24 November 2007

Getting rid of debt

Our six monthly water bill arrived yesterday. It was $44.85, with our discount we have to pay $40.36. We've worked hard to reduce our water consumption and as the price of water has been rising - from 78 cents/kilolitre in 2002 when our bill was $248.20; 78 cents in 2004 when our bill was $148.20; 95 cents/kl in 2006 when our bill was $101.65 to 115 cents/kl now when our bill is $44.85, we have been using less and getting the most out of every drop. We've done a similar thing with our electricity bill.

There are choices to be made when you decide to live simply and reduce your impact on the world. One of the choices we made was that reducing our use of water and electricity was something we could achieve that would make a different to our greenhouse gas emissions and to the amount we paid for our utilities. We worked on one thing but got two rewards for the work we put in. In many ways being frugal is being green.

We did a similar thing when we decided to get rid of our debt. We paid off our house in eight years. We did that by first making the conscious decision to do it, we made a plan on how we'd do it, then we did it. That last part was the most difficult. ; ) It's easy looking at something and knowing you need to work on it; making a plan is pretty easy too, but the doing of it. Well, that takes effort, perseverance and determination.

One of the things we planned for when we started on this path of debt reduction was to not worry about what our family, friends and neighbours thought. We had to have enough confidence to know, really know right down to our bones, that what we were doing was right for us. It might not have been right for our neighbours, or our friends, but for us, it was right - it would make our lives better. I'm not going to tell you it was easy, because sometimes it wasn't, but as we got into it and we saw our debt reducing every week, instead of going up or stagnating, it replaced the feelings of deprivation we sometimes felt when we decided against buying tickets for a concert, going out to dinner or going on holiday, with something better - we felt the taste of freedom.

Being in debt restricts you. It makes you play by someone else's rules. You have to work enough so you have the money to pay up every month. And the really horrible thing about having a mortgage or credit card debt is that often when you make a payment, you don't reduce the debt - or you only reduce it by a small fraction - often you're just paying interest to a bank.

But the purpose of this post is not to remind you of your mortgage or credit card bills, but to show you, by example, that reducing debt isn't just about your large bills. You can reduce your debt by cutting back on your consumption of water, electricity, gas, petrol and your phone. When you pay less for all these things, not only will you reduce your footprint on the earth, you'll also have more money to pay off your mortgage and credit cards. And, ladies and gentlemen, I guarantee that the day you pay off your mortgage will be a day you'll remember for a long time. There is such a feeling of relief and freedom that you'll be smiling all the way to the bank to finalise your account.

Tomorrow I'll write about ways to pay off debt.

Graphic from allposters.com


  1. Rhonda Jean, does your plan for paying off debts and living mortgage free also include savings for retirement? We live pretty much debt free with the exception of our mortgage. Since neither DH nor I were able to start our retirement savings until we were in our 40s, we've got a lot of catch-up to do in that area, which takes the money we could use to pay off our mortgage.

    Catch 22 really - we want to be mortgage free but we also want to ensure that we have more than the small government pensions to live on when we retire.

  2. Ahh, the old life vs debt thing!

    I've made a few remarks (in amongst all the other stuff on my blog) about how ironic it is that living more simply is ok in the eyes of others if you say you're ONLY doing it for the environment, but if you mention the benefits to your wallet you're looked at as if you're a skinflint. That's why I now say (particularly at work) that I'm on a frugality kick. They're starting to regard me as charmingly eccentric... well, that's my hope, anyway!

    I'm in my mid forties, and I still have 4 kids to finish raising. (I just got a look at the prices on my Mathematical son's yr 11 booklist.... oh my lord!!!! Plus the 3 sets of braces don't come cheap.) My choices are to pay 1K off the principal of my mortgage a month, go on a major holiday every year/18 months with the boys while they're still young enough to come with me, and salary sacrifice into super so I can still travel etc when I retire. It's a juggling act, but by living simply the boys and I are able to get more bang for every buck, and live greener too.

    It's a nice feeling.

  3. Hi Rhonda Jean,

    First just thought you'd want to know that I received my apron from Peggy today. It is lovely!
    Second, I just got a notice from my water company that as of Jan 1 the rates will increase on average $6 a month. Now, I've been working to reduce that bill, where it once was $45 a month its now $35 a month, but with the rate increase it appears I'll be right back where I started. AGHHHH! I won't give up and I'll just keep trying.


  4. Well done on your water usage. It is nice when being environmentally aware and frugal go hand in hand. :-) Personally, I think water is too cheap here in Australia for how precious a commodity it is. Sadly, hitting people in the hip pocket seems to be one of the most effective ways of encouraging behaviour change.

    I'm someone who struggles way too much with worrying about what others think. I know it's an area I need to work on (having more confidence in my own decisions).

    I will say though...it is a nice feeling to be mortgage free!

  5. Thank you Rhonda for reminding us that all things are possible. I've spent the last 8 years working on total debt consolidation, then deletion, and frugality. This included living without the benefit of hot and cold running water in a 160-year-old log cabin for 2-1/2 years. Today I filled out the paperwork for a special mortgage program. Because of my lack of debt my chances are far better to qualify. I've been trying to buy a house for 14 years. Perhaps that dream will soon come true. Thank you for all you do.

  6. Interesting topic as my husband and I are on a major debt reduction plan also! I'm curious about how you've reduced your water and electric consumptions down. I'd love to hear more about your way of life and how you've tackled your bills. My hubby and I were able to pay somethings off this year. We know longer have credit cards - they are all cut up and sitting in a jar to admire. We still have credit card debt, but we are dwindling it down slowly. The mortgage will be last for us. We are working backwards from the smallest debt to the largest. I love your blog and look forward to hearing more about your way of life!

  7. Amen again, Rhonda Jean!

    There's a lot of talk out there that frugal is the new green. But those who knew, always knew! ;-)

  8. Well done, Rhonda. I'm so thankful to emerge from my college years debt-free, unlike many of my friends. I feel starting off with debt really hinders and limits you!

  9. jacran, getting rid of your debts will help set you up for retirement. In Australia, people of our age, and probably those down to the age of about 50, don't have the full benefit of our superannuation (401k plan), we came into it too late. But we discovered you don't need anywhere near the amount that is often advised by the government and financial advisers to live well in retirement. They're expecting people to want to live exactly how they live when they were young, with all the spending that goes along with that, and I reckon none of us should be doing that. Hanno and I live on less than $20,000 a year.

    frogdancer, I don't give two hoots what people think of me or the way I live. I used to want everyone to think I lived well and true to my values, but now, I really don't care. Good luck with your plans.

    thanks for letting me know, Coleen. We all have to be prepared for increasing prices and expect things like water, fuel and electricity to increase as resources decrease. Good on you for not giving up! I'm not either. : )

    thanks Lightening. I agree that water is too cheap.

    Gypsy Quilter, I really admire what you've done. Good luck with your dream. I hope you can be in your own home soon.

    Tara, what a great thing to do. Cutting up those cards and putting them in a jar would be a powerful reminder not to go back to debt. I forget if I've already written about how we save water, I know I've done electricity. I'll see if I can come up with a challenge to reduce these things soon.

    Hi Wildside, yep, we knew.

    anna, you're right, it does hinder and limit you. Well done on being debt-free. You really are in the best position.


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