Hi, just wanted to share our story (and maybe win a Wii.)
My wife and I have never liked having debt. Yet we still had debt and we had got ourselves into the cycle of paying our debts and then not having enough money left over and having to grab a little more debt. It was a miserable lifestyle and doing the bills or discussing money, even grocery shopping caused disagreements and stress. We tried several times to get ourselves onto a debt reduction plan, but after time always slipped off.
About 5 years ago we had enough. I know that many people are not fans of Dave Ramsey, but I have to say that he is a great motivator, and his system is very effective. We read his books and sat down and made a plan. We set aside money for an emergency fund and vowed to pay cash for everything from then on. And thats what we did. We sliced our budget every way we could. Any time we had extra money we applied it to our debt snowball. We paid everything with cash. I was working on a masters degree at the time, we paid it with cash. If we didn't have the cash, we waited.
It was very exciting to see the debts go down. It was also amazing to see how much cash you can free up just by paying off your bills.
We finally paid off our last bill about Dec of 2005 (the same month I finished my masters degree.) What a great feeling. I have to say that personally, I don't have any desire to go back. Living with out debt is great. Doing the bills is less stressful, dealing with unexpected expenses is not an issue.
We recently moved to a new area and took out a house mortgage. I hate it. We hated the idea of taking on debt but knew that it was a better option than renting in the area we moved to. We took our experience with debt and applied it here. We bought a house that was not our dream house. It was a little smaller than we are used to and needed quite a bit of work. It appraised for a good chunk more than we paid and with the improvements we are doing keeps increasing in value. We are paying cash as we make improvements. Sure, we have concrete floors in the main parts right now, but in a few weeks we will have the cash to purchase our laminate flooring. I can live with concrete better than I can a credit card bill. Hopefully, when we finish the house we will trade it for another fixer with a smaller mortgage. If we can't sell it, we didn't pay more than we can afford and we can stay put. It's a lot of work and hassle, but it seems worth it to see a way to get rid of the house debt.
To those out there who are struggling month to month, carrying debt, dealing with stress. Let me say, it can be done. We did it. We did it with one income (about 38,000 a year at the time before I finished my masters) with two kids. It's a great way to live.
Have you paid off your debt? Managed to save for your dream home? Had an awesome investment pan out? Share your personal finance success stories here.
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