No debt families- share your successes!

[Amys1st]

You live in the black. The only exception is you pay a mortgage and its reasonable and you are on track to pay it off early.

You owe nothing else, what do you do and how did you get to this point??

This is meant to share ideas, not debate, not to flame anyone who is not there yet, or pass judgement on others who do not live the same lifestyle.

So I will start: I am 35 and DH is almost 35. We have a modest house that we bought 10 years ago and its has doubled in value. We just sold it and bought a much larger house for 30K more which adds up to a few more dollars a month on our mortgage- not much. Its needing a lot of work but we did it on this house as well so it will be a great fun challenge for us. We are gutting the kitchen right away but will wait a year or so on the bathrooms when we have the money for it to do all at once. We are very resourceful and can get great deals on appliances etc.

We drive two paid off cars and will buy another one down the line- I would like to pay cash for it. We have a very well funded retirement acct and have been doing contributions to it for several years. I am a sahm at this point in our life. I doubt I will go back to an employed position but more of an independt consulting type work in a few more years. My sah status has allowed dh to really grow in his career and at this point, there is no need for me to seek outside employment. But as we all know, as much as we prepare, if there is a need for me to do so, I can jump back into it.

We live a frugal and green lifestyle. This also helps us keeping in the black. Anyone else??

[mlleoiseau]

Well, it halps us that dh is a penny pincher. He keeps receipts and tracks every penny he spends. Used to make me do it, too. He's in the military and as newlyweds, we lived in military housing and both worked. We only bought basic furniture we needed. We generally don't go out to eat or go to the movies. We don't really go on vacations, either. We drink water instead of sodas/juices. I've pretty much stopped buying books and go to the library instead. We buy as many toys and clothes as we can at the thrift stores. We managed to sell both of the houses we lived in at a profit. We generally don't buy things we don't really need and usually ponder the purchase for a while and look for the best bargain.

I think basically it's the little things that add up. It really helps, though, that dh has had a good paying job our whole marriage, and that at first we lived in military housing. Also, we didn't have dd until we'd been married 7 years.

[Amoreena]

i'd love to hear from anyone in *california* who's in the black. really.

i'd love to hear suggestions on how to get to black

we're in better shape than most i think, meaning our debt could be MUCH worse, but i'd really love to see us much more on track.

i'd love to hear what has worked for people, starting with the little simple stuff.

[msjd123]

Originally Posted by Amoreena

i'd love to hear from anyone in *california* who's in the black. really.

i'd love to hear suggestions on how to get to black

we're in better shape than most i think, meaning our debt could be MUCH worse, but i'd really love to see us much more on track.

i'd love to hear what has worked for people, starting with the little simple stuff.

Well, I consider us to be in the black even though we have a mortgage and student loan debt ($20K). We *just* paid off $13K in credit card debt, and we have committed to living frugally and never acquiring credit card debt again. It's a change of pace, that's for sure, but we both really want to make it happen.

Some of the things that have helped us get to this point have been luck and timing. DH and I are both teachers, but I started teaching w/o a credential at 21, straight out of college. (What the heck possessed them to hire me, I'll never know, LOL!) We both work for LAUSD, which pays us better than most districts, and we chose to live in the San Fernando valley, which is cheaper than many other areas. We bought our house for $310K in 2002, when I was just 24, and that has counted for so much. We were able to save nicely before we bought the house because we lived frugally and I started working so young, and in 2002, the market was still pretty mellow. We were also married in 2001, so we used almost all our wedding money for the house. We eloped (to Santa Barbara, actually!) and had a cheap honeymoon in the Wine Country, so doing all those things in 2001 enabled us to realize our dreamof buying a house in 2002. Honestly, if we hadn't bought then, I don't know what we'd do because our house in now valued at $650K, which is totally unaffordable for us.

Hope that helps explain things a little!

[mumm]

We are in boston, which may not be quite as expensive as CA, but is still pricey. We live in an area where the average 1800 sf house goes for about $900 K. (There are more million $ homes in my town than $500 K) We have a (far) below average income of about $70 gross. We have a 1997 (I think) sentra and a 2006 toyota sienna. I was worried about buying a new car, but with twins on the way we needed a car we could all fit in. We had to take out a loan, which was very scary for me. But we managed to pay it all off in about 4 months.

We do not scrimp on savings. My partner puts in the maximum amount her company will match. She also follows EZTracker, which tells her where her investments should be each month. It has worked really well for the 15 months or so we have been doing that. We don't short change life insurance either.

Our only debt coming out of college was college loans. It took me about 3 years and my partner about 8 years. (Our finances were combined right out of college- she just had way more debt because of her education costs.)

We never buy anything we can't pay for. It's actually very simple if you don't already have debt. We do plan to put an addition on the house in the next few years, which will require us taking on new debt. I feel anxious about it, but also know that we will spend less on it than the mortgage lenders would like us to! We don't need things to be nice- i.e. we shop for clothes at thrift stores for everyone, we don't dress fashionably. If we eat out it is for pizza and salad, not a nice joint by any means. For mother's day I got new athletic socks.

I do think our living low on the totem pole (that's not the right phrase- low on the food chain? I don't know : ) affects my self-esteem. I don't have the confidence I think I would have if I dressed well, drove nicer cars, knew how to order with a waiter at a restraunt, etc. Sometimes I think we should live somewhere where $70K is a decent income, but then we would lose out on the school system, more educated folks, the inclusive community that as a two-mom family we value.

For the little stuff- wash and iron your clothes- skip the dry cleaning where ever you can. Store brand items are okay most of the time. Keep the constant expenses down- heat/ac, food, etc. Most people find my house to be cold- it is. For children- breastfeed, cloth diaper- don't introduce them to anything costly! They can have plenty of fun with free stuff and won't know the difference until they are 5 or 6. (Then you can have fun making up for lost time since they won't take skiing, horseback riding, scuba lessons, etc for granted!) I can't even begin to understand people who buy coffee everyday, or lunch. Ouch- that adds up to real money. Books/Music.Movies- go to the library- they'll get you anything you want! Do your own landscaping, snow plowing, gutter cleaning, house painting, duct cleaning, etc. Don't get a gym membership- buy some sneaks, get a bike and some weights. Swim at the local pond for 4/6/8 months a year and skip the pool membership.

It is better to have more money. Steak is better than dog food- that is a fact not just opinion. When I get down about what I don't have, I try to find someone else to compare myself to. I also feel good when my kids say they are thankful for their house (as tiny as it is) and their food (as basic as it is) and their family (as simple as we are)- It means I may not have much, but I've got everything I need!

Plus if you have no debt- you are entitled to a holier-than-thou attitude! Especially if you once had serious debt- then you can have that and a whole lotta respect from folks like me!

[rsps]

Originally Posted by Amoreena

i'd love to hear from anyone in *california* who's in the black. really.

i'd love to hear suggestions on how to get to black

we're in better shape than most i think, meaning our debt could be MUCH worse, but i'd really love to see us much more on track.

i'd love to hear what has worked for people, starting with the little simple stuff.

well, I'm in California but I don't know how much help I'll be.
We've never been in debt. We bought our house 9 years ago with a fixed rate mortgage (could not afford to now.)
We funded college through parents/savings/grants/a small inheritance so no student loans. we've always lived frugally, and both work part-time at this point -- equals one decent full time job (though our income is below the local median)

we are 36, paid cash for our last car (through a gift from my parents.) are on track with retirement savings.
We need to do some work on the house and I'm planning to go slowly so we can pay cash for it all. We don't have cable tv and only recently got dsl internet. our house is under 800 sq feet for 4 people.
we have never run a credit card balance.

I think it's very difficult to get out of debt once you are in. I wish our society (parents, schools, etc.) did a better job of educating young people on how to handle money.

[annekevdbroek]

We're debt-free too. We pay ourselves first - which allowed up to save for our first house, and our move to a slightly bigger/better house on our most recent transfer. I am soooooo frugal. We live within our means. I think as PP noted, we don't buy things that we don't have money for. Our credit cards are rarely used. Each month we have automatic payments to the various savings accounts (retirement, college, other retirement, etc.).

In the past year we paid cash for two cars. When we bought our last car in 2000 we said that was the last car loan we'd take. We've done a lot of work on our house and have paid cash and done as much of the work ourselves as possible.

I have a feeling most of these posts are going to come down to 1) live within your means whatever they happen to be 2) don't buy stuff unless you can pay cash unless it is for a house or higher education 3) save money for big things such as a downpayment, retirement, etc.

[annekevdbroek]

Originally Posted by rsps

I think it's very difficult to get out of debt once you are in. I wish our society (parents, schools, etc.) did a better job of educating young people on how to handle money.

This is so true! I was never taught about money and was raised with very poor examples. I've been really committed to teaching my children about money. DS1 who will be 4 in July just started getting an allowance. We talk pretty much daily about money, how to save it, etc. He has to save 20% of the allowance. He has told me he doesn't want to go to the toy store for a while (to avoid temptation) so he can save his money for something big. I am so proud of him!

[Amys1st]

I agree it will come down to what a pp said- its living within you means, not buying what you can afford etc.

We are selling our home we bought in 97 for over 300K. We bought it for 145K at age 25. If we were 25 now, we could not afford to buy our house. I also noticed the salaries today that 25 yr olds are making are not too far off what we had back then. So I can see how it would be hard for a younger adult to get ahead. We would took out a home equity line in 2000 and put on a new roof and paid it off within a few months. Then in 2002 put in a new air conditioner. Paid that off. Then in 03 put in a new driveway then paid it off. So the house appreciated with the bubble and we put money into it and got it all back. Now we will do it again with this house. Its bigger but not too much bigger. We plan to pay it off in 15 years. We still have a very small mortgage compared to most people.

As everyone said- we eat well but at home. I am a 99.99% scratch cook. I CD, I breastfed, make/made my own baby food, we are bigtime Cragislist, ebayers, trader post etc. Freeycl etc.

Savings- at age 35 we have almost 120K in retirement. DH contributes over 10K annually. I did when I was employed. Once I start up again in a few years, we will do the max for the roths too. The only issue I see is if we make too much money to contribute to roths but I want to stash as much cash for retirement as possible. You cant mortgage that!

[aircantu1]

We'll be debt free except for the house this month -- quite possibly this week!!

We did it by following Dave Ramsey's advice and selling everything that wasn't tied down and being as cheap as possible -- driving beaters, heading to Craigslist anytime we needed something "new", stopping the eating out (this was a huge money waster for us), and using lots of coupons. And of course cutting up the cards and paying cash for everything. And cancelling cable and the lawn service and the cleaning lady and anything else that wasn't absolutely necessary for survival. Oh yeah, and my husband working a whole heck of a lot but he did that anyway.


We had $51,075.74 in debt between cars/ student loans and credit cards when we first discovered Dave Ramsey -- NO MORE!! We had been "trying" to get out of debt since we got married in 2002 but we didn't have a real plan for it and we were only tackling the credit cards -- not the student loans and cars.

Now the plan is to move onto Baby Step 3 and get 3-6 months of expenses in savings.

[Amys1st]

Originally Posted by annekevdbroek

I have a feeling most of these posts are going to come down to
1) live within your means whatever they happen to be
2) don't buy stuff unless you can pay cash unless it is for a house or higher education
3) save money for big things such as a downpayment, retirement, etc.

I have to agree. Now I guess for most its easier said than done!

For #2, I would add- for a house, make it a payment that can be done every month. Factor in taxes, pmi, interest, and anything else. THis should not eat up more than 23% of your gross income also.

As for higher education, I would look for ways to ease the burden before taking out huge loans. Plenty of people have spent time at state colleges and local city and com colleges for the foundation courses and once in the major work, then going on to the higher education school. We are also putting away money for my children, but we expect them to also contribute whether working during school like their parents did, or something- its also part of the learning process.

Getting out of school and having a debt the size of my mortgage is really teaching you nothing but you will now have to work even harder to get this paid off.

[root*children]

We are debt-free, but don't own a house. We're planning to buy this Fall, to get a bit more saved up for downpayment. We don't have any retirement, but we want to buy the house first, then finish our emergency fund, then start the retirement savings.

We live well below our means, which is saying alot, since we technically qualify as "low-income" for our area! I actually didn't realize this until I recently have been looking at first-time homebuyer programs, and we qualify for quite alot b/c of income. It just doesn't feel that low to me... but I was raised very frugally, so can live on just a little

[Thalia]

Hmm, some of the reasons we are in the black are beyond our direct control. One of the things that helped us the most was having parents who made it a big priority to save for our undergraduate education. And the fact that the stock market did well enough in the 18 years they were investing in our college funds to allow them to pay for our education in full. We didn't earn that, but we can try to do the same for our kids. I also work for an employer that has a very good health insurance plan. I don't know anybody who has a premium PPO plan and pays less than we do for family coverage.

On a day to day basis, some of the things that help us the most are:

• knowing how much we earn and spend and making spending priorities
• talking about money together so that we are in agreement about how we spend
• not watching much, if any, TV (because of the consumerist messages it sends, among other things) and listening to public radio with few commercials
• choosing to stay in a smaller rented apartment (with a very low rent) until we have saved enough to buy
• eating at home for most meals
• not using the credit cards at all or paying them off in full each month
• ignoring the credit card offers we seem to get every time we make a purchase at a department store
• only buying used cars that we can pay for in full
• increasing the percentage we save each year
• buying as much of our first baby stuff used as we can

Paradoxically, we have also found that giving away more seems to help with saving and staying in the black. I think it helps us keep in a good mindset about money and possessions generally. We tithe, we budget for unexpected opportunities to give financially, we give to charities that provide food and clothing for the poor, we give away things we own but don't need to Freecycle. The more you give, the less you feel like you "need".

[fiesta'smom]

I just love reading through this thread! You are all an inspiration and so resourceful!

DH and I are a bit older (49 and 48) and have the advantage of all of the kids being grown. When they were teens, we were struggling with keeping them in Christian school (mostly just to avoid public at the time), living in a tiny house in order to do that, and driving beaters that kept breaking down and costing us money! We ended up with about $4500 in CC debt that we just could not get on top of. Our school bill was more than our mortgage!

My hubby found a library book by Carol Keeffe called How to Get What You Want In Life With the Money You Already Have . I was not too thrilled at the time because I handled our finances and it sounded like a lot of work to keep track of it all! But we did it! I developed an elaborate system on paper to keep track of all of our spending (and yes I mean ALL of it). The main idea of the book is to plan and save for your very real expenses right down to the money to pay the news delivery person each month. The other part is to gradually reduce your debt at the same time.

Well, we ended up paying off the CC debt and saving for our expenses at the same time. We broke even after about 3 years and have gradually saved more and more over the years. Thankfully we got a computer in 1998 and I was able to convert my paper system to Quicken. That saves me hours of math! Now I just do data entry and checks and balances once a month. We have a money market account, a savings account and a checking account. I keep track of our spending in "cash accounts". There are LOTS of them, and it's annoying, but it keeps me on track. The cash account balances individually must add up (as a whole) to the real money that we have in the real accounts.

I do use a credit card, but I only use it to get ahead with a cash back feature of some kind. I then record every receipt and set the money aside in one of my cash accounts so it's there when the bill comes. The bill gets paid in full every month.

Right when we almost got our first house paid off we sold it and bought another. We moved from a townhome to a very modest single family home. We didn't have enough money to pay cash for it so we did end up with a 15 year mortgage. It will be paid off in about 12 years. That is our only debt.

We use craigslist for cars and furniture. We've used freecyle in the past. We used to do a lot of making do, but now that we are getting a bit older, we do treat ourselves more often. It motivates us in other areas. We like books for instance, and tools for the yard, and we do buy them when they are discounted or second hand, but could probably live without them. They are our luxury items! We are real homebodies!

The house has cost us a lot of money. It needed new windows, furnace, hot water heater, insulation, etc. We spurged and added AC (with the newest coolant that hopefully will not pollute as badly). Although we could live without the AC, for a couple of homebodies, it's just plain luxurious and we love it. We don't use it much really and it's very inexpensive to run...it was actually cheaper than all of the fans we used to run! We used the money we kept out of the first house to cover these expenses as we knew that they were coming up.

Good luck with all of your frugal endeavors all! I'm so impressed!

[Sharlla]

Well I paid off what CC dept that I had. We own a home but it is paid in full. Me own a car and a brand new motorcycle paid in full.

We don't finance anything. If we don't have cash to buy, then we don't buy. Me also don't live beyond our means. Our bills (food, gas, lodging, extras) are about $1000 a month. We bring home double that.

[FillingMyQuiver]

We're debt free, but just barely living in the black each month. When DH and I got married 5yrs ago, we had over $50,000 in debt combined (CCs, student loans, car payment). We paid that off in 3yrs, a feat we are both really proud of. We basically snowballed our CC debt (although we hadn't heard of Dave Ramsey yet). For the rest of our debt, mainly our car, when DH was laid off from his programming job 2 yrs ago, we cashed out his 401K (it wasn't big at all) and applied some of the severance package towards the debt. We moved in w/ my parents for about 6mo til DH got a new job and we got on our feet.

Before getting pg w/ DD in 2005, we were a 1 car family, a 2001 2dr Honda Civic. We paid that off and also paid cash for our Jeep Cherokee that's our family car.

We don't own a home, but hope to soon. We own both our cars and drive carefully, so we have the minimal insurance on our cars. We live VERY frugally, cook mostly from scratch (although that's been sliding since I got pg again, but I'm getting my energy back ) We conserve water and electricity, don't have cable, and don't do anything extravagant. We're going on vacation this month w/ my family, but were only able to afford to pay cash for it b/c my parents are using their timeshare, so we don't have to pay for lodging.

Right now DH makes just enough to pay for our monthly bills, so we don't have any real savings to speak of. He's due for a promotion in July/ August which will enable us to really start saving and hopefully move into a different place (we can only have 4 people in our apt, it's affordable housing). We know of someone that may be looking to rent their home w/ first option to buy, and we'd definitely be interested.

Getting to this point has been a bit of a struggle. Both DH and I come from homes where debt is looked at as a necessary evil (a view we do NOT agree w/). My parents went through a REALLY hard financial time when I was younger and I learned a lot from it, unfortunately, now they indulge themselves (and my younger sis and bro) quite a bit. DH's parents are the same way. Struggled financially when DH was younger and now they indulge A LOT, and have A LOT of debt. We want to teach our children how to use money responsibly and to save, something that wasn't taught to us til we were married, and we learned it the hard way:

To this day we kick ourselves about the $50,000 in debt we had. If we had not had to pay that, we would have had a nice down payment to buy a home. But it was definitely a positive learning experience for us.

root*children~ can you give some sites for the first time homebuyer programs you've come across. Even w/ DH's promotion, we will be supporting a family of 5 on less than $38,000/yr, but we'd like to look into home ownership.

[njsummer01]

Congrats to all the debt-free families here!

We've worked really hard to become debt-free ourselves, and we certainly haven't had any support from family or friends who just don't understand my obsession with thrift stores!

By living on DH's teacher's salary for the past few years and banking mine, we've been able to pay off our cars, student loans and mortgage. We're also building our family through adoption so we were able to use cash for our first adoption (just brought our baby home in April ) and have enough saved for the second as well. Now I'm staying home with our babe, so no more savings opportunities, and we're on a pretty tight budget.

In our case what has helped the most is changing our mindset. We've read so much about materialism, advertising and what it does to all of us. The book "Affluenza" really spoke to us. Now, instead of looking at my friends' designer bags and new SUVs I take pride in our simple lifestyle and actually try to avoid the trappings of wealth that I'll admit, we used to strive for. Getting rid of our tv and making a firm decision not to buy big box/sweatshop made goods if at all possible really helped with this too.

Getting/staying out of debt is definitely a journey - we're committed to staying this way, but it will definitely be a challenge in the future because we want to adopt more children and will eventually have to buy a bigger car to accommodate them!

[mnnice]

Originally Posted by annekevdbroek

I have a feeling most of these posts are going to come down to 1) live within your means whatever they happen to be 2) don't buy stuff unless you can pay cash unless it is for a house or higher education 3) save money for big things such as a downpayment, retirement, etc.

I think there are also a couple key things that have elements of luck involved. For example remaining healthy, not having children with special needs, having no or very brief periods on unemployment, and staying with your significant other (divorce/custody issue get expensive fast) all help. But if your unable/unwilling to do the things first three things on the above list debt-free is unlikely to happen even if you are very lucky.

[Herausgeber]

I'm not debt-free (still have mortgage and student loan), but I am very much in the black in terms of net worth. Cash flow is a little tight right now with daycare expenses, but I'm making it.

The secret to happiness is low overhead.

I bought a house when I was 25, on my own. I took in roommates to help pay the mortgage. The house has doubled in value in 5 years, and for four years of that I basically lived here for free. I kicked everyone out but DP when I got pregnant.

I started saving for retirement when I first graduated from college, putting away the max each year. I never got used to seeing the money in my paychecks, and it adds up FAST. I'm only 29, but I have more money saved for retirement than most people over 50 in this country.

I was very aggressive about seeking promotions and raises in my career. I have grad school debt (30K at 4 percent), but my degree led to an annual raise equal to the amount I borrowed in less than 2 years. I could pay off the debt, but I've chosen to invest the extra cash instead.

I don't do car notes.

[WNB]

Originally Posted by Amys1st

You live in the black. The only exception is you pay a mortgage and its reasonable and you are on track to pay it off early.

You owe nothing else, what do you do and how did you get to this point??
...

I was born white to parents who were educated, though not wealthy.
I was blessed with parents who were willing to consider post-secondary education an investment in my future, and who were willing to assume debt on my behalf for that education (in addition to my own debts, and in addition to generous scholarships and grants from my college).
I've been fortunate enough to avoid health problems, and my love ones are also so fortunate.
I found a job -- through the classified ads -- for a firm that is run by honest, intelligent, caring people, and I stuck with them even when it seemed like I was being ground into the dirt by the hours, because the work was interesting and I felt like they valued their employees.
I did not have to manage the challenge of raising a child while trying to continue my education, or while working in a low-security position for an employer uninterested in helping employees be better parents.
I married someone who came from wealthier stock, but similarly healthy.
I was able to pay below-market rent to my husband's parents whil we saved up to purchase our home.
I learned early on, in grade school, what an amortization curve looks like and how it is possible to save tons and tons of money by paying down the principal on loans amortized over long periods of time.

In short... I've made good choices, and I like to think I don't live extravagantly -- but I know a major part of my family's financial stability is based on luck and privilege.