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How We Achieved Debt Freedom

June 22, 2015

In the beginning, there was debt. Our marriage began like many others these days – my wife married into my debt.

My debt consisted solely of student loans. While I’m thankful for my education, and it’s been very beneficial to my career thus far, I was never a fan of the ongoing payments and interest. My wife, on the other hand, was always pretty smart when it came to money. She was also smart in the traditional sense. Her solid school performance led her to excellent scholarships, and she was able to quickly pay for what little the scholarships didn’t cover.

For me, I wasn’t able to snag the necessary scholarships to pay for all of my education, so I went the student loan route, $17,500 to be exact.

Before we got married, my student loan balance was worrying to my then-girlfriend (now wife), especially since my total net worth at that time was around -$15,000 thanks to my debt. It wasn’t the most solid situation to marry into. I’d love to tell you that it was my financial wisdom that lit the fire to get my debt paid off, but in reality, it was my deeper desire to impress my soon-to-be wife and establish a better financial situation for the day we married. Six months after I graduated college, the race to debt freedom began.

Debt Year One (2012) – A Slow Start

The first year of debt repayment was painfully slow, mostly due to my laziness. My salary during that time was around $31,000, which was a small fortune considering I was single and living in a small studio apartment. I was putting about $200 a month towards debt payments, which I later found only applied to small portion of the principle on the loan. At that rate, I could’ve possibly had my student loans paid off after 10 years. Maybe.

It was mid-2012 that I asked my girlfriend to marry me. We set a date for mid 2013. At this point, I knew that my debt repayment was becoming increasingly important (not that it wasn’t already). I ended the year with a debt balance of around $15,000. It was a start, but I knew I had a long way to go.

Debt Year Two (2013) – Changes

The second year of debt prison brought with it many changes. Not only did my wife and I get married that year, I also snagged a new job which bumped my salary to around $42,000. The debt payments increased slightly, but most of the new money went towards funding the newly married lifestyle. Debt payments remained around $200 a month. My wife married into $14,000 of debt.

Towards the end of 2013, my wife got a full time job, effectively doubling our household income.

The day she received her first paycheck, we went out for a dinner and had a talk about our financial future. Because we had adjusted to living comfortably on my income alone, we had quite a bit of additional money waiting to be utilized. We made a decision that night – our most important goal from that day forward was to pay off our debt as fast as possible. We knew that we could either carry my debt for the next decade, or crush it once and for all and use the freed up money to pursue a more fruitful financial future.

As the year came to a close, we bumped up our debt payments to around $1,200 each month. We ended the year with a balance of around $11,000.

Debt Year Three (2014) – Freedom!

With a new year beginning, we were on fire with debt repayment. Each payment served to motivate us further as we saw the balance drop lower and lower. Though we were tempted with windfalls here and there, we stayed the course.

On September of 2014, we made our final payment on my student loans. Paid in full. If you’ve become debt free, you probably know the feeling of freedom that comes with this experience. We finally felt empowered and excited about our financial future.

We used the next $1,200 that would’ve gone towards a debt payment and split it between us as blow money. Stupid? Yes, especially knowing what I know now about compounding interest, but I did get this sweet 7-string guitar out of it. If you’re approaching debt freedom, I’m not going to encourage you to do that with your money, but seriously, reward yourself for a job well done.

What Now?

Now that our debt is crushed for good, we enjoy a life free of the shackle of debt. We’ve since built a healthy emergency fund and begun investing our money in retirement and taxable accounts with good ole index funds (using Betterment!). We’ve also been steadily tracking our net worth, a practice that’s definitely opened our eyes to the power of our investments, and provided a clear road map to how we can continue to pursue financial independence.

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