This is part 1 of a series of how I paid off $95,778.5 in less than 3 years.
In this series I will talk about what I did to get rid of my car loan ($15,087.21) and mortgage debt ($80,691.29), as well as some things that I learned through out the whole process of buying my home and paying it off.
The first thing I did was made the decision that I was going to get rid of this debt. Looking at $95,000 worth of debt can make anyone doubt they can pay it off. Without making that decision, I had no chance. There were several people that told me that it was impossible to pay off a mortgage. So I just stopped talking to those people about paying off my debt. I still haven’t told them I paid it off! Why bother!
In 2009 I discovered Dave Ramsey while I was browsing through the radio. I couldn’t believe what I was hearing. People were calling in to tell Dave they paid off hundreds of thousands of dollars in debt. I immediately got hooked and started listening daily! I still listen daily because Dave gives great tips on saving, budgeting and starting a business. Plus it keeps me motivated!
I remember hearing Dave say if you can’t pay off your car loan in 18 months sell it. At the time I had around 18 months left if I made additional payments, so I felt good because I didn’t want to get rid of my car. Dave Ramsey often talks about his baby steps. Baby step 1 is having $1000 in a starter emergency fund, baby step 2 is to get rid of your debt except your mortgage. In February of 2009, I had around $7500 sitting around, so I took $6500 and put it on my then car loan balance of $15,000 and I left $1000 for my starter emergency fund.
After putting $6500 on my car loan, I became seriously intense about paying it off. I made as many additional payments as I could.
- I cut my spending big time by tracking every dollar I spent
- I stopped eating out
- Cut back on buying clothes
- Any bonuses I got at work went towards my car loan
- I used my tax refund to pay it down
Once my car loan was paid off I began to attack my mortgage. Check out Part 2 here