Debt Free Story: What it’s like to be debt free for 20 years

debt-free-storyToday’s Debt Free Story comes to us from ESI Money. The ESI family has been debt free for 20  years, enabling them to retire early and live life on their terms! Their story, strategies and advice are priceless to those of us still working toward financial freedom. Without further ado, take it away, ESI!

When we got married we both had debt. Between the two of us we had two mortgages, a car loan, and a bit of student loan debt (owed to my grandmother). It totaled $155,000.

Neither one of us was in a hurry to pay it off quickly. Both of our families had debt and it seemed like it was “normal” to do so.

Then we took a class at our church (a precursor to Dave Ramsey but very similar content). While there we learned about the dangers of debt and how much it can cost you. It made sense to us and at that point we decided to become debt free.

We took the traditional debt snowball method and started on the smallest debt — my college student loan. It was only $5,000, so it took us almost no time to pay it off since we were both working and had good jobs.

The car loan took a bit longer. It was about $10,000 and we chipped away at it here and there. Every month we put in something — sometimes large and sometimes small. Within a year it was gone too.

In the meantime we had sold both our condos and moved from Pittsburgh to Nashville. We bought a $165,000 house with 35% down and the rest mortgaged. We could have afforded much more, but we bought a house based on what we wanted to spend — not what a realtor/bank said we could afford. Then the real work began.

Over the next several years we piled on extra payment after extra payment. The money came from:

  • My wife’s jobWe lived on my salary and put most of hers toward the mortgage (until she stopped working once we had kids).
  • Pay raisesEvery time I got a bump in pay, we put the increase against the mortgage.
  • BonusesIn the years it took us to pay off the mortgage, I earned a few annual bonuses. Those were big hits to the loan and since it was “extra” money, we never missed it.
  • Side businessI started a business freelance writing for magazines. It brought in $5,000 to $10,000 a year, almost all of which went to the mortgage.
  • Low spendingWe kept our spending low so even after my wife quit her job, we had plenty left over from my salary to go towards the mortgage.

By the way, we did not sacrifice what we considered to be better investments during this time. We invested fully into my 401k to get the entire company match.

We were kept motivated by seeing the number of our payments drop so quickly. I tracked the loan in Quicken and sometimes we’d make an extra payment and eight months would drop off our 30-year loan. It’s amazing to watch the time drop off in chunks — especially in the early years. It caused us to want to pay off even more, which took off even more months, and caused us to want to pay off more. It was a great cycle and thrilling to see the time fade away with each payment.

Within five years we had it paid off. We lived there a bit longer, then moved to Michigan, paying cash for our new house. Since that time (1997 or so) we haven’t had a mortgage until recently when we moved and had to take one briefly while our former home sold. Other than that we’ve been completely debt free for almost two decades. Paying off all our debt so early allowed us to super charge our savings and investing and ultimately retire at 52.

As for those wanting to do the same, I’d simply advise the following:

  • Find something that motivates youFor us it was seeing the time drop off. For you it may be something different. Whatever it is it has to get you interested and keep you going because it can be a long, hard slog.
  • Develop ways to grow incomeTake a second job or start a side business. Put all of it into paying off your debt.
  • Keep expenses lowThis will allow you to maximize the gap between income and expenses so you can put as much as possible towards debt reduction.
  • Buy a house you can affordThe first step to paying off your mortgage occurs before you even own your home. If you haven’t yet purchased a house, be sure that when you do that it’s a home you can afford. Develop a budget before you buy with the target that you want to be debt free in 10 or 15 years (whatever your goal is) and it will tell you how much you can spend on a house. If done correctly, doing this can help you pay off your house in 10 years.

Then, once you’ve paid off everything you can sit back, relax, and shout “freeeeeeeedoooooom!!!!”

ESI Money is a blog that focuses on achieving financial independence through earning, saving, and investing (ESI). It’s written by a fifty-something ex-executive who’s now enjoying the fruits of early retirement. You can find out more about him and ESI Money by visiting about ESI Money.

Have a Debt Free Story of your own you would like to share? Contact me!

22 thoughts on “Debt Free Story: What it’s like to be debt free for 20 years

  1. It must be an awesome feeling to be debt-free for two decades. My wife & I were debt-free for 2 years before we decided to build a house, but, we intend for that to be our last debt.

    Congrats on breaking the “status quo” of accepting debt is a fact of life. I think if most people realized how liberating it feels to be debt-free, more people would jump on the bandwagon.

  2. What an awesome story; thanks for sharing!! We are starting late but working on debt freedom as well.

  3. I really like how ESI rejected the idea that debt was normal. This is something I always stress to everyone who starts out with student loan debt. It doesn’t have to be normal.

    The side hustle is great. Even just a few thousand a year can really add up. With all the sharing economy/on-demand economy apps out there, there’s so many ways to make a few bucks on the side.

  4. Debt certainly is not normal. It is accepted in America as the norm but outside here it is far different.

    I think anybody, regardless of debt or no debt, should look to have a side hustle. Even if it is just an extra $500 a month, that will be enough to max out a Roth IRA in a year!

  5. 2 decades of debt free life is impressive

    I haven’t decided if we are going to attack our mortgage for rapid payoff right away, the interest rate is so low I prefer investing the bulk for now. That view will probably change over time as we won’t want to pay a mortgage at early retirement.

    Finding motivation is a big first step, if you don’t have a reason you will quit

  6. Buying that house you can afford is SO important (especially because of all of the costs that go along with buying a house at the upper end of your price range!) Thanks for sharing your story – it’s impressive and encouraging!

  7. Nice work! (and hello from a fellow Michigan-der) You definitely had the right formula in there: Living on one salary while you bank the rest, setting aside raises and bonuses, low spending, etc. It’s amazing how a little bit of discipline can go a long ways.

  8. My wife and I paid off our mortgage four years ago. We’re like you and can’t imagine having a mortgage ever again. It’s such a wonderful feeling to be able to look at our paycheck and know it’s not going towards housing costs. Thanks for being such an inspiration!!!

  9. Great story. It just goes to show how being mindful of debt can allow you to take small steps to shave off debt a little at a time. Debt is the enemy of success!

  10. I really like how you outlined where the money for the extra repayments came from. A lot of people make excuses for not being able to pay off that bit extra, but the truth is that most of us do get bonuses here and there – a bit of money for your birthday, end of year work bonus, tax refund… These are all places to make the money work harder for you – much better choice to pay off debt or invest than to buy the fleeting feeling of something “shiny and new”.


  11. I like what ESI said about buying a home you can afford. I definitely think going with a house you can afford is HUGE. It is so easy to overspend on a mortgage when you are just looking at monthly payments. For example, buying a $200,000 home v. a $220,000 only costs $60-70 more per month. But that is $20,000! Plus interest over time. Gotta keep the big picture in mind.

    1. Isn’t that the truth, Amber!? You will almost always “qualify” for more than you should probably spend. Being realistic about the numbers and what you can really afford is so important. I love your example!

  12. I seriously cannot imagine that feeling! But I really hope we get the opportunity to one day.

    Also, I think this was the most important part of your story (besides paying off your debt, obvi) “By the way, we did not sacrifice what we considered to be better investments during this time. We invested fully into my 401k to get the entire company match.”

    You should not have to sacrifice everything you want. Thanks for sharing your story!

  13. As a renter in one of the most expensive housing markets in the country, I can’t even imagine how great it must feel to own a home and be mortgage free. But we are debt free and I do know how good that feels. I hope I can say the same in another decade! Good for you, very inspiring.

  14. Very cool how you rejected the idea that you need a mortgage to buy a house. I’ve been thinking about that recently. There’s a lot of power in being debt free.

  15. So many nuggets of wisdom in this post. “The first step to paying off your mortgage occurs before you even own your home.” Wish I’d recognized that before we bought our home! Congratulations on your 20 years of debt-freedom. I’m 53, and still 3 years away from that state after over 4 years of debt reduction (Ramsey style). But we’re getting there! Thanks for sharing your story.

  16. Hey ESI, that’s awesome! I didn’t realize that you had been mortgage free for so many years. We are still working on paying ours down, but hopefully will have it knocked out in 9 years or so. It happens to coincide nicely with both kids being done with undergrad (hopefully).

    Thanks for sharing the details!

    And, of course, thanks for hosting Amanda!

  17. This is a cool story, and very possible with focus and effort. I really like how he made a plan and stuck to it without getting into new debt along the journey. I hope to one day be FI like him. Congrats ESImoney, and good luck.

    1. It’s something to strive for. And it’s proof it can be done!

  18. I can only imagine how freeing it must be to owe no one. Stories such as these always give me perspective and encouragement on my own journey. Thanks for sharing!

  19. Nice job paying down your debt. It clearly took a lot of discipline and focus, and it must feel fantastic.

    Our only debt is our home (and a large debt it is). I’m doing the “logical” thing and investing instead of paying it down since our interest rate is so low, but it does bug me every time I see that line item in our finance sheets.

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