Debt Free Story: How being debt free can grant you life choices

debt free choicesToday’s Debt Free Story comes to us from He and his wife have been 100% debt free for a few years now, which has given them the opportunity to travel, take care of their family and the freedom to choose a career path. Don’t miss how debt payoff was accelerated in this story. It goes to show a little creativity and flexibility can pay off!

Tell us about yourself.

I grew up in Northern Virginia about 30 minutes outside of DC and have never lived anywhere but Virginia. I didn’t even leave the state for college. With that said, I am super close to my family and extended family, all of whom live within a 20 minute drive of my house. My wife and I actually lived seven houses down from each other for many years but didn’t date until after college.

I am one of the biggest investment/financial nerds that I know, and it wasn’t until I joined the PF community that I found like minds. My wife was incredibly thankful as I finally had an outlet to connect with others about my passion. I seriously have a one-track mind and could talk with friends, family, or even strangers about this stuff for hours. I probably spend more time at work on my breaks discussing finances than actually eating my lunch, but it’s totally worth it to share my passion with people.

I first developed my love for investing my senior year of high school when I took a computer class, where we tracked investments and used that data to build the financial models. Learning about investments just before the tech bubble also helped as the stock market seemed like a magical place where stocks only went up.

What type of debt did you have?

I am incredibly blessed in that my parents paid my college tuition in its entirety. On top of that, I was fortunate enough to get a job right out of college and lived at home for a while as I saved up money for a down payment for a house. Because of that, I never accumulated any sort of credit card debt. I also opted for well-loved, used vehicles so that I did not need to take out loan for those purchases. So, the only debt I’ve ever had was a hefty mortgage, which I paid off four years ago, shortly after I got married.

What was the defining moment that made you decide to tackle your debt?

My parents stressed early on that I should think about paying off my mortgage debt as quickly as possible. They emphasized the freedom that would come with debt elimination. When I first bought the house, I wasn’t overly concerned with paying off the house since my mortgage payment was reasonable because I had roommates living in my home, whose rent covered a portion of the mortgage.

I think it was about six months into having a mortgage that I decided that while I loved living in my house, I absolutely detested paying my mortgage each month. Watching that much money leave my bank account each month was tough. On top of that, I felt somewhat trapped at my job at the time and thought, if I didn’t have this mortgage, I would have the freedom to pursue something else.

What was your plan for paying off the debt? How did you prepare?

Initially, I used an Excel loan amortization spreadsheet template to see how long it would take to pay off my house. I then started to play around with it to see how the numbers would work out if I paid things off faster or slower.

After I saw that I could significantly lower the amount of interest that I would pay over the life of the loan by paying more up front, I created my plan. I cut my expenses down to the bare bones in order to make an extra principal payment every quarter. Instead of a meal out, I cooked for myself or went to my parent’s for a free meal. I purchased a programmable thermostat and my heating/cooling bill dropped. Pretty much any way I could save a few bucks, I did. And those bucks added up. In hindsight, I should have just paid whatever extra money I had towards the mortgage monthly instead of quarterly.

Where did you find the extra money to put toward the debt?

Initially, I had three roommates. At one point, I moved out and back in with my parents for a year to rent out my whole house out in order to accelerate payments. While I enjoyed living with my parents, it felt a little silly to live at home while I owned a property close by. Thankfully, one of my roommates decided he wanted to live elsewhere, so a room opened back up and I moved back in.

The rent I charged was fairly cheap, and in the seven years that I lived with roommates, I only increased it once. I probably could have increased it more along the way, but number one: I really loved living with those guys, and number two: I thought if I could help them save money to buy their own place while they help pay down mine, it’s a win/win situation.

So having stable roommates for seven years and also receiving some raises along the way allowed me to continue accelerating my payments. I also took any bonus money that I received each year and applied it towards the mortgage. Of course, at the time, it wasn’t fun putting all that money towards my mortgage, but it was worth it to gain financial freedom.

Finally, when I got married, my wife had saved up some money for her own down payment for a home. Since she moved into my home, she applied that money towards the mortgage, which allowed us to be debt-free at the start of our marriage.

How long did it take you to pay off the debt?

I was able to make the final mortgage payment in December 2012 after 7.5 long years.

How did you stay motivated to continue on your path to debt freedom?

Every month, I loved updating my Excel loan amortization spreadsheet and watching that balance drop. It also helped that during that time, the stock market was getting crushed, and I thought to myself, at least I’m getting a guaranteed rate of return.

I actually ran the numbers a couple of month’s ago and found that if I had invested the money into the stock market or had paid off the mortgage the difference was only 0.1% in favor of the stock market.

For me, not having to make another mortgage payment on my home again is well worth forgoing the extra 0.1%.

Did you make any mistakes or hit obstacles that slowed or stopped your progress?

The biggest obstacle that occurred was when my beloved Mazda MX-6 car engine died on me. It was a great, reliable car that met its demise much too early. Unfortunately, I ended up donating it because I could get a bigger tax write up than trying to sell the body. I then had to find, and pay for, another reliable car, which was not in my plan. I ended up picking an affordable Honda, but it was still an outlay of money that I had not anticipated.

How is your life different now that you are debt free?

In my 20’s, I traveled once outside the US to Mexico. Since my wife and I got married and no longer have debt, we have been able to travel all over the world. On top of that, it has allowed me to not fret over climbing the corporate ladder to make more money. I’ve been fortunate to select jobs that interest me instead of ones that would pay very well but where I would be miserable.

On top of that, being debt free has allowed my wife to stay at home and take care of our son and also her special needs sister full-time. This would not have been possible if we still had a hefty mortgage.

What advice or actionable tips can you give people who want to pay off their debt?

Start today!!! Write down your dreams, and then set up financial goals along the way to reach your ultimate goal. I ask friends all the time what their life would look like if they didn’t have any debt. Most of the time, it isn’t what they are doing now. So, I encourage anybody that is living a life that doesn’t line up with their dreams due to debt to quit delaying and start moving in the right direction today.

Mustard Seed Money is a financial blogger who works for the federal government as an accountant.  His real passion lies with personal finance, though.  He is on his way to achieving financial independence by 2020.  Read his thoughts and insights over at Mustard Seed Money.

Thanks so much for sharing your inspiring story of debt freedom, Mustard Seed Money!

If you have a Debt Free Story of your own you would like to share, please contact me!

51 thoughts on “Debt Free Story: How being debt free can grant you life choices

  1. Great job MSM! I can’t wait to be mortgage free myself. I’m slowly but steadily working my way there – with a family of five living on one income it can be a challenge, but I know we’re going to get there!

    1. Being mortgage free is one of the best feelings in the world. Having read your blog I know you are well on your way to achieving financial freedom 🙂

  2. I am quite the opposite of you MSM as I never want to be debt-free. Though I have quite a bit of debt, I would say that 75% of my debt is tax deductible and it’s working hard to help me increase my net worth.

    Sometimes, it’s great to explore the other side of the spectrum and learn what it’s like to be there. From time to time, the freedom of being debt free did cross my mind and I would wonder how it would affect my behaviour. In the long run, I think that’s a good place to be and I would love to join you one day.

    1. Thanks for sharing Leo!!!

      I thought I would be fine carrying debt as the leverage could open up other opportunities for me. Turns out that I hated the debt and actually felt trapped.

      So for us it made sense to pay off the debt and has allowed us to sleep better at night 🙂

    2. I’m very curious to see what tax plan ends up getting passed. Trump is proposing a $30,000 standard desuction for married couples. If this gets passed, a lot of people will no longer need to itemize their mortgage interest (unless they have a lot of other deductions). I wonder if this will motivate anyone to pay off their mortgage early.

      1. It will definitely be interesting to see what the final tax proposal looks like. I think I read the other day that the top 1% gain 15% of the benefit of mortgage interest deductions.

  3. We’re working somewhat on mortgage payoff so I understand the appeal. Still I’m only doing so after hitting my other investment goals. I get the appeal of being debt free, but like others have commented I’m not super concerned about my mortgage. Other aspects of debt I had in a previous life were a bigger concern.

    1. I totally understand where you are coming from and I thought I’d be the same way. But for whatever reason when it came to carrying that mortgage debt each month it felt more like a burden than a blessing to do other things. So we became hyper focused to pay it off. It’s like I tell friends, do whatever helps you sleep at night 🙂

  4. Wow, that is so affirming to hear that only “lost” out on 0.1% growth in stocks compared to paying off your mortgage. I do think, aside from other benefits to paying off a home, it’s nice to have a guaranteed return of not having to pay whatever your interest rate is.

    1. When we were paying off the mortgage in the midst of the great recession it felt great knowing that I was getting a guarantee return on my money.

      I’m glad that I looked back though because I then started to have doubts that I did the right thing by paying off the mortgage as I could have been buying cheaper shares during the downturn.

      So when it turned out the difference was only 0.1% it was a sigh of relief.

  5. You are way ahead of your time. Most people don’t even consider their mortgage as debt, or at least bad debt they need to pay off right away. It must be a great feeling to be living free and clear!

    1. I have to admit that I didn’t either at first. But then seeing how much of my paycheck was going towards the mortgage was a slightly sickening feeling. It was definitely one of the best decisions I’ve ever made.

  6. Awesome, MSM. Many PF experts say it’s silly to pay off the mortgage when you could be making more money through investing, but we’re firm believers in the choice that comes with complete debt freedom. Congrats!

    1. I too have heard that it’s better to invest your money instead of paying off your mortgage. Although based on the analysis that I did during that time period it totally made sense for us to pay off our mortgage and we are so happy that we did 🙂

  7. I follow MSM regularly but I still found some additional info about his story in this guest post. There are a lot of arguments about which is better: paying off mortgage or invest the money instead. One thing is for sure: you should save regularly for either purpose and your financial situation will increase sooner than you think.

    1. I’m glad to hear that you were able to glean some new information 🙂

      I definitely agree whether you decide to pay off your mortgage or invest in the future. Save for something!!!

  8. Great job, MSM!

    Although I don’t have a mortgage myself, but instead a car loan, I do hate seeing my bank account wither every month due to payments. I’ll be debt-free once I’m finished with that loan!

    1. Awesome job getting rid of all your debt except for a car loan. The one thing I wish I did when we paid off our house was celebrate it somehow. Hopefully after you pay off your car loan you can commemorate this in a special way 🙂

  9. Bravo MSM. I am so inspired by stories like the of people who freed themselves of the shackles of debt. I can’t even imagine what it would feel like to own my own home and have it paid off. I also really am so struck by people who are able to have the freedom to do what they love because they don’t have to feed the beast. That is the dream of dreams…

    1. I’m so happy that it inspired you Linda!!! It’s definitely one of the best decisions that I’ve ever made in my life and I have a hard time thinking about ever having a mortgage again 🙂

  10. Great story, MSM. There are many financial pearls to take away from your experience, like saving money by living with family and not financing purchases of cars. Congrats on being 100% debt free! I can’t wait until I join you myself!

    1. I’m happy to hear that you enjoyed the article. Being 100% debt free is one of the best decisions that I have made in my life. I can’t imagine going back and carrying a mortgage again.

      I look forward to reading your financial journey as you become financially free.

  11. Great job MSM! We’re in your camp about paying off the mortgage. There’s no feeling comparable to owning the roof over your head. Congrats on all your accomplishments. I’m so glad you found the PF community to share your enthusiasm with.

    1. Thanks for the kind words Mrs. Groovy. My wife is also happy that I finally found the PF community as she had to listen to my personal finance musings way too much 🙂

  12. There is no better feeling than knowing you are completely debt free! Great job on paying the house off early MSM! I’ve found that having no debt also increases risk tolerance a bit more, which should help with increasing net worth over time.

    1. I totally agree with you that my risk tolerance is much higher than before. I am not nearly as concerned about the swings of the market or how it will affect my job. It’s a great feeling.

  13. I don’t have much debt (outside of my student loans totaling around 7K right now) and it’s allowed me to travel a lot as well. I also travel on a budget, meaning I either couchsurf or stay at hostels. A lot of perks for sure!

    1. That’s awesome how little debt that you have and even more exciting to hear how much traveling that you get to do. One of my regrets is not traveling more when I was younger. I’m happy to hear that you are taking full advantage of it 🙂

  14. I loved hearing more of your story, MSM! You were one smart cookie!! That’s awesome that you have great friends that statues for so long – and not easing the rent was the perfect you scratch my back I’ll scratch yours scenario. I’m sure after that long together you wouldn’t want to lose one and have a random guy move in! So great that your wife liked the place too… man, it may have been a whole other ballgame if she didn’t. 😉 What a great way to start out your future together. Now you not only have a great story for your son but also a great inspiration as your parents were for you. Way to keep the chain going!

    1. I never thought about the generational blessings aspect but you are definitely right. Hopefully the advice that I received from my parents will continue being passed down through the generations and hopefully they end up more wise than we did 🙂

  15. Congratulations on being debt free. It must be a big relief for you.
    Many years ago, when I was self employed, I went through a very long and rough period, I racked up well over $100,000 in credit card debt. This didn’t even include mortgages. It took me a while to work my way out of all this debt, but I did it. One of these days, I will write an article about this and how I pid off all the debt.
    )My biggest tip: Pay off your lowest balance credit card first, no matter what the interest rate.)

    1. Congrats on paying off the debt. Sounds like you used the debt snowball method to pay things down which psychologically has proven to be a very effective way to pay down debt. I can’t wait for you to share that post.

  16. The only debt my wife & I currently have is mortgage debt and we are putting our extra money into that instead of investing. It was a tough decision as the interest rate is “only” 3.25%.
    We are still investing but the reasons you mentioned for being debt-free are awesome. My wife & I enjoyed the two years we were debt-free and want the liberty again as soon as possible.

    1. Being debt free is a huge blessing for our family. Hopefully it opens up some doors for your family and gives you the flexibility that you’re looking for 🙂

  17. “I’ve been fortunate to select jobs that interest me instead of ones that would pay very well but where I would be miserable.”

    That’s the best part of financial independence, living the way you want to live without having to chase money. I also had roommates before getting married. It was a great way to cut expenses, and some of them are still my best friends. Congratulations on paying off the house!

    1. Living with my best friends after college was awesome. We spent a little over 5 years together and those are definitely memories that I will treasure. It was also nice that they were helping pay the mortgage 🙂

  18. Great stuff, MSM! Y’all are doing awesome. And thanks, Amanda, for hosting this great Q&A!

    Lots of great, smart nuggets here, and lots of inspiration too.

  19. “My parents stressed early on that I should think about paying off my mortgage debt as quickly as possible.”

    That’s awesome, MSM! And, great story. This weekend, I’m teaching some teenagers about personal finance and I’m going to use some of these topics for sure.

    1. Thanks for sharing Primal Prosperity. You’ll have to share how the weekend goes. I’m curious to hear what the perception of teenagers when it comes to debt.

  20. I loved how you were thinking about helping other folks along their journeys even while you were busy paying off your own mortgage. You sound like a really nice guy! Congratulations on being mortgage free and enjoying all the freedom that goes along with that.

    1. I have to admit being mortgage free is definitely one of the best things that I have ever done. The freedom that comes with it a very nice feeling 🙂

  21. 7.5 long years? That is a blip of time when compared to length of time most people carry a mortgage. Good for you for taking the path less traveled! I hope your colleagues listen to you over the water cooler : )

    1. I’m trying to convince them to listen to me. I’m not sure that they’re quite there yet. But I like to think that I’m laying the seeds 🙂

  22. I love his point about writing out what your goals or your life would look like if you didn’t have any debt. I’ve never quite looked at it from that angle, but I’m going to do just that now. Maybe it will motivate me to hustle harder.

    1. I’m happy to hear that line resonated with you. It was definitely a light bulb moment for me that totally transformed how I saw things.

  23. It is an encouraging post for everyone, especially for young people who still have a debt. It should be fortunate to select jobs that interest him/her instead of ones that would pay very well but where he/she would be miserable.
    Immediate action is always the best when one wants to payoff a debt as soon as possible.

    1. I am definitely fortunate to be able to pick jobs that interest me more now. I know not everybody has that flexibility but having paid off the debt has helped allow this 🙂

  24. Inspiring story, MSM! You and Mrs. MSM have made a lot of great money decisions over the years and are reaping the rewards. It’s a great example to everyone who strives for financial freedom!

    1. Thanks for the kind words Mystery Money Man. We try to live by Charlie Munger’s words

      “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

  25. Such a blessing that you did not have to touch a single student loan! Knowing what I know now, I want to do everything possible to ensure that my children don’t get weighed down in debt! As much as I would like to own a home, I know adding a mortgage would not be the best financial decision for me right now. It is true that if debt was not an issue, many people would not be doing what they are doing now.

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