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No debt families- share your successes! - Page 2

post #21 of 94
Here I go again...

Every financial decision I've made in the last 20 years has been with my eye on what it will do to my net worth. Dh (thank my lucky stars!!!) has as well. As I've said before, we choose to carry a mortgage and will not pay it off early because it would negatively affect our net worth. We don't look at the monthly payments for anything... we look to see if it will increase our net worth.

Other things that have helped... Dh is 51 and he was 41 when we met. He is in academia, but in one of the highest (non-medical) paying fields. I was a computer programmer... made big bucks until I became a SAHM. We started a family late in life, after we had years and years and years in lucrative, established careers. I was able to save a lot of money because of my career, mostly. Dh and I are both big savers. I'll admit that in my 20's and even into my early 30's I'd blow some money... mostly on travel. I was single and I'd literally take a few weekend trips to Europe on these last-minute reduced fare flights each year in addition to other vacations. But I ALWAYS kept my eye on what it would do to my net worth. If I hadn't been maxing out all of my retirement investments, if I hadn't had a fully funded emergency fund, if I had any credit card debt, I would have NEVER done something like that.

The other thing that helps us is to not be materialistic. I couldn't care less what I drive as long as it's paid off and safe. I don't buy any designer anything. I cook from scratch. We don't eat processed foods. We don't go to movies, but wait for the videos to come out. We do eat out about once a week on average. When we buy something, we research the hell out of it and buy something that is of high quality that we can live with the rest of our lives. We don't believe in buying something cheap that will break or wear out in a few years. If we need something, we save the money up for it and do without in the meantime. Our furniture, our house, our kitchen pots and pans, etc. were all purchased with the intent to buy good enough quality that we could pass it on to dd when we're dead an buried. It is much more expensive to buy cheaply made stuff that you constantly have to replace.

Finally... sound investing. We don't go out there and try to beat the market or dabble (play, daytrade) in the stock market. We are soundly invested in funds that march right along with the market, beating it sometimes (especially recently), but mostly just chugging along at the same pace. We are invested for the long haul and have accumulated enough to live quite lavishly if we wish in our retirement, while still funding dd's college, and leaving her a healthy sum in our estate plans. But the bottom line is always NET WORTH.

Dh and I both come from poor families. His father was a cobbler back in Istanbul and my Dad was a civil servant. They both taught us how to manage money wisely.

(We also have not had any major medical bills because our insurance has always been very good. When I was working, I paid $5/month for my health insurance... a PPO! Dh has some health issues, so we do pay a couple of hundred dollars a month for his medical needs, but nothing major like a hospital stay.)
post #22 of 94
Well, we are both 25 and we have no debt besides our mortgage. Both of us have always hated the idea of debt and have never let ourselves build any and we have been fortunate enough to not have any crisis that has forced us to take on debt. Another big factor was no student loans. We went to a state school and my parents paid for tuition (I paid all living expenses) and Dh's parents paid the first couple years and then his job paid for most of the rest through reimbursment.

We made a couple less than stellar financial moves, most involving new cars, that have kept us from being in an even better place, but I have tried very hard to let go of that and focus on the things we have done right.

Like the pps mentioned, if we don't have the $$, we don't buy something. It is tempting to finance something like the carpet we need, knowing that the odds are excellent we will have no problem paying it off, but we wait until the money is in hand (and then sometimes finance the purchase while the $$ earns interest for us).

We watch all of our spending and limit it to the amount that allows us to save for all of our insurances, property taxes, etc and still put away $300 into an emergency fund (currently $800/month for food gas, household items). The fund was drained early this year when we had to put in a new furnace and air conditioner, but we have been able to rebuild it and are
working towards the goal of 6 months of expenses.

I have an ING account that I split into different 'subaccounts' for things like the property taxes, insurances, and even things like gifts, clothes, and car maintenance. That way, there is never a scramble if one of us needs new clothes or the car needs tires. We also earn good interest on the money while we aren't using it.

We have a long way to go before we are in my ideal spot, but I am proud of where we are now and how we handle our money.
post #23 of 94
100% debt free, no mortgage, no car payment.

We live beneath our means. When we were poor we lived as though we had nothing. When we turned middle class we lived as though we were still poor. We spent money on nothing but the mortgage and car payments. We saved the maximum we could afford and legally allowable in IRAs each year to protect it from taxes. DH opened a proprietorship, opened 401ks for each of us under it, transfered the IRA money, and we borrowed against ourselves to pay off our mortgage and car. We then aggressively paid ourselves off.

Still I live as though we were poor. I could be saving more. Our water and other utilities keep rising; I'm struggling to get it better under control.

I cook everything that I can from scratch.

We don't go on vacations.

We rarely buy new clothes, and when we do, the girls clothes are handed down.

We don't pay for entertainment. We borrow DVDs from the library. We do have satellite TV and high speed but DH needs both for work and can write them off.

We have put off a lot of repairs to the house-- because we might just abandon ship and buy a new (old) house... so we are saving our funds for that.
post #24 of 94
Quote:
Originally Posted by Amoreena View Post
i'd love to hear from anyone in *california* who's in the black. really.

Almost... NYC. The cost of living here is outrageous.
post #25 of 94
This is the tribe for me. DH and I are both in our 20s and do many of the things mentioned here, so I won't repeat all of them. Some of the things that have really helped us:

1) We both walked out of college with no debt. DH's was paid for by the GI Bill and ROTC. I earned scholarships and my parents paid for the rest. I am currently going to graduate school and we pay out of pocket each semester. My degree will pay for itself in three years. (For a teacher, the difference between a bachelors and a masters is 3-4K a year.) I chose to attend a recognized state university with a good program and manageable payments rather than a fancy private program and incur debt. (Certainly may not work for everyone, but I've been happy with my education.)

2) We invest wisely and take full advantage of Roth IRAs. We save, save, save. My DH just got a raise and we increased our monthly savings accordingly.

3) When we make major purchases, we save so that we can buy quality.

4) We drive used cars.

5) We live on one-income, even when we're dual income (as we are now). Anything I make, we save/invest and don't touch. It will make the transition to SAHM much easier when the time comes.

6) We rent. To some, this is not a smart decision. However, we have moved three times in less than two years. Buying is not in our best interests at this point in DH's career. We try to live in government housing or find a place to rent that is in a safe neighborhood, but below our BAH (government housing allowance for military) so that we aren't spending out of pocket for housing. Our housing may never be brand new or have all the extras, but it is enough. With the money we save by living following these principles, we pocket the extra savings to save for a large downpayment when the time comes for us to buy.

7) We have fun! So often people think that since we save all the time, it means having no fun. DH and I love to travel and do so often. We eat out at nice restaurants, but not all the time. It's all about moderation.

I'm really enjoying reading this thread-it's so interesting to see what has helped others get to where they are.
post #26 of 94
I am really enjoying reading this thread. We are far from debt-free, but I want to instill some of these values in my DDs. I hope they can learn from some of our mistakes, as well!
post #27 of 94
One word: Cash. If I don't have it on hand, I don't need it anymore. This has worked for us in years where we made 19,000 and years where we made 60,000+. We are 26 and 27, 1 child with no debt other than a mortgage after we close in early June. While our cushion has been helped by privilege- my husband's dad was a doctor and he died young last year leaving us a nest egg beyond what we anticipated having. However, we were debt free/cash only before that and would have been able to buy a home even in the absence of that windfall. The main thing it helped us do sooner will be orthodontics for me. Also, we did just pay cash for a Camry to replace our ailing old Corolla.

I grew up mostly on welfare, have worked at some paid job for the last 14 years (have tax returns dating back to when I was 12) and have gone to college mostly on grants, merit based aid and cash I earned. I work full-time and am finishing my education (plan to get a masters) 1 or 2 classes each quarter.

I think the biggest thing is a willingness to live below our means. When/if we spent everything, we would have had no failsafe for the unexpected bumps along the way (layoffs, illness, separation). But we don't need whatever it is that all of our salary would buy. No cable, few new clothes, lots of used items etc.
post #28 of 94
I had a lot of CC debt when we got married. After we paid that off, we have been totally debt free. We are very low income but we manage to save as much as we can. We try not to buy anything we don't need and pay cash for everything that we do. We're very simple people who try to be content with less. We've paid cash for the vehicles we've owned (always older, but well running cars).

Right now we are going superfrugal and saving every cent we can to buy a house in the next few years. We also save for retirement, more than most people we know (which is nothing).

As well, we are prepared for emergencies, with emergency money stashed away and a year's supply of food storage and other necessities. I figure right now we could live for about a year comfortably if we did not have a cent of income. That doesn't include all the things we could sell.

It's funny as we are the lowest income people I know IRL but we're probably the best off financially.
post #29 of 94
Quote:
Originally Posted by meowee View Post
Almost... NYC. The cost of living here is outrageous.

We're in the DC area. We pay $2200 a month in rent. Thankfully, we were already out of debt when we moved here.
post #30 of 94
Looooove this thread.

Keep it coming... :
post #31 of 94
I forgot to mention, in addition to buying used cars, we are committed to staying a one-car family (maybe even a no-car family in the future). This saves us a ton on insurance, gas, maintenance, and parking fees. We also try to limit how much we use the one car we do have. Dh takes public transportation to work and I walk to work, so we usually use the car about two days a week, maybe three. We live a few blocks away from the center of the downtown area in our Chicago suburb, which lets us walk to the movie theater or restaurants or the post office or the vet or the hardware store or the bakery...you get the picture. It adds up.

Our current car is not very gas-efficient. It's a big heavy Volvo, and while we love that it's safe, our next car will probably be a more fuel-efficient Honda or something else that is less expensive to repair. If we can pay cash for a hybrid, we'll do that, otherwise, we'll just try to find one with low mileage, cheap repairs, and good fuel efficiency.
post #32 of 94
Quote:
Originally Posted by WNB View Post
-- but I know a major part of my family's financial stability is based on luck and privilege.


My financial picture isn't near debt-free, but what I do have I owe to privelege in large part.
post #33 of 94
Thread Starter 
DH was just saying now that the weather is better, he wants to bike to work. Then w the gas price going up, we are looking for ways not to burn the fuel. Luckily, our new house is again closer into town so its easier to walk to everything. That really does make a difference.

The downfall I am having right now with selling my house- not composting. It is driving me crazy but in another month I can start up my compost bin again....

I love hearing how everyone else is staying debt free. Once you cross that line, its hard to fall out of it. Also if you see a bank acct piling up, you want to keep it going.
post #34 of 94
I'm not a regular poster but I am debt free and have a story to tell. :

Actually, I won't bore you with the whole story. Right now we are completely debt free, no mortgage either. Hopefully soon we'll be buying a new house and that will change.

Our road hasn't always been easy, but I'll tell you the most important things that contributed to us living in the black.

~After paying off some debt before marriage, we kept just one credit card with a $1000 limit. We told the bank not to increase the limit unless we asked. This was key for us, because I have no self control really when it comes to spending, so this is a game I play with myself.
~when we bought our first home, dh was not making much money, we qualified for a low interest rate and no down payment because dh is a veteran. We bought a house that was about 1/2 of what we qualified for.
~dh got a free education, makes the same amount as a friend of ours who is still paying off her college education.
~we have lived as cheaply as possible all these years I've been a sahm.
~earlier this year, we got a big chunk of money and all our bills were paid, I looked at dh and said, well what are we going to do with this money? He said, let's pay off the car. So we did. The chunk of money was not a windfall, it was money he earned, btw.
~we bought a business vehicle for dh a few years ago on our home equity line and after bills were paid and food was bought each month, whatever money was left in the checking account went straight onto that account, so that is paid off too.
~We sold our first house (renting it back for now) and walked out of the closing with the original sales price that we paid all those years ago + $30,000. We're now looking to buy a new house very soon, and with housing prices increasing, we'll be taking on a much bigger mortgage, but our cars are paid off and we don't owe anyone else any money, my kids have gotten used to being poor. We've taught them that it's a choice we've made, to forgo X in return for Y. They understand this and accept it. :

Now, last but not least, I post daily at a website where I receive a lot of support and it has been a big part of our success. If you want to know where, pm me.
post #35 of 94
We are debt-free other than our mortgage, which is pretty reasonable. We live in one of the most expensive areas of the country.

First of all, let me state right off the bat there was a lot of luck (bought our house in a down time, no major illnesses, etc.). There is also the privilege that comes from growing up in a family where sound financial decisions were valued.

Beyond that, here are the things that I think keep us debt-free and largely free of financial stress:
  • Practiced frugality. That means we are always looking for ways to save, save, save. We rarely eat out. We center our family activities around hiking and other outdoor activities. We don't buy anything unless we could pay cash, even if we put it on the credit card. We buy used. Essentially we just try to live frugally as part of our life.
  • Little television and only carefully screened movies for DH and I. DS gets neither with the very rare exception of a DVD with no ads that features live fire engines (he loves fire engines). I strongly believe that it is much easier to keep consumer desire under control if the mediums that encouraging consumption are limited.
  • We give a lot away. I know it seems counter-intuitive, but I agree strongly with the PP who said that the more you give away, the more you seem to have. I make it a practice to walk through the house and garage at least twice a week to see if I can find anything to give to our local family shelter or to Freecycle. I post something to Freecycle at least once a week.
  • We live in a small house. I LOVE small houses. I think they foster intimacy in the family and you are constantly reminded of the cost of material things, because the small house will feel cluttered a lot sooner. Also, I keep a running total in my head about how much we pay for a square foot of our house, which makes it easier to decide whether something is worth buying or not. IOW if we have to move because we buy too much stuff, that essentially makes that item a LOT more expensive.
  • We pay off our CC every month.
  • We try to go into stores like Target with a list. I have a weakness for cute house stuff so I often send my DH. I'll go to OSH for him because that's his weakness.
  • We set specific savings goals and we reward ourselves when we meet them. Right now we are saving for a vacation to a specific spot that is pricy. It will take a few years but we will really enjoy it when we go!
  • We have cash for savings/retirement pulled out of our paycheck so it's as if we never had that money.
  • We buy our cars used and in cash. If we can't pay cash, we don't buy it. We pay to live close to public transit and we use it a lot. We also walk a lot. I walk to the grocery store, to the library, etc.

I think those are the biggies. I want to emphasize the luck part, though. I think that's as important, if not more. We are lucky, and I'm grateful.
post #36 of 94
I have been thinking about this thread and I wanted to add in here something else that has really helped us. At some point or another I heard someone say (likely some financial guru like Suze Orman but honestly I don't know who precisely) that we are very good at trading what we really want for what we want NOW. I consider this every time I start to buy something. Is this what I really want in the long term or is it what I want right this minute and can afford? I try and protect what we REALLY want (a house, professional school, great preschool for our son, a cushion, vacations, major planned purchases), from what we might want now (new clothes, books, breakfast out, coffee at our favorite place). Every so often what we want NOW wins, but most times it does not.

We have always had a long term goal or two and then a few short term goals. So for example, we are not just saving some distant goal (say what a house was to us a few years ago) but also some smaller goal as well- opera tickets, a short vacation or a new bed for example. That kept us on track because we have always had a "big little goal", be it $60 concert tickets or a $600 weekend trip to keep us motivated.

Knowing how to cook is also very helpful to us in the living without debt/living below our means path we have been on- I have many friends that must spend money on convenience foods because they can't make broth or pizza dough. Also, being able to repair/fix things when they break has been useful.

I 100% agree that privilege and luck has a lot to do with being able to be debt free. However, I know many people that come from much more privilege than I do (ie they did not start working at 12 and were not on welfare most of their childhood etc) but are far worse off financially- even if they are equally healthy to me. Choices have a lot to do with this. The example I always use is a friend who has trouble paying her rent and has no savings but who rushes out to buy new shoes whenever hers get a little scuffed. I don't need to do that, because I am not used to (as a child) to having un-scuffed or un-worn shoes...we polish and repair each pair we own often. I strongly dislike the assumption (which I see some IRL making, including my brothers) that because I budget and scrimp and can then afford the big things we really want (like a house, a newer used car with no payments, a vacation, tickets for my nephew to visit etc) that it is all just our luck or good fortune. I find that attitude rather mean because it entirely minimizes the work we have put into running our household.

On a final note, I will also concur with those that think giving is a needed part of the equation. Not only do we give of our time, money and items (reduces clutter and helps others), I work full-time running a non-profit. Working in a non-profit means slightly lower pay and much less generous benefits. But I love what I am using my skill set for on a daily basis.
post #37 of 94
Thread Starter 
DH and I were also fortunate to grow up watching our parents use their $$ wisely. Both of us come from larger families and both of our parents are retired and doing quite well. They taught us you should save esp for the later time in life. More important, they taught us how to be resourceful and manage w what we have.

I also know plenty of people who have large debt and cannot manage their money. We have friends who need both incomes esp since combined, its less than what dh makes, but they live a much more spendable lifestyle than we do. They have high ticket items, go out to eat all the time etc and have zero savings and spend spend spend.

I have read The millonaire next door, The automatic millonaire, and several other books and all of these list the same things all the posts are listing. I knew this already, but its good to see our lifestyle confirmed.
post #38 of 94
Quote:
Originally Posted by kijip View Post
I 100% agree that privilege and luck has a lot to do with being able to be debt free. However, I know many people that come from much more privilege than I do (ie they did not start working at 12 and were not on welfare most of their childhood etc) but are far worse off financially- even if they are equally healthy to me. Choices have a lot to do with this. The example I always use is a friend who has trouble paying her rent and has no savings but who rushes out to buy new shoes whenever hers get a little scuffed. I don't need to do that, because I am not used to (as a child) to having un-scuffed or un-worn shoes...we polish and repair each pair we own often. I strongly dislike the assumption (which I see some IRL making, including my brothers) that because I budget and scrimp and can then afford the big things we really want (like a house, a newer used car with no payments, a vacation, tickets for my nephew to visit etc) that it is all just our luck or good fortune. I find that attitude rather mean because it entirely minimizes the work we have put into running our household.
Oh, I totally agree. I have a relative who regularly insinuates that our much more stable financial position is entirely luck. Yet he started out much wealthier than we did and fritters away cash like there is no tomorrow. It always annoys me, because we work hard to be frugal.

There is definitely luck and privilege, and for that I am grateful, but we also work at it.

Quote:
Originally Posted by kijip View Post
On a final note, I will also concur with those that think giving is a needed part of the equation. Not only do we give of our time, money and items (reduces clutter and helps others), I work full-time running a non-profit. Working in a non-profit means slightly lower pay and much less generous benefits. But I love what I am using my skill set for on a daily basis.
Absolutely. I forgot to mention that I've noticed that in the years we give more away we seem to have more. We also make a point to give cash as well as items. I think giving cash feels in some ways more concrete, and I don't know, this may be weird but I really feel the more we give away, the more we get back.
post #39 of 94
We live debt free. My dh makes a good salary so most people think that is the reason we are debt free. It definitely helps, but we were debt free way before my dh finished his training. We were both debt free coming into our marriage, except for my dh's school loans. (we repaid those his first year out) We both owned our own cars, no payments, and were renters. Our first year of marriage, my dh made 30,000 and I was in graduate school which cost $10,000. We paid it in full, no loan, and also bought a condo.

We were lucky to have been raised in families where our parents were very careful with their money. My mom had 2 children before she was 19. She was single. She went back to college and we lived in my grandparents finished basement. She graduated and we moved out. We never had much money, but my mom was very careful with her money and always had a cushion for unexpected things.

We are lucky now that we can buy more expensive things when we want to. But, usually we are frugal. I cook at home, I shop on a budget, we own 2 cars, but not fancy ones. We mow our own lawn (no one does that in our neighborhood) We live on just a fraction of our income and save the rest. We are able to be generous with our donations. But, I think it is easy to be frugal when it is a choice, at least for me. I know in the back of my mind that I am safe financially and if I overspend, nothing bad will happen to me.
post #40 of 94
We are not a no debt family yet, but we will be by the end of the year! Currently we have over 50k (I'm not even sure exactly how much it is). We incurred most of this debt while we were going to school and we had some huge medical bills. But.....in just a couple months, DH is going to have the chance to spend 6 months earning almost an extra 100k!!!! We'll be able to wipe out all of our debt at once. I just absolutely can't believe that this is happening to us. DH is scheduled to get a raise in July which was going to help us to be able to start paying extra on our bills, and we were working on a plan that was going to take several years, but now we can just take care of it all at once. When our debt is gone, we'll only be paying for stuff like internet, car insurance etc. After all of that and our mortgage and groceries and gas, we'll have approx. $1,200 extra each month. I am so grateful for this opportunity so early in life; it's going to be such a blessing for us. I just hope I can stick to my goals of always being wise with our money in the future. Not that I think that we'll ever have huge amounts of debt again (I hope we never have any) but I still want to live frugally and use what I have well.
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