Credit Debt Finances & Money

Did we meet our “Zero Debt” goal date?

With all the mess going on in our lives (grad school, new jobs, travel), I totally forgot until today that I had set a “Zero Debt” date for May 15, 2009 back in August 2007. Did we succeed?


Just today, the $12,000 check I sent to pay off my Honda Ridgeline cleared. Oh, you didn’t know? You need to follow me on Twitter to keep up with these things! It’s interesting that without remembering my original goal date, I still decided to do the pay-off payment this month.

That means we’re down to just my student loan, which is under a $10,000 balance (see the debt scales in the sidebar). As a note, I’m only counting consumer and education debt in this “Zero Debt” goal, not mortgage debt.

Why didn’t we succeed?

First, I want to be clear that I don’t think we failed, we just didn’t succeed with the goal. We shuffled around priorities in 2008 and 2009, but didn’t revisit and revise the original goal date. Since my school loans were deferred (i.e. no interest, no payments), we decided to stick that money in the bank instead. We were planning on refinancing our mortgages, but with the falling house values, we just couldn’t keep up with reducing the principle and opted to pay off the truck with that banked amount instead.

Our savings account is still sitting with enough that we could pay off the student loan right now and not be hurting in an emergency, but I think our next priority is to reduce the principle owed on our mortgage so that maybe one day we COULD refinance, assuming we’re not constantly fighting falling home values. We have until November 2009 to refinance before the rate resets, but I’m not too worried about our situation; but that’s for different post.

So while we didn’t meet my ambitious goal of debt freedom in under 2 years, we got VERY close. When I wrote that goal, we had about $55,000 in debt remaining, and just a month later, we bought a MINI Cooper for about $19k and then paid it off by year-end. I’ve also paid thousands towards my masters degree in that time, tripled our savings account holdings and doubled our 401(k) contributions.

While it might seem like we’re rolling in money, in reality reducing our debt freed up money for other things. We’ve been out of credit card debt for a while now, and Stacie’s student loan and auto loans are gone, so those hundreds of $$ each month went towards other debts. It’s called the snowball effect and it’s one of the best approaches to paying off debt that doesn’t involve debt consolidation. For us, we’ve freed up over $1000 per month in debt payments for cars, credit cards and student loans in the last 2 years.

How much would you free up each month if you didn’t have debt payments? And don’t count your mortgage, unless that’s all you have left (congrats if it is!). Can you imagine what dreams you could earnestly pursue if you had that cash on hand each month?

About the author

Clever Dude


  • The thought of money going to my CCs every week (I pay about $150 extra in payments per week) KILLS ME! that is $600 a month that could be saved or invested.

    AND THAT IS JUST CC DEBT! Not Law School Loans or Mortgage


  • Congrats on eliminating so much debt and still being able to enjoy life in the meantime!

    My debt right now consists of deferred student loans ($2100, but I have the cash to pay them off) and my mortgage. I purchased my home in November with a mortgage of $102,000 and am refinancing this month with a principal of $95,500. I would like to pay this off in 7 years, but 10 will be more realistic.

    If I didn’t have a house payment, I would drop more money into my 401k and Roth for certain, but I would likely travel a bit more.

  • Congratulations on coming so far! My fiancĂ© and I still have a long way to go, but we’re getting things together and I no longer have any CC debt.

  • Your line about not succeeding on this goal (as it was written) not having to mean that you failed is spot on.

    As you point out, in 2 years things do change and courses should be adjusted.

    On the otherhand, stretch or aggressive goals are powerful tools in helping us improve or redefine our status quo, which is something so clearly you have been able to do.

    You’re a great example, keep it up!

  • Congrats to you both for coming as far as you have! That’s a major accomplishment and you should feel very proud. If you’ve got an ARM – which it sounds like you do – I think your decision to pay down the principle a little so that you can refinance is a good idea. While the rates are low now, there’s no telling what they’ll do in November and it would be a bad place indeed if they skyrocketed and you were still at the $77k. I don’t think they’ll be as bad as all that, but it’s a much larger amount of money to be stuck paying a higher interest rate on. Besides, you’ve accomplished a lot in three years and I suspect that student loan debt will be gone before you know it anyway.

    Best of luck!

  • Congratulations on getting this far…Although my debt was not as much as yours, I too paid off all my non-mortgage debts in about 18 months. Just keep plugging away and pretty soon you will be debt free. I really believe if more people in this country become debt free and stay debt free, then this country will be fundamentally transformed in ways we have never imagined.

  • What a great trip you’ve had. I have about half the debt you are starting with but less expendable income to pay it off. So I have a 3 year plan with it. I can’t wait for the feeling you must have right now… the joy of success.

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