I’m Newly Debt Free! (And Ways You Can Be, Too)

im-freeAs of today, I’m proud/pleased/excited to say that I’m 100% free of debt! No more student loans, credit card balances, auto loans, or anything like that! I paid more than $8,000 off in loans this year, and it feels great to be free for the first time in 8 years.


I’m free!!!! (just like in Shawshank Redemption)


My Debt-Free Strategy

1. Keep debt low from the start and don’t take on new debt. The easiest way to get rid of debt is to never get in it in the first place. Some of the ways I avoided debt were:

  • Went to a state college (UMass) instead of an expensive university that would’ve cost more than twice as much
  • Applied for and was awarded a teaching assistant for graduate school, which paid for my tuition as well as a stipend
  • Stuck with used cars (after making the mistake of financing a new car at age 18)
  • Giving up credit cards so that I don’t run the risk of carrying a balance no matter what happens

2. Set a solid goal. I wanted to be 100% debt free by the end of 2011, and I made sure to stick to that goal. It’s part of a much bigger goal, actually, and it’s an important first step in a series of other goals. With this goal I paid off over $8,000 worth this year.

3. Make it a priority to pay down debt. I knew that I wanted to pay off all my debt before I quit my job and went on any other big, new adventures. I really hate the pressure of making monthly payments, so it was a must to get rid of all debt before I embark on my next journey.

3. Automize. I made it impossible to miss my goal of paying off balances by setting up automatic payments from my checking account to my loan servicing company. I set this up to occur every payday (I get paid twice a month), and I worked backwards from my debt-free date to figure out the payment I’d need to make each time.

It worked out to about $1,100 a month that I needed to pay (which is around one-third of my net pay at my job). It wasn’t the easiest amount to apply towards debt each time, but it was more important than anything else I could spend my money on.

5. Make it a priority to earn more. Over the last month I’ve made a few hundred dollars on Money Spruce (while being careful not to take away from the reader experience at all). This is part of my larger strategy to diversify my income through both this blog and other freelance writing and Search Engine Optimization (SEO) work.

I realize my debt was at a fairly low interest rate (6.8%), and I hope I didn’t end up in a situation like Todd. However the size of my debt was pretty small, and it really motivated me not to spend when I set the goal to pay off the debt. Perhaps it wasn’t the best thing I could do with my money financially, but I still think it was the right choice.

Now that my debt is gone, I’m going to take those monthly payments I was making (about $1,100) and put it in my “Quit My Job” fund. It’s easy to do this since I already know that I can live without this money, and I’m thinking I should get more aggressive and save at least a few hundred dollars more than that each month.

Did you pay off debt in 2011? What strategies worked for you?

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  1. Congrats on the achievement! Feels great doesn’t it?

  2. Ditto! That’s a great way to finish out the year.

  3. That’s fantastic! Just think of how much extra money you’ll have to work with for savings and other goals. I found that budgeting after we paid all our debt off was a little harder, because I had fewer bills. Weird how that worked. It was totally a psychology thing.

    • @Kacie Yeah, I’m excited to put the money towards other things. I’m going to make sure to just keep putting the same amount (or more) away in savings and treat it like a bill so I’m not tempted to spend more.

  4. That is awesome Jeffrey! You are a rare breed! I’ve been there and I know how it feels. Great job and congratulations! What a great way to start 2012!

  5. World of Finance says

    Congrats! Huge accomplishment.

  6. littlehouse2009 says

    That’s awesome! And very impressive.

  7. MyMoneyDesign.com says

    CONGRATULATIONS! That is no small achievement. I am still striving to get there, but that mortgage and car loan are still looking pretty mean.

  8. I went the other direction in 2011 – took on a bunch of debt in the form of a mortgage, haha.

    I wanted to toss you a congratulations on paying it all off in 2011! Now that you’re in the black you’ll have a great 2012!

    • Haha, yeah I realize there’s a dig difference if you have a mortgage involved or not in paying off debt, and I’m certainly not trying to throw this in the face of any homeowners. Happy New Year! @PKamp3

  9. Great post! We shaved off 18K and we are so much closer to be almost debt free! I finally can see that long awaited for light in the tunnel. 🙂

  10. Congratulation! We still have a ton of mortgage debt, but at least we don’t have any consumer debt.

    It would be great to pay those off, but it is going to take a lot of time. 🙁

    Great job!!!!

  11. Hey Jeff,

    Congratulations on getting debt-free! Awesome work. I can personally attest to financing cars being a very bad thing. Although I could afford it at the time (and probably will still be able to, moving forwards), it makes up far too much a percentage of my disposable income.

    There is living within your means, and then there is spending your disposable income sensibly.



  12. This is awesome Jeff! It’s so exciting you’re debt free. I can’t wait to be debt free by the end of 2012 and so far I’m on track. I like your idea of having a “Quit My Job Fund” and I am looking forward to doing the same one my debt is clear. Being a recovering workaholic, I have a long way to go till I can quit but I’m working towards it.

    Thanks for the inspiration and sharing your story. It’s nice to see someone else, like me, who works hard towards a goal and completes it!

  13. Thirtysixmonths says

    Congrats, Jeff! Being debt free is huge!

  14. Great to hear that you’re debt free. I was so happy when I paid off my credit card /overdraft debts and I managed to keep saving the money so that I was able to put the money towards a deposit for my own house. Yes I have a mortgade and back in debt but it’s part of the big picture and I’m back saving again.

  15. eliseconnors says

    Congratulations on paying off your debt! I managed to get into even more debt in 2011 after making some very silly decisions from a financial perspective. Right now that puts me at over $12,000 in credit card debt. I have two car notes, and I won’t even count the student loans (they are still in deferment, thank God!). It’s really hard to see the light at the end of the tunnel, but I’ve decided not to let my debt control me! I will, instead, be in control of my debt.

    • Hey Elise, that sounds tough! I’m glad you’ve got a positive attitude about it, and I hope you’re able to pay off debt in 2012! If you haven’t already, I definitely recommend setting SMART goals for getting where you want to be by the end of the year. @eliseconnors

  16. financialsamura says

    Way to go man! What are your thoughts on getting a mortgage?

    I’m debt free as well, but have several mortgages from my investment properties.

    • Thanks, Sam! I really have no interest in getting a mortgage myself right now. I like being a renter at the moment, and I plan to move around the next few years, so owning is optimal for me at this point.

      I certainly don’t knock anyone that has one (or multiple) mortgages, and I’m sure I’ll consider it once I plan to settle down somewhere. @financialsamura

  17. nickelbynickel says

    Congrats on being debt-free, we rock 😀

  18. Congratulations!! That is so awesome. I paid off somewhere over $7,000 in debt in 2011. My goal is $20,000 in 2012. It’s really ambitious but I think it’s possible. I have never “automized” before but I did get I Will Teach You To Be Rich from the library based on your blog, so I may give it a try. I don’t think I have a good reason not to automate though.

    • That’s awesome! Yes, I like to automate for as much $$ as possible. It makes it virtually impossible to spend that money instead. Ramit takes it to a bit of an extreme in the book, but if you can handle his approach, I’m sure it works well.@IAmDebtProject

  19. I eliminated just over $30,000 from mid-August 2012 to just yesterday..  It is so relieving to not owe another penny to anyone at all.  I kept a log of my emotions, activities, and perspectives throughout the 4.5 month journey:  http://debtdefeater.blogspot.com/It was a fantastic ride, and gave me so much more perspective on money.  In the past 4 months I’ve read several dozens of personal finances books (by the way, reading is a great hobby if you’re trying to get out of debt!) and I’m ready to build my way to a road of wealth.

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