Here is a story from a reader, Courtney, that I thought you all might enjoy.
My husband and I are in the process of becoming debt free.
I came up with a plan well over a year ago to start paying down our debt and we were supposed to be debt free as of November 2011. That did not happen.
We found that once the debt started to decrease we would justify a large purchase, and say “its only going to set us back one month”.
Since November has come and gone and we are still working towards paying down debt, we have now developed a strict budget and we are paying every penny towards debt.
I have set up a weekly payment schedule so each week a chunk gets paid off. I did it this way so that I know that in 13 payments (13 weeks) we will be debt free.
For the time being, we have been eating food in our stockpile and we are avoiding going shopping to avoid the temptations.
We are new with a budget and sometimes it is hard to snap out of old habits, but we are trying. It has only been a few weeks, but things seem to be going well.
Courtney also had a question:
One thing I wanted to ask is: what is considered Debt Free?
We are striving to be credit card debt free, but we still have our car payments. Technically that is a debt, but we have already locked into weekly payments with this, and if we pay it off tomorrow, or October 2013 when the term is done, we still pay the same amount of interest because the interest was calculated in the total borrowing amount way back in 2008.
So we feel that we are already paying the interest so paying it off faster doesn’t really matter. Can I still say we are debt free as of August even though we technically still have a loan?
Most people consider themselves debt free if they have paid off all debt except their mortgage.
In my opinion, debt free means you have ZERO debt. You don’t owe money to anyone. That includes your mortgage.
Of course, it’s important to celebrate all success – so when you pay off your credit card debt, be excited! You are one step closer to becoming debt free.