One of the “bucket list” goals that I set at 30 was to be debt free within ten years. It was an interesting goal (at least to me), and one I could never hope to accomplish alone. In reality, my wife was the one who did most of the work to make this goal a reality.
We had just moved from Tucson, Arizona to Sacramento, CA when we turned 30. This was in the late 1980s, just after the Keating Savings and Loan debacle, so we moved back to California with virtually no assets and seriously in debt. When we determined to be debt free (well, actually we expected to still have a mortgage) we discovered a couple of basic principles about successful debt reduction: 1. Create a budget; 2. Commit to pay down debt; 3. Pay cash for most expenses; 4. Don’t spend more than your (after taxes) income; 5. Don’t try to impress anyone with possessions.
These principles seem basic (they are) and easily discovered (they are), but seem to elude many young couples – they eluded us for several years.
We began by setting a budget, then began paying down our debt that carried the highest interest and/or had the shortest pay off. We stopped impulse buying and used cash for virtually everything we chose to purchase (including cars – eventually). We began to live well within our means (in order to buy down our debt more quickly) and purchased a fixer upper home in a nice neighborhood (more on that in a later post). We bought cars we could afford and quit buying a new car every six months or so (embarrassingly true).
If this all seems simple to do, it’s not. It required a commitment to not buy every shiny thing we saw. It also required a commitment to quit caring if our home or cars were as big, or fancy, or modern as those of our friends, but we also decided to love what we could afford and celebrate with our friends when they made their purchases. In short, without realizing it, we really were committing to live pretty stress free lives. My wife and I grew closer together and we were able to be virtually (still have a small mortgage) debt free within about five years. This has given us freedom to move when we have wanted to do so, change jobs when we feel like it, spend more time together, depend on each other rather than things, and make donations to charities when it’s needed – investing in the lives of others rather than in stuff that will rust – without fear of not being able to pay for the stuff we have accumulated.
Accomplishing this goal was easily the most satisfying and brought with it a realization of the value of relationships over possessions. Not a bad lesson to discover while doing something so basic.