Once paid off I would recommend switching that monthly payment to putting it towards a retirement account or saving for a house down payment. AspiringYogini I couldln’t figure out what I was doing wrong – thought I was either underpaid, or they were managing their money much better than I. I finally realized they were living way beyond their means. So obvious once you think of it. I also don’t have any debt, so I want to do something smart with my money.. I’m 21 with 1000 dollars worth of Debt and zero net worth. I love your blog. 1) You are in a better debt situation than almost every single one of your peers… that being said, knock out that 1k in debt in with your first couple paychecks.. Mr. Frugal Toque Marcia @Frugal Healthy Simple I have a cash windfall coming up that I already plan to put towards eliminating debt. http://www.youtube.com/watch?v=4r7wHMg5Yjg The whole point of the money you are losing in interest being money you could spend on fun stuff like at perpetualkid.com is what caught my attention to pay off my debt in the first place. Or is there room on it for more withdrawals as needed? RiskyStartup.com They will see you differently too. That loan free date is the exact moment you begin saving for your forever house. What would you suggest? So, it’s free money. The cc game isn’t for everyone though. Makes the decision to pay off the mortgage ASAP that much easier! Then you’re effectively getting a return equal to your student loan interest rate. Then allocate whatever is left over to your debt reduction plan. This is article is totally eye opening to me. If you pay off $100 of the principle next month, and your interest rate is 5%, you are actually decreasing what you will need to pay by $135. (God, what memory of my grandmother did that come from!?). April 25, 2012, 7:10 pm. Keep up whatever it is you are doing! Bonds produce decent returns in 4-5 years. If you prefer being private, continue searching Craigslists ads for less expensive apartments and don’t be afraid to negotiate with the land lord. Mr. Money Mustache (@mrmoneymustache — Pete Adeney in real life) grew up in Canada in a family of mostly eccentric musicians. I was always puzzled by the fact that other people my age (I’m in my upper twenties now) always seemed to have a more expensive and trendier wardrobe than me, always had money to spend at the bar, and could afford expensive cars and igadgets and ski trips to Colorado. And I keep telling them, if you can’t put capital on the house now with such low interest rates, what are you gonna do when the rates go up? The standard United States consumer has more than enough fiscal fat to cut to make a huge, immediate impact on outstanding consumer debt. I could have done even better by getting a roommate and splitting a 2BR in the same building for $400 a piece… I would recommend something similar… dont fall victim to money drain that is living in the most popular place. I currently have 6 month’s worth of little employees idling about in a savings account, and I’d really like to put them to work. If you save 75%, you can retire in 7 years. I just closed on the home equity line of credit last week, and embraced the prospect of dumping the way too much cash I had saved up into the mortgage. The point you made about learning fiscal responsibility as a 10 year old child (Wow, you probably already knew this before you acquired your facial hair!) October 24, 2013, 9:38 pm. Check your local credit unions – these have been the best source for me. joe @ Retire By 40 But I’m on the road to recovery! John @ Married (with Debt) I have been paying it down 3000/month so I will be at 0 by then…but I have also been spending money on eating out, going to the movies and other stuff that I don’t need. It’s funny that the world makes us feel crazy for not carrying a balance when clearly it’s the only reasonable way to use a credit card. Debt scares me like nothing else. It was hard, but I managed to do so in less than 4 years and was debt free. April 18, 2012, 5:12 pm. So let me spell it out for you. I made many mistakes, and I don’t have a huge nest egg, but it’s enough and I can bring in casual income from my art if I want. I think that the opposite can easily be true too. I take a yearly golf trip with old friends and I would NEVER give that up – it far out weighs its cost as it allows me to reconnect with friends I don’t get to see frequently. As we got older they would have to go to multiple stores so we could all get the #2 super sized. April 18, 2012, 8:13 am, Hah, hopefully you’ll get a laugh out of this. Complaints and insults generally won’t make the cut here, but by all means write them on your own blog! Joe Average I was FI at 36 and am really thankful for both of my responsible parents (who have been FI for years)! June 6, 2017, 10:13 pm. But frugality has an instant effect. Yeah, you definitely want a line of credit that starts with a balance of zero and allows you to pull out money (and repay it) whenever you like. Thx in advance. I simply need to do zero extra spending until my debt is corrected. Since the flashing red number is visible to everyone around me, it would be as embarrassing to go to a Nonsense Store and purchase a Flashy Consumable Item as it would be to be a vomit-covered drunk who found a $20 bill and immediately heads to the liquor store. This post is so timely for our family. I also considered VONE, THRK, or IVV, or do you recommend the Vanguard route? Well put, sir. Especially high-interest credit card debt. Yes MMM is a kick your ass punch you in the face blogger. Ugh. This article is not aimed at optimising debt collection risk in the case of a default. My biggest memory of watching Little House on the Prairie was Mr. Ingles insistence of “paying cash on the barrel”. I can tell you from my own personal experience that they can figure it out, it just may take a long time. The interest rate on the car loan is 3% and the student loans are 4% to 6.8%. And this article is simply to point out that most people don’t make ANY sacrifices to get out of credit card debt. Mr. Stache, I would be interested in your view of debt for those of us who are comfortable and could easily extinguish such liabilities if we wished. April 25, 2011, 5:28 pm. All I can do is watch. Thanks! My father commuted 50 miles each way to work 4 days a week and put in every over time hour he could. A company you invest in pulls an Enron (or Washington Mutual, or you were a GM bond holder, or AIG stock holder, or….fill in the blank, and don’t have the arrogance to assume you’ll be smart enough to avoid these), you’re hosed. Where was all this money coming from, since they were still going to school and didn’t have a trust fund? Yes, exactly. I’ve been trying to develop a quiz where you can decide if it’s time to panic about your debt. I saved thousands of dollars with the mortgage interest deduction this year. It has been hanging around too long. Debt Aversion is one of the greatest gifts my parents ever gave me. The rate is pretty low (prime +1), and with an upper cap of $50k that should be more than fine for short term emergencies. Not as successful immediately. Mr. Money Mustache They never even had a credit card. financial goals. February 1, 2013, 3:54 pm. If the account has been established for at least 5 years, contributions (but not earnings) can be withdrawn at any time with no income tax on the money (you paid the tax before you put it in). Let’s illustrate what I mean with a few examples: One time, I lent money to a friend so he could pay his university tuition. I think I learned most of this Debt Aversion from my parents. I hate going to work NOW. . I didn’t know such things existed – you learn something new every day. I haven’t yet signed up for anything, but the language that I’m seeing makes it sound like signing up for a loan requires taking that money. Paying off $35,000 in 13 months is awesome. Everything worked out fine in the end, since this was an honorable friend, but I still learned something about society’s differing opinions about debt. The worse when it comes to will-power and getting stuff done I have work... On health, fitness, and has much the same that mortgage is probably the best thing or I. 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