5/26/2004 - 9/18/2013 R.I.P. ... and Good Riddance!

I have a confession to make ... I am a killer.  I have killed without remorse, without regret, and -- to tell you the God's honest truth -- I kinda enjoyed it.

To make matters worse, my victim was barely nine years old, not even through a third of its expected life cycle.

And to top it all off, I celebrated this death.  My wife celebrated it with me.  We went out and had a nice dinner ... on gift cards, of course. 

To be fair ... this thing I killed was trying to kill me, too, so I only consider its death a matter of self defense. 

My friends, our mortgage ... is dead.  And I, for one, am pretty darned happy about it.

3,402 days.  That's how long we lived with that mortgage.  Nine years, three months, 23 days.  That's a long time to live with something that's trying to kill you an inch at a time.  And yet, I consider my wife and I fortunate that we slew this beast as quickly as we did -- we know full well there are countless millions of others out there who will have this beast on their backs for 30 years or more throughout their lives.

How did we kill this fell beast?

• We threw every spare cent towards the principal balance.  By my calculations, we've brought in $37,000 more this year than we've spent.  Guess where nearly every bit of that went?  To help make that amount as large as possible ...
• We continued to live frugally.  We don't live a life of deprivation, and even have managed to raise a happy and healthy toddler ... but we kept our costs low as best we were able.
• We depleted our rainy day account.  This one is not recommended by most financial types, but it was a calculated risk -- and desperate times call for desperate measures.  In the event we do need some sudden influx of emergency money, we have various sources we can tap ... not ideal, but possible.

And so, Wednesday morning I called up, got our payoff amount ... and made the payment.  When my wife and I woke up Thursday morning, it was the first time we had ever done so debt free in the entirety of our marriage.  Let me tell you, it was a truly great feeling.

So where does that leave us now?  We still have many financial goals for the future, and we get to start working toward them immediately.  Some of them are

• Replenish the accounts we raided to pay off the mortgage. We all but depleted our Rainy Day fund, and knocked both of our checking accounts pretty low, as well.  
• Resume contributions to our IRAs.  We've laid off contributions to our IRAs for the past several years to help make our debt-free dreams come true. 
• Set up savings accounts for various other goals.  Repairing and replacing appliances and vehicles, taking vacations, and funding future opportunities for our son.  Just a few of the things we'll be saving up for.

Here's hoping you all are having great success on your own financial journeys!

And the Results are In

Back near the end of November 2009, my wife and I set a goal -- an audacious goal, to be sure, but a goal nonetheless.  At the time, we had a mortgage, a second mortgage, student loans, and at least one car loan.  In total, we had just over $124,000 in debt.  We decided that we wanted to wipe it out, and fast.  Choosing it more for its alliteration than its feasibility, we chose forty months as our time frame.

At the time, there was really nothing going on in our lives to indicate we would get anywhere close.  We were both working.  We were living below our means.  We had no plans to rack up any new debt along the way.  Our incomes were nice, but between us, we certainly weren't approaching six figures, though we were in the upper half of five-figure incomes.

Along the way, life happened.  We bought a new car.  When that one got totaled (not our fault, I might add), we bought another one (which insurance covered the lion's share of).  We decided to start a family, and welcomed into the world our son Daniel, as well as several thousand dollars of payments to various doctors.  We bought a second car.  I quit my job at school so I could stay at home with our son.

Back in 2009 when we made this goal, I had dreams of being debt free in forty months ... but no real certainty that it would happen.  I had hoped we would get close, but, to be honest, I figured that, at best, we might whittle away half of that amount.

So here we are, forty months later, and what is the result?  Well, we're not debt free, but over the course of those forty months, we knocked nearly $95,000 off of our total debt.  We still owe just over $29,000 on our primary mortgage, but my estimates are that we will have that paid off by the end of the year.  Call it "Debt Free in 48."

Despite not making our goal, we achieved some remarkable results.  We paid off an average of just over $2,300 each month -- that's straight principal, not counting interest.  We've managed to increase our incomes substantially, and stand to make more in 2013 than ever before, despite me no longer working for the public school system (the joy of being a self-employed composer is I can do my work from home while the little one naps).

So, was the experiment a failure?  Hardly.  The true power in setting audacious goals lies not in whether or not you achieve them, but in the changes the pursuit of them causes in your life.  We are a little less frugal now that we've been at points in the past, but when we spend money on something, it comes from a place of consciousness about how that spending will impact our lives.  We have put ourselves in a far more stable financial position, such that if one of us should lose a job, it will be that much easier for us to stay financially sound.

As the months go by and we get closer to that $0 balance on our mortgage, we can feel a sense of hope and freedom that has been growing bit by bit over the months.  We've been in debt of one sort or another ever since we got married in 2000.  If my calculations hold, by the end of October -- or when we'll have been married just a few months over 13 years -- we will be debt free, a condition we plan to stay in for the remainder of our days.  At that point, the work we do, the money we make, moves from paying off what we owe to other people, and it starts working for us, paving the way to a smoother future and, hopefully before we get too old to enjoy it, financial independence.

So even though the "Debt Free in 40" part of things didn't pan out, the goals don't stop.  The time frames get rejigged, the goals change -- but the goals are still there.  And, for any of you who care to read about them, they'll be talked about here ... as sporadic as ever, but talked about nonetheless.

An Update and a Confession

I have to say, I'm impressed even with myself -- not a single post in all of 2012.  I knew my wife and I were writing sporadically on this blog, but the last we wrote, my wife was barely pregnant with our son.

Fast-forward from October 2011 to January 2013, and things are much different.  There are now three humans living in the house, one of them just over nine months old.  Our son is crawling, standing, almost walking, gibbering, and generally being a source of joy and happiness in our lives.  We're spending a small fortune on diapers every week, but thanks to a ton of gifts from friends, as well as some other friends with boys about a year older than our son, we've spent virtually nothing on clothes for him.

We've also been blessed with numerous toys from friends and family.  We've bought precious few toys with any money out-of-pocket, and despite the modest number of toys he has, our son still seems happy, content ... and tends to gravitate to the same three or four toys no matter what we lay out for him to play with.

We also have a sizable library of books for him, and again, we've bought very few of them ourselves.  Friends know our affinity for reading to our son and so will get us a book here or there, and thanks to our public library's summer reading program, we added several books we received as prizes for reading to our son.  Of course, we've also made numerous trips to the library, so we have a virtually endless supply of reading material for him, all for almost no money.

He's eating solid foods now, but we're spending less than many folks because my wife is making nearly all his baby food herself.  Apples, pears, green beans, even squash -- all of it is fresh before she cooks the living daylights out of it and then pulverizes it into oblivion before freezing it in ice cube trays for ready-made quantities of baby food.  No worrying about little glass jars and going to the store -- we just open the freezer, take out a ziploc bag, toss a couple of cubes in the microwave to defrost, and voila! -- instant butternut squash.

Thankfully, our son has been a source of joy, and not a huge source of financial drain.  That's not to say he hasn't had financial consequences on our lives, or been the source of many hard financial decisions.  Perhaps the biggest is that I quit my job as an elementary school librarian at the end of May 2012 so that I could stay home with him during the day.  This was a loss of about $10,000 a year before taxes, but considering the amount of money we would save on daycare -- not to mention the fact that he's being raised at home by his father and not some stranger with ten other kids to worry about -- it was absolutely the right choice.

As part of having our son, we also had many other financial decisions and events crop up.  There were doctor and hospital bills, of course, which, even after insurance, still cost us several thousand out of pocket.  There was the second car we bought -- a new 2012 Honda Fit -- which, like the Civic we already have, will be driven until the tires fall off.  (Yes, we know most places advocate only buying used cars, but we appreciate having the warranty for the first several years, and the Hondas are so reliable that they scarcely depreciate for the first several years -- we could save maybe a thousand dollars on a year old Civic or Fit, but that's not enough savings to also inherit a year's worth of someone else's problems.)

So what it all comes down to is this -- a confession.  As you can tell by looking at the numbers at the right (as of this writing over $47,000 left on the mortgage and 84 days to pay it off), we won't make our goal to be debt free in 40 months.  Unless one of us wins the lottery (a long shot since we don't actually play the lottery), or some rich relative dies and leaves us a large inheritance (again, quite unlikely), it's just not going to happen.

That's not to say that paying off this debt is no longer a goal for us -- on the contrary, for the past six months and more, ever since our son arrived, virtually every extra dollar we've received has gone toward paying down the mortgage, so much so that we paid off nearly $29,000 in principal in 2012 alone.  As it stands right now, if all goes well and according to calculations, we ought to have the mortgage paid off, at latest, by about March 2014 ... and it's entirely possible that we'll have it paid off before the end of 2013.  Yes, that will put us at "Debt Free in About 49" instead of "Debt Free in 40", but we're fine with those extra few months.

Does that mean this blog and the goal behind it have been a failure?  Well, yes, let's be honest, this blog has been pretty much of a failure -- when we can go for 14 months without writing anything, I'm not sure you can call that a success.  But the goal -- to be debt free in 40 months -- has that been a failure?  Absolutely not!

When my wife and I made the goal to be debt free, and when we made the arbitrary 40-month goal, we had no idea if we could do it or not.  It was really a very pie-in-the-sky sort of dream.  Based on our income and debt load, it wasn't impossible, but with my wife a public school teacher, and with me an elementary school librarian with a couple of piano lessons on the side, it sure didn't seem likely.  Still, we committed to the goal anyway -- saving money, being frugal in how we spent money and consumed resources, searching for new streams of income.

I firmly believe that, because of this goal -- even though we won't hit it -- my wife and son and I are in the financial position we are now, and will be free of debt before any of us turns 36 years of age.  If we had never set the goal of being debt free in 40 months, we wouldn't now be sitting here with the possibility of being debt free in 49. 

So, that's where things stand now.  I can't guarantee we'll post any more frequently, though I CAN guarantee you'll here all about it here when I make that last payment. 

What could be so distracting?

What could be so distracting that we haven't posted a new post in months?  Why haven't we at least updated the savings/debt totals?  As of yesterday, I am 16 week pregnant!  We've been very busy getting our physical, emotional, and financial selves ready for our expanding family.  This includes a two-pronged approach to getting our finances in order: savings and free stuff.

Free Stuff

Thanks to some very generous ladies I know from school and church, I don't think I'll need to purchase a single maternity item for my apparel.  The shirts, pants, and even pajamas lent to me totaled an astounding 55 items for me to choose from.  My "maternity" wardrobe is now bigger than my regular wardrobe.

In addition, I've been on the hunt for as many free samples and free programs as I can find.  My OB educator gave me several samples at my first appointment, and I have signed up for free diapers from several companies.  In addition, most department stores that allow you to sign up for a baby registry will give you a free gift bag of goodies for simply registering. 

Caution - Just because it's "free" does not mean it is a good deal.  My husband and I went to a major retailer offering gift cards for purchasing items such as diapers and batteries.  However, the difference in price between the items we were asked to purchase and their equivalent generics were more than the price of the offered gift cards.  It doesn't matter how much you save, only the value you get for the money you spend.

Saving

This is where my husband shines.  Although you will see the amount we owe on the house going down, it will be at a slower rate than usual.  Instead, our rainy day account will soon be soaring.  As first-time parents, we don't really know every expense coming around the corner.  So, we're going to build a nice healthy account called the rainy/baby account.  Hopefully we can transfer a nice bulk of that to our debt at some point, but for now we're playing it safe.

Sorry for the delay in posts!  Feel free to share any of your thoughts in the comments below.

How Much Rain Am I Expecting?

I made a decision last week, one that has the potential to shape our financial future for years to come.  It was a hard decision, and I made it while drinking coffee and staring at an Excel spreadsheet.

I decided to stop adding money to our Rainy Day Account.

We all know what the Rainy Day Account is supposed to do -- when you get a time in your life where all heck breaks loose, the Rainy Day Account lets you keep going with your life without going into massive debt or curling into a ball and dying.  Most of us also know that Conventional Wisdom (always a bad idea to blindly trust something with capital letters) says you should have three to six months worth of regular expenses in your Rainy Day Account, though some experts say as much as a year's worth.

I stopped contributing to our Rainy Day Account with just over $7,000 in it.  Not quite three months.

Instead, I turned and started throwing every available cent back toward our mortgage.  Our principal balance has dropped almost $1,000 in the past week.  Some Financial Experts (see, there are those capital letters again -- watch out!) would call this foolish, because once I've socked money into our mortgage, it's terribly hard to get it back out.  It's not liquid.  Now, a Rainy Day Account -- that's liquid.

Instead of explaining why I'm Right and They're Wrong, I'll simply say this -- general advice only works for general people.  If you are exactly like every other person in the world, it will work perfectly for you.  If, however, like my wife and I, you are a unique and personalized individual, you should take any of that general advice and see how and if it applies to you.

Here's why I stopped adding to our Rainy Day Account (your reasons may vary):

• We've got nearly 3 months worth of expenses in there.  Not a ton of money, but a good sum, should something awful happen.
• We've got financial buffers set up in other places.  We have almost $2,000 in a savings account that is supposed to be used just to pay income taxes, property taxes on the house, and homeowners insurance.  If we had an emergency, we could tap into that.
• Our income is diversified.  Most people get their money from one source and one source only, so if they lose that job, they're sunk, and need to fall back on that Rainy Day Account.  My wife and I have income coming from about five general places (a school corporation, a church, a group of piano students, a group of music publishers, and a university), and many more different specific locations within those (we each get income from the school corp for very different jobs, I've got about a dozen different piano students and a half dozen different publishers who pay me royalties, etc.)
• I can always add more to Rainy Day if I think I need to.  Upping the amount in that account is as simple as diverting the next extra mortgage payment into the Rainy Day Account instead.  Since they're both at ING Direct, it's not a hard thing to do.
• Eliminating the mortgage gives our Rainy Day Account more worth.  Right now, $7,000 is less than 3 months worth of expenses.  As soon as we don't have to pay $500 a month in mortgage principal and interest, that $7,000 goes even farther.  Owning our home outright, to us, is the greatest hedge against a financial catastrophe we can imagine.

Reading a lot of Financial Pundits is great, as is reading any sort of Financial Advice column.  But before you buy anything they tell you, think it through in terms of you and your life.  It may be they're right, but it may also be they're trying to give you Sound Financial Advice in capital letters (and we all know what that means...)

Ask, and Ye Shall Receive

As Independence Day lurks just around the corner, I've been taking some time to consider the great American spirit of self-reliance.  As Americans, we are masters of our destinies.  We need not seek the help of others to reach our goals.  We are ... invincible...  [said with whispered awe]

Of course, that's crazy.  Whatever you may think of what it means to be an American, there is nothing wrong in asking for a little bit of help.  At the very least, it is a good idea to let people know what your goals are.  You never know who might be able to help you.  It might just be that helping you is exactly what that other person has been looking for.

For instance, I am a little over 70% finished with my masters degree program.  Come December, I will have a masters degree in curriculum with a focus on technology integration.  (Impressive, right?  I'm thinking of having a superhero costume made of textbook pages, chalk dust, and the logo "CM" emblazoned in sticky tack on the front standing for CURRICULUM MASTER!  Don't worry - no spandex).  During the previous spring semester, I sent an email to one of my professors to say how much I liked her job, and I asked her how I could take it.   So, when a position as grader came up this summer, I was lucky enough to get that position.  Last night, she wrote me an email asking if I'd be interested in teaching a section for IUPUI in January.  I think by taking 30 seconds to write a quick email back in March, I got on her radar, which put me in a position to really go somewhere potentially amazing with my career.  All I did was ask.

The little bit of extra income from this will go toward debt-reduction, which is why this is showing up as a post here.  Plus, I think it's a lesson that applies to many parts of our lives.  If there is something you want, something you need, or something that means a lot to you, share it.  Ask it.  Post it.  Get it out into the universe where it can do some good.  The world is generally a good place to be, and it wants to help you.  Let it.  Just ask.

Yes, We're Still Here

I know it's been about half a year since either my wife or I have posted on Debt Free in 40, but we are still out here, though busy with the rest of our lives.  I'll try to get here soon for a proper update, but in the meantime, you can enjoy the new debt numbers over at the right.  Our mortgage has gone down (though not a great amount), mainly because we've been socking cash away into our Rainy Day fund, as well as using some emergency funds for some nice emergencies ... like replacing our car when it got totaled. 

I hope to post something more later this week, but for now, know we're still out here, we're still alive, and we're still hammering away at the debt.