Debt Free Story: How one couple achieved debt freedom for retirement

debt free to retireToday’s Debt Free Story comes to us from a reader in Iowa, who paid off her debt to make retirement a reality. I appreciate her taking the time to write her story and for allowing me to share it with you.

How one couple became debt free to retire

Tell us about yourself.

I am 64 and my husband is 67. We live in Iowa. My husband has been retired for a little over a year. I am still working 3 days per week.

How much debt did you have?

We have always had mortgage debt until 2 years ago. The last mortgage began at $87,000 17 years ago. We have also always had a car loan of between $6,000 – $10,000 until 3 years ago. We have never had credit card debt as we always pay the balance due.

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

It occurred to us that it may be possible to retire at a reasonable age after all – if we had no debt. Or at least retire from full time jobs. We could probably live on a small pension and social security and, at some point, possibly a small monthly subsidy from IRA’s. There would be no exotic trips, second homes, or extensive travel but we could live comfortably. Of course, it would not be possible unless there was Zero debt.

What was your plan for paying off the debt?

We have always been aware of a monthly budget. Our goal was to keep our monthly expenses at a manageable amount so we could also save whenever possible to have a cushion for emergencies. We also refinanced the mortgage a couple of times to get the lowest interest possible.

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

Any periodic bonuses or any other extra dollars that came our way went towards the principal balance of the mortgage. And a year-end bonus from work paid off the auto loan. We continued to put even small amounts into a savings account if there was extra at the end of the month.

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

The mortgage was paid off in 13 years. We have had no car debt for about 3 years. We generally buy a car that is 2-3 years old so hopefully we can keep enough saved to pay cash for any future vehicles.

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

The only motivation was to be able to retire at a reasonable age. Retirement was not even feasible unless there was no debt to payoff.

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

There are always obstacles. Some months, expenses that come up that were not planned. But that is why we felt it necessary to have a savings cushion that we could fall back on. The savings could remedy the unexpected expense so we could stay on goal for the debt payoff. We always try to save more the next few months to replace funds that have been deducted.

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

We don’t really notice having a bigger cash flow yet as the dollars going towards a mortgage are now going to health insurance premiums. My husband has retired and we no longer have group insurance. This will be an expense for the next 14 months until I am eligible for Medicare. He could not have afforded to retire if we still had a mortgage, auto payment or any other debt with the health insurance costs too. And so life is different in the way that we have more free time and basically live the same lifestyle on less income. We may both work part-time jobs for some time ahead but without the stress of careers. Being debt free gives us the choice.

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

I think the most important advice is plan ahead and save whenever possible. I am a firm believer in having a cushion for emergencies and also “spur of the moment getaways” or just frivolous entertainment.

Thanks again, Iowa reader! If you have a Debt Free Story of your own and want to share, contact me!

Photo Credit: Another great Iowa photo from my son, Jake! 🙂

6 thoughts on “Debt Free Story: How one couple achieved debt freedom for retirement

  1. Good advice. The wisdom that jumped out at me:

    * they banked their unexpected gains. Bonuses went to debt payoff, not to fancy vacations or car upgrades. I’m sure your fellow Iowan would have loved those things (who wouldn’t!) but saving for retirement requires discipline.

    * “there are always obstacles.” It’s easy to get discouraged when life bumps you off course, but you gotta stay fight to get back on track. A cash cushion sound like it helped this person.

    Thanks for sharing the solid advice and may your friend enjoy retirement! She’s earned it!

    1. Thank you, Ty! Yes! Perseverance and discipline are so important, especially with paying off debt and saving for retirement – it’s typically such a long term goal. It would be easy to get derailed with the obstacles, but that perseverance (and emergency fund) can get you through.

  2. Can’t argue with the cash cushion approach for when the unexpected happens, and it will. Thanks for sharing Iowa reader’s story! Continued success!

  3. What an inspiring story. My husband and I also want to achieve early financial freedom. That’s why we stay frugal. Great read!

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