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Photo by where_ever_i_am_ via MorgueFile - used w/permission

Happy New Year everyone!

One of the reasons I started this site is to share my journey towards debt freedom (defined here as no debts except home mortgage).

Yes, I know that true debt freedom means paying off your house too, but most personal finance “experts” save that milestone as an upper-echelon, extra credit assignment.

I feel the same way.

Becoming debt free (minus the house), for us, means that we will owe no money for student loans, cars, credit cards, or personal debts. Like a small army, we marched down the Debt Warfare path, turning small victories into momentum.

A few years ago, in 2008, we reached our first milestone of paying off credit card debts. We had about $20,000 on those going back to 1999 and earlier. This took a few years because I was only paying them off half-assed. Now, we use one credit card for rewards cash, and the full balance gets paid off at the end of the month. This is called spending less than you earn.

In 2010, we paid off my car. In 2011, we paid of my wife's Escape. This was about $40-45k in debt. It almost makes me sick to think that much money passed through my hands and into the pockets of banks. All for stupid cars.

As each debt was paid off, the payment due amount was then applied to the next debt, as if the payoff never happened. For a long time we were putting an extra $1000 per month toward cars. When the last car was paid off, that extra $1000 became an extra $1500 towards student loans.

And I'm happy to report that in 7 months and 7 more payments, we will be debt free. When you count the minimums due, plus the extra $1500 payment, we will have almost $1,800 in freed-up money each month when we pay these off. This means we are living well below our means.

$1,800 is essentially an extra paycheck each month. Let that sink in a minute. AN EXTRA PAYCHECK EACH MONTH. In 7 months I will be giving myself a $21,000 per year raise, or 40% of my salary. How many people do you know who got raises that big in a down economy?


Think about how powerful that idea is, that you can take steps in your own life, within the framework in which you live, and carve out success. This shows you how dependent that debt makes you, and how independent debt freedom can make you.

Once we achieve debt freedom, if I were to lose my job or decide to change careers, I could take an almost 50% pay cut without significantly changing the quality of my life. I wouldn't be forced to sell my house or beg for change. Granted, I would be treading water without getting ahead, but hell, I've been doing that my entire life, so that's nothing new.

When the 7 months pass and we achieve debt freedom, my plan is to build up a 6 month emergency fund with the extra $1,800. Then it will be time to focus on saving for retirement.