...in the real world, with a middle-class income?

I want to be debt-free so much I can taste it.
I am in charge of our family finances, and I am going full-steam ahead with killing all of our debt.
I guess what I am wondering is- if it sounds too good to be true (that *we* can be debt-free!), is it?
I don't want to do all this hard work, give up vacations, etc, for nothing!

Has anyone here -on a modest income- really went from having the average American debt-filled life-style to being totally debt free? Or at least built up enough investments that you could be debt-free if you wanted to be?


I have read it takes the average person about seven years to pay off their debt using the domino/snowball plan. That is what we are doing. We got a really good fast start, have no credit cards anymore, are paying our last car loan off three years early, then moving onto the mortgage (we will be making at least double payments on it), and we allready have decent savings in order to prevent future debt. But sometimes it seems there are so many years stretching ahead of us on this that it is never-ending...

We live in a house with a $200,000 mortgage, and I think that is half the problem. It is worth almost twice that, which makes me feel better, but doesn't really help us financially because we aren't selling it. I do not work outside the home, and my husband makes about $65,000 a year base salary with a lot of benefits and potential for bonuses, and hopefully his income will go up. He also has a side hobby of buying/fixing/selling antique cars, which is starting to bring in more money as well.
I was just reading the recent blog post about investing in whatever you know... and that is exactly my husband. He just bought an old classic car for $1000, and can put just a little into it, and easily sell it for $6000 or more. He could keep working on it and sell it for even more, but he is looking at the quick turn-around to get an even better car, to fix and sell again.

So, do you think we can do it? Or is it pie-in-the-sky to pay off a $200,000 mortgage in seven years on our income, with kids to feed, etc?
I look at my kids and think of the financial life I want to give them (security, giving them a great start in life, etc), but then I wonder if they will like the trade-offs, like less Daddy-time and less huge vacations- at least for seven years. They are all still rather young, so I can't really ask them yet.

Anyway, thanks for listening to me ramble on here.
I just found this site a few weeks ago and I really enjoy it.
I know it's called Getting Rich SLOWLY, but I just can't help wanting to dig out of the debt FAST!

It's absolutely possible to be debt free. However $200K in 7 years is $28,500 per year not counting interest. That is an awful lot to pay off with $65K income. It really depends what your other expenses are I guess. I really want to be debt free as well, and I think the risk sometimes is trying to do too much at once and burning out in a sense. If you feel too deprived you may get to the point where you rebel and stop being careful.

Being debt free is a realistic goal but 10 years might be more reasonable unless income grows quickly.

Can you sell the house and the buy a $200,000 house and eliminate the mortgage?

Have you cut-off cable/satellite TV, cell phones, owe nothing on your cars, use air conditioning and heat only to stay alive, take the bus, or otherwise do everything in your financial control to minimize spending?

Why, exactly, do you feel that your house has to be paid off in such a short period of time? That 7 years to debt free I would think refers to consumer debt, which a house is not (I could be wrong, I can't bring myself to read Dave Ramsey so I don't know for sure.).

Being debt free is a great goal...but not at the cost of everything else, particularly if you're depriving yourself soley to pay off a tax advantaged debt like a mortgage.

Assuming you have a decent loan rate, you should focus on paying extra on your mortgage AFTER you pay for the things that life calls for. Are you saving for retirement? education? emergencies? You are allowed to have a little fun too you know.

Go for it if you can, but don't do it at the expense of actually enjoying your life. IMO, paying off your mortgage in 7 years instead of 15 is not worth it if it means your kids never see you and you never get to do fun things. Being financiall successful is not about living a life of nose-to-the-grind-stone deprivation. It's about making smart choices and understanding the consequences of those choices. There is nothing wrong with having a mortgage and it taking a few years to pay off.

Don't pay down your mortgage quickly if it means you have to forgo a normal lifestyle. Look to enrich your lives and those of your children. If you've saved for their education, allowed for a comfortable lifestyle, saved up an emergency fund, got good retirement plans in place, got cash to buy your next vehicle(s) and so on, then consider paying the mortgage. But do consider that you don't have a huge mortgage, compared to many people.

I am in a somewhat similar position so what you are saying resonates with me. Yes you can probably pay off consumer debt in 7 years, dpendning on how much it is. No you can't pay off consumer debt, your mortgage and get to 10-15% of income saved for retirement in 7 years. Can't do it with 4 people living off of one 65k salary. Perhaps I live in a high COLA but IMO, that kind of income will just cover your bills and maybe get you started with saving for retirement (certainly no where near the recommended 10%). Any bonus money you get you can throw at the consumer debt and then move on to savings.

I KNOW it's hard with kids. You can cut off your cable, but then you spend more money on supplies for activities to do with the kids. You desperately need a night with your spouse to reconnect and maybe you can do a cheap date night at a coffee house, but your babysitter costs $10 an hour. And they're not giving up their Friday night for just one hour of work. Money for school pictures, teacher gifts, there's a birthday party every weekend. It's tough, I get it.

Can you achieve your financial goals? Yes, if they are SMART ( specific, measurable, achievable, realistic and timely) I'd think about adjusting the timely aspect of your plan, but otherwise sure you can.

I was debt-free throughout my 20s and most of my 30s, on an income that ranged from the low 20,000s to a max of 40,000. The key was that I didn't have a credit card for most of that time, and when I did finally get one I used it like a debit card and paid it in full every month. Plus I didn't own a home and didn't have any kids. But I agree it's a lot harder in your situation!

I wouldn't consider a fixed-rate mortgage on a home to be bad debt.

With our combined income, we expect to pay off the 2nd position HEL in 5 years. This includes rent money we're using strictly for prepay. We will be living frugally for those years. Around the end of the time frame, little ones shall come into this world and then we'll start relaxing a bit. I wouldn't be so aggressively prepaying down the mortgage if 1) we had little ones 2) we didn't want to invest in other opportunities and thusly need the freed up cash flow.

If you've chosen to be a one-income household (which I'm not knocking; it may very well be the best thing for you and your family), then no, I rather doubt it.

Your husband needs to save more for retirement than if both of you were working. Assuming you can make those retirement targets, I think it is important to save at least a nominal amount for higher education. You need more insurance to cover his income. And you need to have some room to have some fun, sometime.

Since you could easily pay off your remaining mortgage if you had to sell, I think that there are many other worthy goals that come in front of pre-paying the mortgage in seven years.

When most people talk about living debt free... they are usually referring to credit cards and/or auto - personal - or student loans. I currently don't own a house and therefore no mortgage, but in it's place I have to pay rent. I would rather be in a house working towards ownership, even if the property taxes continue forever. Mortgage debt is good debt and sometimes considered a asset if it gains in value. Other debt usually does not.

Technically I'm am debt free. I even have a student loan and a car loan, but I offset that with more than enough higher yielding investments to pay them off easily. I would love to be in your shoes with a half paid mortgage. Send in extra payments when you can, but don't kill yourself to pay it all off before its time. You also need to weigh if you can get a higher return if you were to invest your money somewhere than what you are paying in interest on your house.

Sounds like you are on a good track though, keep it up!

I agree that there are two classes of debt-free: consumer-debt free and completely debt free. I think the former is something everyone should strive for, and that the latter is an ideal held by many, but not a necessity for most.

Technically, I am actually consumer debt free. My only debts are my mortgage and my home equity line of credit. However, since I know that the HELOC represents consolidated credit cards, I want it paid off. It weighs heavy on my mind. Once it's gone, then I'll consider all my consumer debt eliminated. I'll even allow myself to say that I am debt free.

In the long run, I really would like to pay off my mortgage to actually be debt free, but recent reading has convinced me that retirement saving most certainly needs to be a higher priority.

The only quibble I have with that philosophy is that predicting your health and ability to enjoy life during your 60s, 70s, and beyond is just as hard as predicting where the stock market will be in 20 years. It's a balancing act, to be sure, but the worst-case scenario is someone who scrimps and saves for retirement, putting off most of the pleasures of life until "later" and then dies of a heart attack or cancer at age 64. The worst-case scenario on the other side is someone who lives entirely for the moment and then finds themselves at 65 with nothing in the bank and being forced to work until they physically can't anymore. Everyone has to find a balance between those extremes that suits their comfort level.

Both of my parents died relatively young and I've always had a premonition that I would too, so I'm focused more on paying off my mortgage as quickly as I can (to the detriment of my retirement savings...I'm still putting a hefty chunk of change into retirement every year but not as much as I would if I weren't set on paying off the mortgage) so I can at least have some financial freedom during my 50s. If my early-death premonition turns out to be wrong, I will have to work longer into my retirement years, but my monthly expenses should at least be relatively low.

I'm definitely not knocking the stay-at-home Moms, but without two incomes, your chances of being debt-free are not that great. I recently made the last payment on our house, and I can tell you, it's a great feeling (it'll be better once our bank account recovers...I was a bit anxious to pay it off). All that would not have been possible without my wife's help. She's an extremely successful professional, and I do everything I can to support her. We both work hard, and are waiting a few years to have kids....which also helps our expenses.

Any chance you could work parttime or on the weekends? While I understand that would cut into family-time, that's really the only conservative way I can see to speed up the process for you.

Good luck with it!

The financial difference between a stay-at-home parent and a parent who works outside the home is not all that much. Where I live, daycare for two kids is $2200 a month and a nanny is about $3000-$3500. Once you add in all the costs of working (clothing, transportation, networking and so on), you're not much ahead. In fact, you might actually be spending more than that one income brings home. So don't assume that a second income is crucial to financial success.

If it is of interest, you could look into working from home or for the occasional evening or weekend.

It's not impossible to live comfortably on one salary. I was a stay at home mom from 1992 to 2005. In 1992 our only debt was about $4000 on a car loan, and we had about the same in RRSPs. During these years my husband's salary grew gradually from $30K to 80K. We had 4 kids, maxed our RRSPs most years (18% of previous year's income), put 25% down on a house, took a $90K mortgage and made payments that would pay it off in 11 years, and saved to pay cash for a new Toyota Sienna when our Caravan was 10 years old. We scrimped a bit, but not to the point of feeling deprived. And with 4 kids in less than 6 years, I would not have been able to afford day care anyway.

So it can be done, you just have to decide what your priorities are and try to keep some balance.