So, this is a continuation of my previous post on becoming Debt Free on a Dime which you can read HERE. There is where I tell you where we came from in our financial journey! Now, down to the good stuff, how did we get debt free? Read on to find out!
Debt free, one step at a time…
Short steps climb a mountain after awhile and that is exactly how we climbed out of the mess we had made for ourselves. Now, don’t get me wrong, we weren’t hundreds of thousands of dollars in debt. Probably max debt we carried was $30,000, but we wanted out, completely!
First thing I did was sit down and make out a payment sheet. I figured up exactly where we’d be by paying it off on the bank’s payment plan and how much longer we’d be paying. I then figured how much interest we were paying long term. Ouch, that hurt! We were paying about twice the amount of our loan back. That did not make good sense to us! If we could afford to do that, why couldn’t we cut our time in half and save a bundle?
Let me tell you the bank did not appreciate this move. In fact, they tried to tell us we couldn’t make payments only on the principle or pay our loan off early. That was an absolute lie, which we called them on and they backed down. So, we started making a principle only payment the first of the month, then a regular payment at our due date. Our balance started shrinking and the amount applied to principle got bigger as the months went by.
We also asked the bank to lower our interest rate. We found a lower rate somewhere else and told them we were moving our loan unless they could beat it. They did! I still remember the day that we paid our loan in full! It was in 6 years, which was half the time that we had borrowed for!
The borrower is servant to the lender…
Unfortunately this is so true! Debt sucks you in and keeps you a slave to it. A friend posted a meme the other day that said, “I owe, I owe, it’s off to work I go.” We are often so indebted that we literally do not have the capability to make certain decisions on our own. One of these is the ability to stay home when we are raising children.
I know this was HUGE for us! We had just built a house and decided that after 8 years of marriage we wanted children. But could I stay home with them? Read the next post in this series to find out why I could!
Think you can’t stay home and live on one income? Read my article 5 Tips for Living on One Income!