The title of my blog is “10 Years to Debt Freedom” but I have a confession to make…  It is really 9 years to debt freedom.  You see, I started my journey to being debt free last year when I developed my plan.  I would pay off my credit cards first, followed by my car loan and then student loans.  After all else was taken care of I’d tackle the hardest part of them all – the mortgage.  Part of designing my plans was to make a few promises to myself, and my wife:

  1. Pick a realistic number that can be ADDED to a payment I am making and pay it before doing anything recreational.  For example, I wanted to put an extra $1,500 toward my debts every month.  At the beginning of each month I first built my savings account up an extra $1,500 before going out to dinner, going bowling, etc.  I then made all my monthly payments and added the $1,500 to my car loan for a total payment of $1,856 each month.
  2. Don’t take out a loan or use credit unless it’s 0% interest and you have the cash to pay it off.  My wife and I needed to buy a new bedroom set but we waited until we saved to go buy it in cash.  When we found the one we liked we decided to buy it with store credit at 0% interest and set up an automatic payment to pay it off in 6 months – to ensure we didn’t pay interest after out 12 month, no interest period.  Why did we do this?  I have some of my saved money invested and I was averaging a 16% return on it.  So by leaving my money invested and slowly taking it out as I made each monthly payment, I was actually making money.  You can do the same.
  3. Put away a small amount each month for an “oh $hit” fund.  Bad things happen, and you can either anticipate them happening or pretend they never will – but they always happen.  Just a couple weeks ago my wife walked out to her car after work and found out her tire was flat and it couldn’t be plugged – that was a $160 unexpected purchase.  I anticipate a few hundred dollars of unexpected things are going to happen each year so I save $50 a month for it.  I also save a little bit extra for ‘fun’ purchases that I want to make, like vacations or new clothing.
  4. Don’t get distracted.  Saving money and paying down your debt is just like going on a diet.  You see your friends buy nice things on credit or take out a loan so they can go on a vacation and your first instinct is to get a little jealous.  Just remember, in 10 years when you don’t have car payments, credit card payments, or a mortgage your friends will be jealous of that, and the vacations and nicer things you will be able to buy because you pay no interest.

Get started on the first step to 10 years to debt freedom and make yourself these promises, you can do it!


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One Response to Promises

  1. Pingback: I hate budgets, you probably do to… | 10 Year Debt Freedom

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