When I saw the article on comparing unit prices at grocery stores, I almost wept. I found a soul mate blog! I’d been doing that exact process for 4 years, and my grocery bill was down to $50 per week.
Everyone talks about downsizing when the children leave, I’m doing it. It’s an emotional struggle to leave the house my daughter grew up in. Yet, I see my peers handing checks to their elderly parents who have nothing, and my own mortgage wouldn’t have been paid off until I as seventy-six (a big of a joke, no?), so I believe my own financial solvency may be the bigger gift to my daughter. I’ll be keeping notes on this journey of downsizing! It’s an exciting new chapter — scary and full of opportunities.
Thanks J.D. – keep it coming. I’m a BIG FAN
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Thought I’d share the story of how I started an emergency fund (excerpted from an old blog entry):
Back in the mid-Nineties, I tended to do my laundry at my parents’ house rather than spend $5 a load in my apartment basement. I started setting aside $5 a week to represent the laundry moolah I wasn’t spending. Also, in a (failed) effort to curb my videogame habits, I began dropping a quarter into a jar each time I started a new game, usually of Twisted Metal 2. Both stashes eventually totaled over $400, including around $170 in quarters. (Ever lift a Classico pasta-sauce jar full of quarters? Buy a truss first.)
I continued the laundry-cash tradition when I got my own apartment, but I also began a Friday ritual of throwing any extra money from my weekly allowance in as well. Basically, each week the larger of $5 or my allowance remainder had to go into that pot. If I ran through my allowance earlier than Friday evening, $10 went in; should I be foolish or pressed enough to return to the ATM a third time, $15; and so on. Taking a ten and a five out of the $60 that you need to last the week forces you to stop returning to the well so often, I can assure you. Soon, I started adding any sort of “found money”: tax returns, appliance rebates, folding money from the coin-counting gadget at the bank, unused walking-around dough from vacations, even a couple of good blackjack scores. Two years later, in the wake of 9/11, I dubbed this now-substantial cache of cash my emergency fund, only to be tapped upon widespread failure of ATMs. Four years after that, I was able to use a big chunk of my emergency cash to fund fully my 2006 contribution to my Roth IRA. Automatic savings may be unconscious, but never are they mindless.
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Last week I made the final payment to my credit card. It had carried a balance since 1995, and been as high as $14k. Never again. Now there’s a world of opportunity (bigger emergency fund, more into the Roth, saving for a house) that I couldn’t have envisioned before.
The site, and all you fine people, help me to stay focused by remembering the mantra “years, not weeks” to get to my goals.
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Everyone’s stories are so inspiring!This has been a wonderful “independence year” for my family, too. My husband and I paid off our house in March — and that was the last of all of our debt. No CCs, no car loans, nada.
We had exhausted our savings to accomplish paying off the debt. After we paid off the house, we immediately began saving to replenish our savings account. We now have built back 6 months expenses for an emergency fund. We are now working towards building a “planned expenses fund.” We live very frugally, within a budget, which is enabling us to do this with one income (which dropped 50% when I lost my job last year and found new employment). My biggest frustration at the moment is not maxing out my 401(k). I’m contributing 6% now and would dearly love to take it up to 15%. However, I don’t see increasing my 401(k) until we have our planned spending account funded. I just want to ensure we never have to use our credit cards again. So, I will be very happy when I can begin funding my 401(k)to the max.
This is a great website. It is very inspiring and provides me with great ideas on how I can continue to save and invest.
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We live off 60% of our income and have 6 months worth of expenses in an emergency fund.
As for the other 40%, we are putting 18% toward retirement, 10% towards short-term expenses for some pending home improvement projects, and the other 12% will be used for paying the car off by Christmas. We will be completely debt-free at that point.
Beginning New Year’s Day 2009, the 12% we are saving for the early car loan payoff will be funneled into a travel account. We will be able to go anywhere and do anything we want paying $CASH$ along the way.
We’ve always lived below our means and now, in our early 50′s, our choices are about to pay off! It’s a very exciting time! If we can do it on our modest incomes, anyone can.
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Since paying off my mortgage 6 months ago and all other debt, I’m able to live on 50% of my income, and wow, that’s when life begins! Seriously. I’ve got several automatic savings accounts in place, for various goals, and beyond that, I’m going to HI 4-5x per year, visiting family, paying cash. I have a splurge fund, w/automatic monthly payments going into it too, and I can see at a glance the amount of money I can spend on whatever, that will not take me away from my other savings goals. Sometimes people can save too much, and be afraid to spend, and that can be as damaging to the psyche as overspending is to the pocketbook, because you don’t want your money to control you. You want to be in control of it. You don’t want to be a miser and cling to your money. Money is a tool and should be used for that purpose – both for your enjoyment and to meet your current and future expenses.
A couple of more things. I do pay off my charge card as though my life depended on it. What I mean by that is that each and every time I use it, I go to my online banking and pay the balance off. I don’t do it monthly. I don’t do it weekly. I do it after every single purchase. They have the payment date set up to your monthly due date, but w/a click, you can go in there and change it to today’s date or the date you are making the payment.
Lastly, people talk about peace of mind when you are out of debt and what does that mean really? It means you walk with better posture, and with confidence. You have a bounce in your step. You look people in the eye. You sleep like a baby at night. You burst out laughing a lot because you are relaxed and happy. You dance around your house from time to time. You are always upbeat and cheerful and fun to be around. And the most amazing thing is that I actually look forward to paying my bills each month and the property taxes or house/car repair emergencies because all I have to do is transfer the funds to do it. All the emotion has been taken out of money for me. That’s the way it should be too. Money is a tool. And so when we get our financial lives in order and control our overspending, and get out of debt and live below our means, we get all these intangible rewards that well, money just cannot buy. Rock on everybody!
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These stories are great reminders of all the different ways we can save and use money wisely. In May of 2007 I donated my car and although I had already been using public transit a lot, I am now using bus, bike and legs for all my transit needs. It has been the most liberating thing I’ve done. I wish I’d made the jump sooner, but it’s ok. The longer I go without a car the more I love it. I love having to get creative with my transportation needs and how this lifestyle slows me down and inhibits instant gratification.
This also helped put me in a position of being able to quit my job, and it’s hour long one-way bus commute, and devote my time and energy to getting my textile crafts business under way.
I agree with others that this blog has been very helpful. I also appreciate all the folks who participate and add to the learning experience.
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I have just paid off $12,500 in student loan debt in! What’s more, I am only two years away from completing my Phd in Psychology(which is paid for)!
Although I have paid a huge amount of debt, I have a long way to go to pay off my student loans in full.
The good news is that I am totally credit card debt free as of December 2006! I’ve used my experience with credit card and student loan debt to attempt to inspire high school students to avoid the trap that I failed to avoid.
Two years ago I was invited to speak at a youth and young adult conference in Baltimore, Maryland. The objective was to be apart of a team of committed leaders to help adequately prepare these future leaders for life after high school.
My workshop entitled, The ABC’s of Financial Success, was less than inspiring to these youth, who were more concerned about the latest cd to hit the stores. In fact, one young lady used my session to catch up on her sleep.
After the workshop, I had a revelation; many adults are in financial crises, because perhaps they had fallen asleep just as the teen had attending my workshop. Thank you media!
Secondly, I thought to myself that the key to helping our children was to use aggressive prevention strategies. But how?
I was able to use 3 of the 7 principles in that presentation as a launching pad for a book for high school students (Now Hiring: A Financial Guide for High School Students Preparing for College)
A Avoid Credit Card Debt
B Budget Wisely
C Control Student Loans
D Develop a Plan
E Embrace Entrepreneurship
F Find your Assignment
G Give
I literally gave away hundreds of copies to families because I am more concerned with college graduates being able to sleep at night (not my workshops!) than anything.
That experience taught me the importance of financial freedom through giving, which has fueled my own desire to live a life free of debt! I have since gottn on board with Dave Ramsey’s Total Money Makeover, and only a couple of years away from being totally debt free!
Let’s save our children from slavery to credit card debt, foreclosure, and depression!
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Not quite an independence story, but here’s my story about being ‘almost there’
Over the years I acquired a lot of debt: consumer debt, one line of credit for graduate school, two other lines of credit to help start my business. I was also paying off two other loans from other, earlier debt. Money was hell for me. I was stressed. Worried about bills. Horrified at how much I was paying, every month, in interest.
A year ago, last July, I took stock of my situation, and devised a plan to pay off these debts. They amounted, together, to well over $70K. I sorted the amounts owing by size, and then by interest rate. I decided to attack the biggest interest rate first – coincidentally the biggest amount.
The big credit card bill ($28K) became a consumer loan at my credit union. With a feeling of great relief I zeroed out the credit card debt – moved it to a lower-interest loan – and began to work on the other two loans.
Paid off loan #1 in October 2007. Paid off loan #2 in February. In February this year I also got a large contract, and buckled down to pay off my other debts.
In April I paid off one business line of credit in full, five thousand dollars and a bit. In May I paid off another business line of credit, six thousand and a bit. In June I paid off half of the graduate school LOC and I will pay it all off before my birthday at the end of August.
So now all is left is the graduate school debt and the credit union loan.
So how does it feel? Yeah, it’s good to no longer receive mail from these financial institutions (‘Thank you for your payment of $300, your monthly interest this month is $45 and your minimum payment is $113, etc…)
But what I also feel is intense sadness.
Aside from the graduate school loan – which financed my MBA, I spent on stuff that – yeah I still have – but did I really need it? I made these large lump sum payments to pay off debt, with a big lump in my heart. That $6000 a few months ago could have gone into an emergency account. That other $5K could have gone towards investment.
I acquired the debt bit by bit, and was paying it off bit by bit. So I knew it was there, but it was not exactly at top of mind. In previous years I made the payments to each institution (2 or 3 times the minimum required) and went on with my life. The act of paying a line of credit in one go in recent months – twice – was a good shot of mindfulness.
I don’t think I’ll walk on sunshine until I pay off all that is remaining. Right now I feel like I am in the final miles of a marathon. I’m sooo tired of dealing with this debt.
The end is in sight. The invoices to my employer are out there, and they are getting paid on time, and the balance after my living expenses (and 10% savings) are going straight to the banks to whom I owe the money.
August is near, and once I pay off the graduate school line of credit as a birthday present to myself, I will only have that big loan left to pay (at very low credit union interest rate). And all my energy will be focused on it, as my next year project. I plan to make quick work of it, too by doubling or tripling the monthly required payments – and then focus on my investments/retirement funds.
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