You know I hate debt. Heck, we paid off both of our cars less than 2 years into our car loans. Now we save cash for future cars. We paid off the mortgage of our first home, now our rental property, in 6 years. Some of you have even pointed out that I could have used that $70,o00 in principal payments on something that could have earned me more than the 4.5% interest that we saved. I argued that owning a home outright is a sort of insurance policy for us self-employed people.
BUT, today I want to look at debt in a slightly different light than usual. I want to see any of the debt we’ve ever had as a gift…what did it lead to overall?
Our Debt History
Mr. BFS and I are 30 years old. The debts that we’ve had so far have been a family college loan, 2 car loans, and 2 mortgages in our lives so far. Here is our debt history:
- The $8000 family college loan was forgiven a few months after we started making payments when we graduated in 2005.
- The first car loan of $11,000 came along in 2005 too. It spurred us to live like college kids even when we started making decent money since we wanted to pay off the 6.1% car quickly. In early 2007, our Chevy Aveo was in my name.
- Then we took on a $91,200 mortgage in mid-2007. We lived on less than we could have in order to make principal payments from the very beginning.
- We splurged on a better family/hobby job vehicle for Mr. BFS in 2008, so we got a $20,000 car loan for the Prius at 4.1%. We again tightened our belts and paid off that car loan in 2010.
- In late 2012, we bought our current home and signed up for another $208,000 of mortgage debt.
- In early 2013, we paid off the first mortgage to give ourselves some monthly breathing room in regards to cash flow.
So our “only” current debt is the $204,000 mortgage left on our current home. I italicized “only” because $204,000 is a lot of debt in my eyes. I don’t care if it’s considered “good” debt. It’s money that I owe someone, and my home isn’t really my home completely until that balance is zero. And the 4% interest, which is about $600 a month, is truly annoying too.
Slaughtering Debt Motivates Us
Looking at our last 8 years out of college, it is obvious that our debts actually caused us to live on less consciously. We’ve definitely embraced some lifestyle inflation, but not to the point that we couldn’t save for our future or tackle current debt. We simply funnel extra money to our priorities, and debt repayment is a huge priority for us. So in that way, debt is actually one of the main motivating factors for the beneficial financial decisions that we’ve made up to this point. Not too shabby.
Do I appreciate debt anymore now than before? Nope. But I will say that we don’t regret any of our debts, and they have motivated us to stay on track to pay them off and get ready for our future.
How do you see your debt?
This post is part of The Gift of Debt Series an eight-day, multi-blogger extravaganza hosted by The Fiscal Flamingo. The series is designed to give you the permission to kick up your heels, embrace your debt with glee, and look forward to finding the gold at the end of the rainbow. Follow along in the series as we tell the story of our gift and encourage you to find yours.
FYI: I worked at a dead end cubicle job from 2005-2011 for about $30,000 a year. I went self-employed in July 2011 and make between $80,000-$100,000 through blogging, a rental home, and professional pet sitting. If you’d like to start your own site (link to my free step-by-step guide), I highly suggest checking out Bluehost (my referral link with a nice discount for you). I even have all of my favorite tools on a resource page - I hope they help you too. This all gives me the time to be with my aging family members, the flexibility to stay close with my friends and family, and it should help if we finally get pregnant too! Please contact me any time at budgetingfunstuff*at*gmail*dot*com with questions or just to brainstorm! I’d love to help!