What age did you become debt free and what opportunities did it create?

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nyinca
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What age did you become debt free and what opportunities did it create?

Post by nyinca » Fri Jul 03, 2015 10:38 am

Happy fourth everyone.

Given that holding "good" debt is so ingrained in the mainstream culture I was wondering for those who have become debt free (or striving to be), what age did you accomplish this? And what opportunities/satisfaction has it created for you?

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Re: What age did you become debt free and what opportunities did it create?

Post by CAP_theorem » Fri Jul 03, 2015 10:45 am

I am still making student loan payments, but I could pay them off if I wanted to I just choose not to. I would call that close enough to debt free. That happened around thirty. If I had made better career moves I could have done it a few years earlier.

It didn't create opportunities. Quite the opposite By forgoing leverage (and risk) I missed out on the low in the housing market and it will cost more in the long run. It's ok. My plan is to forgo risk and get rich slow and not take shortcuts and focus on the worst case outcome. Speaking of worst case I need to buy long term disability insurance.

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Re: What age did you become debt free and what opportunities did it create?

Post by jebmke » Fri Jul 03, 2015 10:48 am

I was born debt free.

Took on a small amount of student debt at 24, paid it off @30 but year later took on mortgage. Paid off last mortgage when we moved overseas @50, no debt since.
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Re: What age did you become debt free and what opportunities did it create?

Post by hicabob » Fri Jul 03, 2015 10:55 am

Paid off my house in my late 30's using a stock option that came to fruition. I started to increase my non tax-sheltered long term stock market investments after that point.

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Re: What age did you become debt free and what opportunities did it create?

Post by Garco » Fri Jul 03, 2015 10:56 am

I became debt free after my 30-year mortgage was paid off (age 62), but then one of my children went back to college.... And we supported her. Filed for SS at FRA (66) to help provide cash for that. Only really became permanently debt free at age 68 when I received an inheritance and liquidated her loans.

Added: The main opportunity is that I was able to retire debt free, and to live on my life-long 401k investments plus new cash that same with the inheritance. Concretely this means that we are fully maintaining the same life style in retirement that we had before then -- subject to the particular taxations that come with aging.
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Re: What age did you become debt free and what opportunities did it create?

Post by climber2020 » Fri Jul 03, 2015 10:59 am

The only debt that I ever had was a loan from medical school. I paid it off at age 31, a hair over 2 years from when I got my real job out of training. The day I paid it off was one of the greatest days of my life. I still remember it vividly and took a screen shot of the zero balance statement after the final payment went through. I find the notion of "good debt" completely ridiculous. Even though my debt was acquired for a justifiable purpose, I still wanted that monkey off of my back as soon as possible.

From a day to day perspective nothing really changed after that, except I was able to funnel a lot more cash from my paycheck into my taxable account. Mentally and emotionally, my stress level shot down knowing that I no longer owed anything to anyone. Next goal is financial independence :beer

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prudent
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Re: What age did you become debt free and what opportunities did it create?

Post by prudent » Fri Jul 03, 2015 11:00 am

Age 52. I love the term "debt free" because to me, not having debt truly does mean freedom. The primary opportunity was to have options in employment, including positions I would like more even if it pays less. Was able to accelerate retirement savings. Also, if we wanted to move, it meant we would not have to sell our home first (= more options).

It was probably more satisfying than achieving any net worth milestone because both of us grew up poor and that meant you were at the mercy of the lender. Credit cards had a $500 limit, take it or leave it. A car repair meant buying groceries at the corner market instead of the supermarket - higher prices and bad selection, but they'd let you eat today and pay on payday. If the car repair was too expensive, it meant trading it in on another beater at whatever terms they would offer. Gifts at Christmas depended on whether dad was able to get some overtime at the plant. When people anonymously left baskets of food on the porch, my parents were extremely grateful yet mortified.

I get the whole "good debt" thing and I don't criticize those who use leverage. It's just not for me.

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Re: What age did you become debt free and what opportunities did it create?

Post by Carefreeap » Fri Jul 03, 2015 11:02 am

I don't think that we'll ever be "debt-free" in the strictest definition of debt unless we choose not to own any real estate.

I don't see the benefit of paying off cheap 30 year mortgages when our investments are doing a lot better than that. Since our NW is 5+x our debt I don't see the issue. I like the flexibility that comes with that liquidity.

Perhaps a different way to answer your question is what was the most meaningful financial milestone for us? I think that was when we were approaching the $2M NW mark. DH's employer decided to move out of the area. We then had the choice of staying and living on my income and DH could take his time finding a job. This was in 2001 during the dot-bomb and DH was a tech worker. Or we could take the job offer and I could quit my job. Either choice would not significantly change our financial situation. DH used our situation to negotiate a better job and relocation package. We were also able to buy a nice house in the new location but keep our SF Bay Area house in case things didn't work out or we wanted to return. That turned out to be a very smart decision.

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Re: What age did you become debt free and what opportunities did it create?

Post by sschullo » Fri Jul 03, 2015 11:07 am

Age 57, ten years ago.
As a public school teacher, I did not make enough to max out my 403(b), paying off the mortgage allowed me max out and thus help recover our portfolio from our massive investing mistakes made during the 2000-2002 crash.
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Re: What age did you become debt free and what opportunities did it create?

Post by MarkBarb » Fri Jul 03, 2015 11:10 am

Paid off our house at age 45. It didn't really change anything. Income that was going to pay down the mortgage loan now went into long-term savings. It made my wife really happy, but the truth is that it made about as much financial difference as switching types of bonds.

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Re: What age did you become debt free and what opportunities did it create?

Post by fandango » Fri Jul 03, 2015 11:41 am

Debt free at age 38 when we paid off our mortgage.

Allowed more money for investment and set the stage for retirement possibility at age 55. Actually retired at age 62.

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Re: What age did you become debt free and what opportunities did it create?

Post by Bacchus01 » Fri Jul 03, 2015 12:04 pm

I can't imagine ever being sent free. I'm not even sure why I would want to be.

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prudent
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Re: What age did you become debt free and what opportunities did it create?

Post by prudent » Fri Jul 03, 2015 12:07 pm

Bacchus01 wrote:I can't imagine ever being sent free. I'm not even sure why I would want to be.


Reminded me of a Jack Handey quote: "I hope that when I die, people say about me, 'Boy, that guy sure owed me a lot of money.' "

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Re: What age did you become debt free and what opportunities did it create?

Post by aj44 » Fri Jul 03, 2015 12:31 pm

At 31 in 2012, it changed everything. Most fears are gone, I can take risks at work knowing if I got fired I would enjoy a nice vacation. When I changed jobs, I took two weeks off because we can easily pay our bills on one salary. We can help family whenever we need to and within reason can do almost anything we want.

It is quite liberating.

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Re: What age did you become debt free and what opportunities did it create?

Post by hmw » Fri Jul 03, 2015 12:43 pm

Mortgage is the only debt I have. I can pay it off next week if I want to, but at 2.875%, I think I will keep it.

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Re: What age did you become debt free and what opportunities did it create?

Post by bluelight » Fri Jul 03, 2015 12:54 pm

On 08/17/2012 at age 55 when I paid off my mortgage. I now use the money that was paid in mortgage interest towards vacations.

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Re: What age did you become debt free and what opportunities did it create?

Post by am » Fri Jul 03, 2015 1:56 pm

I have no debt. If I did, even 2.875 mortgage would be unacceptable. Sure it is low compared to possible future returns, but if you have a mortgage in the hundred of thousands, you are still giving away thousands every year to a bank for the sole purpose of giving you a loan. If you do not need the loan, than seems like a bad deal. I do my own investing, seems similar to giving an advisor money to do it for me. Yes, I know, potential returns of stocks are higher, but reality may be different. I know of no easier way to make thousands than to pay off a mortgage which I did the first chance I got.

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Re: What age did you become debt free and what opportunities did it create?

Post by basspond » Fri Jul 03, 2015 2:12 pm

47. We have been able to cash flow car and college expenses, catchup Roth and 401K contributions, and to officially retire at the youngest age that is allowed.

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Re: What age did you become debt free and what opportunities did it create?

Post by FelixTheCat » Fri Jul 03, 2015 2:15 pm

climber2020 wrote:Mentally and emotionally, my stress level shot down knowing that I no longer owed anything to anyone. Next goal is financial independence :beer

+1
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Re: What age did you become debt free and what opportunities did it create?

Post by jlawrence01 » Fri Jul 03, 2015 2:22 pm

I relocated to the Chicago area in 2000. I bought a home at the worst possible time in that year and the rate was 8.5% (you are reading that correctly). When I tried to refinance eight months later (at 6.25%), the bank tried to charge me a fee that represented 5% of the mortgage.

I paid the loan off in six months redeeming savings bonds, selling the individual stocks that I owned and the like. Friends thought I was nuts selling the stock at what turned out to be the high of the market. I figured that I was getting a guaranteed return of 8.5%.

With no house payment and no car payment from 2000-2015, we were able to max out the 401(k), Roth IRAs and build up funds in taxable accounts for retirement, all at a time when the market was in the toilet. As a result of that, my wife and I were able to retire 3-5 years earlier than we expected and move to a warm climate. I have to admit that neither of us really miss working all that much.

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Re: What age did you become debt free and what opportunities did it create?

Post by papiper » Fri Jul 03, 2015 2:41 pm

Elected to pay off our last debt (mortgage) at age 57. Could have kept more in investments, but without a mortgage payment, our monthly expenses dropped below the amount of a pension starting at 58. So now we are retired (3 months) and living completely within our pension and all our investments are growing for the future. Having NO debt payments really frees up cash flow so we could retire worry free.

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Re: What age did you become debt free and what opportunities did it create?

Post by Dimitri » Fri Jul 03, 2015 2:49 pm

Our household became debt free when I was 44 (paid off rental property). We were essentially debt free when I was 39 and paid off our residence's mortgage since the rental was cash flowing more than its expenses. I guess the real opportunity is not to care all that much since we have a place to live as long as we pay the HOA and property taxes which are both quite modest. It honestly doesn't feel all that different. Life is pretty much the same as it was. Neither of the mortgages was oppressive.
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Re: What age did you become debt free and what opportunities did it create?

Post by Watty » Fri Jul 03, 2015 3:07 pm

And what opportunities/satisfaction has it created for you?


We will go through several phases but when are both over 65 and getting social and get the larger standard deduction we will be able to have over $55K a year in income(including social security) and owe no federal or state income taxes. With a paid off house that should be ample income for a middle class lifestyle since we live in a low cost of living area.

If we still had a mortgage or other debt in retirement then we would likely need more cash-flow which could quickly put us into range were each extra dollar of taxable income makes more of our social security taxable.
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Re: What age did you become debt free and what opportunities did it create?

Post by mule » Fri Jul 03, 2015 5:27 pm

I have been out of debt since I was 29 years old I am 58 years old now. I built my own house from ground up (1800 sf ) and had a small construction loan then. Since then I paid cash for everything. I have bought pieces of land through those years and paid cash. I wish I would have bought more small acreages through the years but if I didn't have it I didn't buy it. My family needs always came first and I always felt guilty when buying land but it all paid out in the end.

I'm not saying debt free is always wise but that is what I did. Debt free for 29 years the way if figures out. It has given me the opportunity to save more for retirement years.
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wander
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Re: What age did you become debt free and what opportunities did it create?

Post by wander » Fri Jul 03, 2015 5:35 pm

Property tax is the only debt I have.

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Re: What age did you become debt free and what opportunities did it create?

Post by Toons » Fri Jul 03, 2015 6:31 pm

Being debt free allows one to do with their time what they wish. :happy
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Re: What age did you become debt free and what opportunities did it create?

Post by Index Fan » Fri Jul 03, 2015 7:14 pm

At age 30 I realized that having over 16k on credit cards was not a good thing, A few lears later, after getting a 2nd job, I had paid off every penny of that debt.

Paying it off felt incredibly good. I then started investing.
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Re: What age did you become debt free and what opportunities did it create?

Post by RadAudit » Fri Jul 03, 2015 7:54 pm

Paid off the mortgage at 63. And, being debt free gave me the chance to retire.
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Re: What age did you become debt free and what opportunities did it create?

Post by Traveler » Fri Jul 03, 2015 8:00 pm

I'm not completely debt-free but could pay off my mortgage tomorrow if needed - but at 1.99% (thanks to this board and PedFed!), why would I?
I'm not sure living debt-free or with a very low level of debt is what gave me opportunities - living in a relatively small, low cost home is what gives me opportunities. I bought a new car with cash last year, I travel internationally several times a year and never feel like I'm being deprived of anything because of finances.

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Re: What age did you become debt free and what opportunities did it create?

Post by Nicolas » Fri Jul 03, 2015 8:01 pm

I became totally debt-free at the age of 51 and have remained so since. Never again will I be a debtor. It enabled me to max out both of our Roth IRAs and my 401K every year since, which I couldn't do previously. And it has afforded me great peace of mind.
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Re: What age did you become debt free and what opportunities did it create?

Post by jabberwockOG » Fri Jul 03, 2015 9:07 pm

Have not had any consumer debt for over 20 years. Paid off our mortgage 5 years ago at age 54. This enabled us to save and invest significant amounts of our income. House is worth apprx 600k and total NW is currently approx 2.0M. Plan to retire at the end of this year living modestly but entirely debt free. Nothing I know of feels better on a long term basis than living your life 100% debt free.

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Re: What age did you become debt free and what opportunities did it create?

Post by The Wizard » Sat Jul 04, 2015 12:16 am

Toons wrote:Being debt free allows one to do with their time what they wish. :happy

Perhaps, but it's really total cash flow that matters.
I had a modest HELOC balance (re-fied mortgage) going into retirement two years ago. I could mostly pay it off now, but then I wouldn't have my new vehicle fund anymore. :(
It only steals about $400 a month of my retirement income, so it's not enough to be a real hindrance.
Once it's paid off in a few years, I suppose it will be a nice inflation fighting bump in my retirement income. That sounds good to me. :)
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Re: What age did you become debt free and what opportunities did it create?

Post by Tanelorn » Sat Jul 04, 2015 5:57 am

I think having "good debt" has created a lot more opportunities for me than I had when I was debt free. I definitely achieved financial independence a lot sooner than I would have without debt, probably by 5-10 years.

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Re: What age did you become debt free and what opportunities did it create?

Post by ks289 » Sat Jul 04, 2015 5:59 am

The Wizard wrote:
Toons wrote:Being debt free allows one to do with their time what they wish. :happy

Perhaps, but it's really total cash flow that matters.
I had a modest HELOC balance (re-fied mortgage) going into retirement two years ago. I could mostly pay it off now, but then I wouldn't have my new vehicle fund anymore. :(
It only steals about $400 a month of my retirement income, so it's not enough to be a real hindrance.
Once it's paid off in a few years, I suppose it will be a nice inflation fighting bump in my retirement income. That sounds good to me. :)


I agree.
We may be debt free (mortgage) in 10 years, but we will still have usual expenses and college costs. As long as we are earning a sufficient amount to pay expenses and save, I am not overly concerned about debt free status.
We could pay off our mortgage now with funds in taxable accounts, but investing has yielded a great deal more thus far.

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Re: What age did you become debt free and what opportunities did it create?

Post by kinetic2255 » Sat Jul 04, 2015 10:56 am

I started paying my own way at the age of 16. This created a forced 'live within your means' debt free lifestyle. Student loans were paid off early (25), major home renovations and cars paid with cash. Other than our mortgage we are debt free. The best example on how living this type of lifestyle has benefited us is the opportunity costs with our current home. We purchased and gutted a prior home in 2007: $140k pp + $55k reno's during the height of the market. Five years later the neighborhood was falling apart and we wanted out. We took a $30k loss on the house (the ROI for renting was not there). We were able to absorb the loss and purchase another fixer upper near the coast. We just got a recent appraisal for our current home reflecting a $100k appreciation from the original purchase 2 years ago. This is a net $70k opportunity (on paper I know) that we gained from being debt free.

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Toons
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Re: What age did you become debt free and what opportunities did it create?

Post by Toons » Sat Jul 04, 2015 2:59 pm

The Wizard wrote:
Toons wrote:Being debt free allows one to do with their time what they wish. :happy

Perhaps, but it's really total cash flow that matters.
I had a modest HELOC balance (re-fied mortgage) going into retirement two years ago. I could mostly pay it off now, but then I wouldn't have my new vehicle fund anymore. :(
It only steals about $400 a month of my retirement income, so it's not enough to be a real hindrance.
Once it's paid off in a few years, I suppose it will be a nice inflation fighting bump in my retirement income. That sounds good to me. :)


Yes cash flow does matter.
I was "speaking" of debt free,,no mortgage,car payments,credit cards,etc. :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: What age did you become debt free and what opportunities did it create?

Post by TradingPlaces » Sat Jul 04, 2015 3:01 pm

I hope I die with more debts than assets. Of course, I hope my assets are in trust, outside of my estate, and my debts are many and mighty. You can not collect from dead people.

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Re: What age did you become debt free and what opportunities did it create?

Post by mlebuf » Sat Jul 04, 2015 3:37 pm

prudent wrote: Reminded me of a Jack Handey quote: "I hope that when I die, people say about me, 'Boy, that guy sure owed me a lot of money.' "

LOL! That is too funny.

I became debt free for the first time at age 47. I owed about $13,000 on the house and paid it off when I opted for early retirement. At age 53 I moved to Arizona and went back into debt with a jumbo mortgage. I didn't particularly like the idea of having debt but it didn't keep me awake at night or prevent me from living the life of an unemployed prince. I paid it off at age 68 and have been debt free ever since.
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Re: What age did you become debt free and what opportunities did it create?

Post by Carefreeap » Sat Jul 04, 2015 4:08 pm

TradingPlaces wrote:I hope I die with more debts than assets. Of course, I hope my assets are in trust, outside of my estate, and my debts are many and mighty. You can not collect from dead people.
r

I hope you are kidding.

When my mom got sick my biggest hope was that she died before her house went into foreclosure. Picking up the pieces and dealing with collection agencies because your parent was in debt and didn't have enough to pay them is not fun.

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Re: What age did you become debt free and what opportunities did it create?

Post by jackholloway » Sat Jul 04, 2015 4:16 pm

I am not debt free. I have a 3.5% mortgage whose tax write off of a few grand a year is useful in my current bracket. It will be paid off when kid goes to college in seven years, sooner if I hit my number earlier, later if life happens.

I have a NW of perhaps 15 times my mortgage, so it is a choice between a garanteed 2.5% vs the prospective return of my 65/35 portfolio.

There is definite appeal to being completely debt free. Being able to pay cash for our last three cars felt good.

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Re: What age did you become debt free and what opportunities did it create?

Post by edge » Sat Jul 04, 2015 6:22 pm

Most of the opportunities I've capitalized on have been because I took advantage and used debt.

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Re: What age did you become debt free and what opportunities did it create?

Post by Pajamas » Sat Jul 04, 2015 9:18 pm

I have had one car loan and one mortgage which were paid off very early. I was in my early 40s when I paid off my mortgage.

For a few months when I was in my early 20s I lived off my credit card, but got that paid back in just a couple of months once I got a job. Ever since it has been possible, credit card gets paid in full automatically from checking each month.

If I had a <4% mortgage I wouldn't worry so much about it, but would still prefer to be debt free for living expenses.

I personally would not mind using loans, including margin loans, for business or investment purposes. That's different from living by borrowing.

Not having loans means my living expenses are lower. I am never worried about quitting a job because I don't like it or want to do something else like go to school or take a long vacation or move because I don't depend on my biweekly paycheck for living expenses. (I have quit jobs for all of those reasons.) I enjoy knowing that I have that freedom even when I am working.

It has also allowed me to save more and become even more independent of having to work.

Basically it boils down to "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."

If you have loans for living expenses, you are living beyond your means. A mortgage is the only exception.

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Re: What age did you become debt free and what opportunities did it create?

Post by feh » Mon Jul 06, 2015 12:49 pm

Paid off our mortgage in our late 30s. Simply enabled us to save more for retirement.

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Re: What age did you become debt free and what opportunities did it create?

Post by HomerJ » Mon Jul 06, 2015 1:12 pm

We paid off our mortgage about 3 years ago...

This let my wife quit her job that she hated, since we could then live on my salary alone (and still save about 20%).

She found another job about a year ago, that lets her work from home, which is a lot less stressful.

Being debt-free gave her the freedom to work an easier, more enjoyable job for less pay.

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Re: What age did you become debt free and what opportunities did it create?

Post by BW1985 » Mon Jul 06, 2015 2:27 pm

I've never borrowed which has allowed me to focus a high percentage of my income towards savings.
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Re: What age did you become debt free and what opportunities did it create?

Post by IlliniDave » Mon Jul 06, 2015 6:52 pm

nyinca wrote:Happy fourth everyone.

Given that holding "good" debt is so ingrained in the mainstream culture I was wondering for those who have become debt free (or striving to be), what age did you accomplish this? And what opportunities/satisfaction has it created for you?


I became debt free at age 48. I made it a goal at around age 45. After a marriage replete with financial tension, worry, and stress, I gained enormous peace of mind. That was the platform from which I launched my present journey for ER/FI. It's not the only road to Dublin but it works well for me.
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Re: What age did you become debt free and what opportunities did it create?

Post by DVMResident » Mon Jul 06, 2015 7:37 pm

We did the opposite and purchased a rental with heavy leverage. It boosted our income by ~24%: 7% is cash-flow, 6% principle pay-down, and 11% appreciation (if sold today the appreciation would be higher, but I'm assuming the appreciation will revert to the mean of +1% real).

The extra cash-flow goes (indirectly) into a backdoor ROTH 401(k), offsetting the lost income DW is home with the kid. I estimate the rental will provide 5~7 years of extra retirement.

More Please
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Re: What age did you become debt free and what opportunities did it create?

Post by More Please » Mon Jul 06, 2015 9:10 pm

I don't pay interest, I earn interest. :D

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Re: What age did you become debt free and what opportunities did it create?

Post by TradingPlaces » Mon Jul 06, 2015 9:36 pm

Carefreeap wrote:
TradingPlaces wrote:I hope I die with more debts than assets. Of course, I hope my assets are in trust, outside of my estate, and my debts are many and mighty. You can not collect from dead people.
r

I hope you are kidding.

When my mom got sick my biggest hope was that she died before her house went into foreclosure. Picking up the pieces and dealing with collection agencies because your parent was in debt and didn't have enough to pay them is not fun.


Only if you want to recovering anything out of the estate.

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Re: What age did you become debt free and what opportunities did it create?

Post by cheese_breath » Mon Jul 06, 2015 10:31 pm

My home mortgage was my last debt. Paid it off in Sept, 2001 at age 60. Since I was already retired elimination of the mortgage payment enabled me to leave more of my money invested so it could continue to grow,
The surest way to know the future is when it becomes the past.

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