In 18 months, we've gone from being broke and in debt to being debt free except for our mortgage. This is our story on how we got there.Today is payday.  I LOVE payday – live for it. Nothing makes me happier than getting paid and allocating where all of that money is going.

Earlier today, as I was making our monthly budget for August, I came across some of our old budgets from the last 18 months. Included in those old budgets, I found credit card payments, car payments, student loan payments, vacuum payments (don’t ask), and other various debts being paid off.  Reminiscing about our debt repayment days, I started feeling proud of what we have accomplished so far.  As I made our budget for August 2012, I noticed that we now have only nine categories.  These are the bills we pay each month:

  • Primary Residence
  • Electric Bill
  • Gas Bill
  • Daycare
  • Groceries
  • Internet
  • Life Insurance
  • College Savings Kid #1
  • College Savings Kid #2

That’s it.  While our old budgets would often have 20 or more categories, we have now whittled it down to nine.  The only other bills that we pay are our rental property mortgages, and those bills are covered by the rent our tenants pay.  Additionally, our trash service is paid quarterly and our car insurance is paid twice a year.  Our investment savings are taken out of our paychecks before we see them, and we already have our Roth IRAs fully funded for 2012.  I am so proud to say that we are doing great…BUT it wasn’t always this way.

Our Debt Free Dream

We had our financial awakening about a year and a half ago.  I was pregnant with our second child, and most things in life were going great for us.  We both had jobs we loved, we already had one beautiful daughter, and we had another one on the way.  We had a nice house, two rental properties slowly building equity, and were making a decent living.  However, we couldn’t figure out where our money was going.  Every month, a slow leak drained our bank accounts – which made me a really crazy, frustrated person.  How could we be spending every penny we earned?  I set out to find the answer, and one day we finally realized that it was time to make a change.

We decided that it was time to create a budget and stick to it regardless of what may present itself.  We began tracking our spending and found that we were literally “eating” our income.  Restaurants and unrestrained grocery spending were breaking us, and we had to put a stop to it.  We successfully created a budget we could stick to, reigned in our grocery budget, and began paying off all of our other debts.  We refused to turn back.  We were determined to not return to our old habits.  We wanted better for ourselves and for our family.  With each passing month, our situation improved. Now, we find ourselves where we are today – debt free besides our mortgage.

The Future Looks Bright

I am very excited for the future.  We are now plowing ahead full force in paying off our house.  If we keep paying what we are paying now, we are on schedule to have it paid off in less than four years.  However, I have a feeling that we may pay it off sooner since we typically get a raise every year and will raise our payments accordingly.  Also, we might be tempted to plunk down a giant load of cash to pay it off when the end is in sight.  When that final check is written, I will get my picture taken with it and send it off to MetLife with a farewell letter….well maybe it will be more like “good riddance.”  Anyway, we will part ways for good, and I will never – ever – be in debt again.