Paying off debt

1 July 2013
Sandy made a good point in her comment the other day when she said: We saved and budgeted hard years ago and cleared the mortgage. That is what helped us to live 'easier' now. But easier doesn't mean you give up 'simple' makes living 'simply' easier!  That hit the nail on the head for me and it helps to clarify the point that simple life isn't only about frugality and paying off debt. Money isn't, and shouldn't be, the main focal point of life. However, if you have debt it will stop you living the life you want because your efforts will be directed towards paying off your debt instead of living your life fully. Debt reduction and not gaining more debt is part of simple life, but it's just one of many parts that make up how we live.

Hanno and I bought our home on a 20 year mortgage and paid that mortgage off in eight years. Had  we still been in debt when I realised I was burnt out and wanted to stop work, I would not have been able to do what I did. I would have continued working until it was paid off. Luckily we were debt-free, so I had the self-indulgent luxury of giving up work to find a better way to live.

Hanno took control of our debts from day one of our mortgage. He paid the mortgage fortnightly instead of monthly and we paid extra payments whenever we had spare cash. Now that I look back, it wasn't easy but it was much easier than stretching it out to pay over 20 years and, as a consequence, paying so much more in interest payments. By knuckling down to pay that mortgage off fast, we literally saved ourselves tens of thousands of dollars.

You have to be strong to do something like that but I have to tell you I didn't feel strong while we did it. I only recognised our fortitude and strength much later, with the benefit of hindsight. Imagine this: we're both working hard, we have a young family, we're living in an isolated town to maximise our earning potential and friends ask us to to join them and their family for a weekend on a tropical island. It took guts to say no, but that's what we did. It was with trepidation at first but later it got easier. We didn't always say no to invitations but we did it enough to make a financial difference. Over those years we did take our boys off on camping trips, on a trip to Tasmania and to see our national capital - Canberra. But we also focused on our debts and paid them off. When we saw that debt total slowly decrease, it became easier and we knew we were doing the right thing. We didn't realise then what I know now - that paying off debt lifts the weight of the world from your shoulders and gives you the luxury of freedom.

And you never know what that freedom will be used for. It could be for an early "retirement" such as mine, to cut back full-time work to part-time to have more time for the family, it could be to divide your time between work and study. It could be anything. The important thing is that freedom and independence it will be there waiting there for you too.

Tomorrow we'll talk about various strategies you can use to pay off debt.  In the meantime, I'd love you to share your thoughts with us on paying off debt.