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

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BHUser27
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Re: What age did you become debt free and what opportunities did it create?

Post by BHUser27 » Sat Sep 30, 2017 9:06 am

Became debt free at age 51 (3 yrs ago)
Redirected 100% of loan payments to savings as I paid off each debt
Bumped up my emergency reserve a little bit as I was expecting to change careers
Benefits?
Peace of mind and confidence in retirement plan have drastically increased
Was able to take a few months off when changing careers recently

scrabbler1
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Re: What age did you become debt free and what opportunities did it create?

Post by scrabbler1 » Sat Sep 30, 2017 12:44 pm

I had two periods of being debt-free. The first was in 1987 when I paid off my student loans 2 years after graduating from college. I had paid off just over half of the balance at the end of the 6-month grace period in late 1985 using some money I had forgotten I still had in another bank account I had stopped using.

With the salary at my job quickly rising, I was able to save up to make the down payment for my co-op apartment I would buy in early 1989. That ended my period of being debt-free, but not for very long.

In 1992, I refinanced my mortgage and saved $200 per month. That, along with my rising salary in the 1990s, and the booming stock market, enabled me to pay off the mortgage on my 35th birthday in 1998. That opened the floodgates to quickly replace the money I had used to pay off the mortgage. But with my expenses greatly reduced, this set the foundation for my being able to switch to working part-time in 2001 while still earning more than my expenses. And that set the stage for my being able to fully retire at the end of 2008 at age 45.

Being debt-free played a major role in becoming FIREd, both in 1987 for a few years and in 2008.

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

Post by Earl Lemongrab » Sun Oct 01, 2017 12:30 am

I started out debt-free for a number of years, then bought a house with a mortgage, paid that off and then took out a home-equity loan to invest, which I still have. The loans provided some opportunities.
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

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

Post by avenger » Sun Oct 01, 2017 5:05 am

I became debt-free 3 months ago at the age of 37. Having completed my residency and making a great salary the last 6 years, I put an equal amount of money toward debt payoff and investing. Now, I am saving 45% of my gross salary and really watching the investment account balance skyrocket. I'm not changing anything about my spending, rather just hoping to increase the nest egg while I can. The opportunity I hope to create is financial security at an early age.
cheers ... -Mark | "Our life is frittered away with detail. Simplify. Simplify." -Henry David Thoreau | [3 fund portfolio: VTI, VXUS, SV fund (yield 3.01%)]

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

Post by Pinotage » Sun Oct 01, 2017 5:57 am

DW and I paid off the mortgage earlier this year at ages 34 and 38 respectively. Our student loans are paid and we do not have consumer debt, so for now that makes us debt free. I say for now because if we move, we may take out another mortgage.

We have redirected the mortgage payments to taxable, so no real change in lifestyle or spending. Over time this will really give our taxable account a boost. Also have more flexibility to consider different jobs or part time vs full time work.

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

Post by 2Birds1Stone » Sun Oct 01, 2017 9:02 am

My fiance and I are 26/30 respectively and never owned a home.

We have about $4k in student loan debt, that we will wipe out over the next 14 months.

Staying largely debt free has allowed us to contribute a significant portion of our incomes over the past 5 years into investments.

We will be in a position to drop down to very part time work or take years off at a time by the time I turn 40.

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

Post by MnD » Sun Oct 01, 2017 9:45 am

Two weeks ago at age 55. I had 5 payments left but my stupid bank was going to escrow 45K worth of incoming insurance checks (for roof and siding hail damage) over the fact that they held a $5K mortgage on a 500K house. So I paid it off to avoid the escrow and now I'm going to pull all my business from that bank.

So to answer the question, I have another $1K a month in available income, I can more easily completely fire my bank and switch to a better one.

Dottie57
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Re: What age did you become debt free and what opportunities did it create?

Post by Dottie57 » Sun Oct 01, 2017 10:07 am

I was. debt free at age 47. Mortgage was paid up at that time.

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

Post by CAP_theorem » Mon Oct 02, 2017 10:34 am

HomerJ wrote:
Fri Sep 29, 2017 5:52 pm
Your way is fine, but (of course there's a but), will you still be "debt-free" if the market drops 50%? What if it drops 89%? Those of us who have actually paid off the loans will remain "debt-free" in those situations, while you may find yourself no longer with sufficient liquidity to eliminate all debts.

That said, your way is probably the smarter strategy. Your extra invested money is growing faster than the money I have tied up in my paid-off house. But I'm pretty conservative, and happy with my choice.
My investments were probably 5x my debt at 28. The bond portion was > than my debt around then. By 30 the amount of cash and short terms bonds I had was > than my debt. Certainly that money was still at risk, but I could have used it to make payments if I had to.

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

Post by smitcat » Mon Oct 02, 2017 12:38 pm

We are not debt free now but our overall net worth is healthy and growing. Debt free is not a metric we consider to gage our progress or opportunities.
How you utilize any debt you may have and what your progress is over time is a more valuable matric in our case and I would think that true with others as well.

22twain
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Re: What age did you become debt free and what opportunities did it create?

Post by 22twain » Mon Oct 02, 2017 1:00 pm

Neither of us ever took out student loans or car loans, so our only significant debt was our home mortgage, a 20-year loan paid off at age 54. It let us save a bit more towards retirement. Housing is cheap here in "flyover country" so the payments weren't huge, anyway.

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

Post by bungalow10 » Mon Oct 02, 2017 1:03 pm

We paid off all debt except the primary mortgage at the age of 32. We had enough cash to pay off the house at ~35. I'm 38-almost-39 for reference :)

Being debt-free at 32 facilitated the decision for my husband become a SAHD when we were 35 (we have three kids, now 10, 7, and 4). This enabled me to focus more effectively/efficiently on my career, which helped me make up the lost income. I asked for two years to make up for what my husband left on the table, I did it in 1.5 years.

Then we were at a point where the cash in the checking account could pay off the mortgage, roughly 35 years old? I had a really great career opportunity in Chicago right around that same time and we agonized over the decision, but took it. We moved the entire family in June 2016. We LOVED it. Loved Chicago and we were very glad we took the opportunity - it was a really fun year for all of us and moved us out of our comfort zone and we made good friends.

In summer 2017, we had the opportunity to move to Amsterdam. This was just a few months after buying a house in a Chicago 'burb. Again we agonized over the decision. But honestly, we knew we would have cash in the bank to buy a house in a moderate COL area when we came back, and enough in savings that we could spend money on travel while here (cash flowing it, not dipping into savings) so we jumped on it.

I really, really feel that being debt-free and front-loading our retirement savings, as well as being willing to unburden ourselves from some material things (not all, we still have stuff), has lead to some pretty cool opportunities. No idea what we will think when we look back, but we are enjoying our time in Europe and my kids are having some pretty cool experiences.

So right now we don't own a house or a car, but we are debt free. One of us is employed, and have have money in the bank and enough coming in to pay the rent, buy groceries, and do some traveling

:sharebeer :sharebeer
Last edited by bungalow10 on Tue Oct 03, 2017 1:01 am, edited 2 times in total.
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Pajamas
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Re: What age did you become debt free and what opportunities did it create?

Post by Pajamas » Mon Oct 02, 2017 1:50 pm

CAP_theorem wrote:
Fri Sep 29, 2017 4:46 pm
I consider positive net worth with sufficient liquidity to eliminate all debts immediately as debt free. If you disagree it's cool.
Positive net worth with sufficient liquidity to eliminate debt is not the same thing as being debt-free. If you have debt, you are not debt-free.

It's not a matter of agreeing or disagreeing or being cool about thinking about it differently, it's simply a matter of use of a common language and the established meaning of words in that language.

I have margin debt equal to a little over 5% of my net worth. I have a positive net worth and enough liquidity that I could be debt-free in less than thirty seconds any time the stock exchanges are open, but I am not currently debt-free and don't even know how to make a reasonable argument that I am.

Getting back to the topic at hand, being debt-free has not created any short-term opportunities for me. I chose to carry an auto loan for a while and later in life a mortgage for a while. I could have paid off either one at any time but chose not to do so in order to invest in tax-advantaged accounts instead and have no regrets about doing so.

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

Post by EddyB » Mon Oct 02, 2017 2:09 pm

Pajamas wrote:
Mon Oct 02, 2017 1:50 pm
CAP_theorem wrote:
Fri Sep 29, 2017 4:46 pm
I consider positive net worth with sufficient liquidity to eliminate all debts immediately as debt free. If you disagree it's cool.
Positive net worth with sufficient liquidity to eliminate debt is not the same thing as being debt-free. If you have debt, you are not debt-free.

It's not a matter of agreeing or disagreeing or being cool about thinking about it differently, it's simply a matter of use of a common language and the established meaning of words in that language.

I have margin debt equal to a little over 5% of my net worth. I have a positive net worth and enough liquidity that I could be debt-free in less than thirty seconds any time the stock exchanges are open, but I am not currently debt-free and don't even know how to make a reasonable argument that I am.
While I agree with Pajamas' statement, I think it reveals the relatively limited significance of "having debt," without more context. I was debt free before I bought my current house in 2012. I could have paid cash for the house, but opted to take out a 15 year loan up to the conforming mortgage limit, at a low interest rate (I would itemize my deductions even in the absence of the mortgage interest, for what it's worth). I would not have been better off (financially) paying cash at the time and investing the monthly payments since that time, but I would have been debt free. I can't know, but I think it's unlikely that being debt free these past five years would have created opportunities for me.

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John151
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Re: What age did you become debt free and what opportunities did it create?

Post by John151 » Mon Oct 02, 2017 3:08 pm

I charge almost everything to my credit cards and pay off the balances each month. Other than that, I’ve never been in debt. I rented a car until I had enough cash to buy one, and I lived in rental apartments until I could pay cash for my modest condo. Being debt-free provides a sense of security I wouldn’t have otherwise.

I was able to do this on a middling salary because I’m single and don’t have a family to support, and it helps that I’m a major cheapskate.

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mattyfu1
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Re: What age did you become debt free and what opportunities did it create?

Post by mattyfu1 » Mon Oct 02, 2017 3:27 pm

I am 35 and am debt free. Just sold my house, don't use credit cards and hate new cars :D

Opportunities it created: I travel more, actually downsized and simplified my life, started my own business (SAT tutoring)

For me, having no debt allowed me time to think of ideas and opportunities. This way of thinking has generated me multiple forms of income besides my normal job (teaching).

Best,

MattyFu

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

Post by mptfan » Mon Oct 02, 2017 4:21 pm

Pajamas wrote:
Mon Oct 02, 2017 1:50 pm
CAP_theorem wrote:
Fri Sep 29, 2017 4:46 pm
I consider positive net worth with sufficient liquidity to eliminate all debts immediately as debt free. If you disagree it's cool.
Positive net worth with sufficient liquidity to eliminate debt is not the same thing as being debt-free. If you have debt, you are not debt-free.

It's not a matter of agreeing or disagreeing or being cool about thinking about it differently, it's simply a matter of use of a common language and the established meaning of words in that language.
I agree with Pajamas.
I eat risk for breakfast. :)

Not Law
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Re: What age did you become debt free and what opportunities did it create?

Post by Not Law » Mon Oct 02, 2017 6:00 pm

Last car loan was paid off in 1988 at age 33 - I pay cash only for quality used cars. Student loans paid off in 1988. Credit cards used for rewards, paid in full every month since the early 90's (used GM card points to buy a new car for $4200 in 1995, Norwegian Cruise in the late 90's). Home mortgage (home A and later home B - bought in 1995) paid off in 2014. Opportunities: retirement goal was to replicate monthly spending. Each time a monthly payment ended, the retirement goal became more attainable. By the time the mortgage was paid off, the retirement funds were enough to cover twice the regular monthly expenses. We did cash flow two college educations in the 1990's as well. Never had incomes in excess of $80k.

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

Post by CAP_theorem » Tue Oct 03, 2017 2:49 pm

mptfan wrote:
Mon Oct 02, 2017 4:21 pm
Pajamas wrote:
Mon Oct 02, 2017 1:50 pm
CAP_theorem wrote:
Fri Sep 29, 2017 4:46 pm
I consider positive net worth with sufficient liquidity to eliminate all debts immediately as debt free. If you disagree it's cool.
Positive net worth with sufficient liquidity to eliminate debt is not the same thing as being debt-free. If you have debt, you are not debt-free.

It's not a matter of agreeing or disagreeing or being cool about thinking about it differently, it's simply a matter of use of a common language and the established meaning of words in that language.
I agree with Pajamas.
OK. I'm cool with that.

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

Post by indexonlyplease » Tue Oct 03, 2017 3:42 pm

jebmke wrote:
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.
Can I ask the reason why you moved overseas? Did you find a great place to live? Please tell.

Thanks

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

Post by SQRT » Wed Oct 04, 2017 7:31 am

Paid off mortgage and margin loans shortly after retiring. Used debt extensively while working and this leverage helped increase my net worth. On retiring though, I wanted less risk so totally deleveraged. This was 11 years ago. Dont want or need any debt at this point.

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

Post by Nowizard » Wed Oct 04, 2017 8:03 am

We are well into retirement but are not debt free by choice. Debt limited to mortgage, though we could pay it off easily if required. We do not follow the common advice to pay off your mortgage at retirement, choosing instead to continue investing which has been successful in the past. The difference is that we are now primarily investing for our children.

Tim

MP173
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Re: What age did you become debt free and what opportunities did it create?

Post by MP173 » Wed Oct 04, 2017 8:04 am

I have been debt free four stages of my life:
1. Mid 20's when $600 in student loans (yes $600) was paid off. This extended until age 30 when the first house was purchased with a 12% mortgage (yes, 12%).
2. At age 54, I paid off the mortgage of the 2nd house. It was paid off about 5 years in advance with extra monthly payments for several years. This was in early 2009 and dovetailed nicely with the recession. I am on a variable income and the income suffered for a couple of years. This period of debt free was brief as I remarried and we purchased a home.
3. In 2014 at age of 59 we paid off the mortgage when I sold "my house #2" and used proceeds to pay off the mortgage. This was also short lived as in 2015 we purchased two new cars and financed both on 3 year payouts.
4. The car loans were paid off early (one paid in just over 1 year, the second in less than 2 years). Debt free again at last.

This works well as my wife took early retirement. I am still on variable income and my philosophy over the years has been to keep debt at a very low level and pay off rapidly. It is nice to have that "$0.0" in the personal balance sheet for long term debt.

My philosophy was picked up from my parents who paid cash for everything. While I have not completely lived that philosophy, debt has been managed well. I used credit cards for certain purchases and pay off monthly, except when I forget to pay!

Ed

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

Post by Kitty Telltales » Wed Oct 04, 2017 8:17 am

Been debt free most of my adult life. Carried a balance for over 30 days on credit cards only out of error on my part twice. I've had 4 different houses that were initially and partially bought with mortgages, but treated all like a car loan and paid them off in 3 or 4 years, which freed up my decision making for the next phase. I'm 56 now and will most likely stay in my homes or downsize at this point. Any car I buy in the future will be cash.

One of my personal definitions of freedom is being debt free.

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

Post by traineeinvestor » Wed Oct 04, 2017 8:23 am

Not debt free and no plans to be so.

I decided to carry a mortgage on our home into retirement. The interest rate is below the rate of inflation and below the dividend yield on the local equity index fund. When its paid off, I'll most likely take on a new mortgage. I'm happy to accept the higher risk involved for the additional return.

We also have mortgages on our investment portfolio. No plans to pay those off early either.

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

Post by sunny_socal » Wed Oct 04, 2017 8:47 am

traineeinvestor wrote:
Wed Oct 04, 2017 8:23 am
Not debt free and no plans to be so.

I decided to carry a mortgage on our home into retirement. The interest rate is below the rate of inflation and below the dividend yield on the local equity index fund. When its paid off, I'll most likely take on a new mortgage. I'm happy to accept the higher risk involved for the additional return.

We also have mortgages on our investment portfolio. No plans to pay those off early either.
Sounds like you're living in here & now. Post back when we have another housing crash or market crash :wink:

TheHouse7
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Re: What age did you become debt free and what opportunities did it create?

Post by TheHouse7 » Wed Oct 04, 2017 9:33 am

30, and my wife has quit work easily at 28 being 3 months pregnant with our first kid. :beer

Dream big. Have a 10 year outlook on your decisions.
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

retire57
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Re: What age did you become debt free and what opportunities did it create?

Post by retire57 » Wed Oct 04, 2017 10:29 am

35, including mortgage. This freedom enabled us to work less and travel more. Of course, being kid-free also dramatically increased our options. :happy

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

Post by MathWizard » Wed Oct 04, 2017 11:12 am

At age 58 (last year).

We first worked at increasing tax advantaged saving. At age 58, we maxed that out, and had extra money,
so instead of earning 0.15% in a savings account, we paid off the 3.875% house loan early.

In the past year, we were able to
replace a very old car that had a number of problems,
repair a car that needed about $1500 in repairs,
pay for a the last year of college for our youngest,
do some deferred maintenance on the house (deferred because of 8 continuous years of kids in college.), and
take a trip to Europe for our 35th anniv.

crg11
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Re: What age did you become debt free and what opportunities did it create?

Post by crg11 » Wed Oct 04, 2017 11:16 am

Not debt free, fairly close. Paid off my student loans early this year and that was a huge lift to our finances, both mentally and budget wise. Not having to think of payments, collect statements, figure out taxes, and just grumbling about my student loans was liberating. Also we have paid off our credit card monthly in full for close to a decade now.

All we have left is a mortgage (4%) and a car loan (0.9%). I would love this to be our last car loan, but probably not quite there yet.

hulburt1
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Re: What age did you become debt free and what opportunities did it create?

Post by hulburt1 » Wed Oct 04, 2017 11:23 am

No debt no house cars visa..At 32 I was and am free to work part time. and still build up to 2.3m. I have never made $80000 WITH WIFE AND I WORKING. I'm 64 and will not need to live on SS so will wait untill70.We live on 60000 now and have travels the would, Wife Is going to England this summer and every 6 months I drive to where I want to. Alaska, Key West, Nova Scotia, Arizona most winters.

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

Post by bungalow10 » Wed Oct 04, 2017 12:25 pm

HomerJ wrote:
Mon Jul 06, 2015 1:12 pm
Being debt-free gave her the freedom to work an easier, more enjoyable job for less pay.

She can always go back to the more challenging or more stressful job if she chooses to :D :D :D
An elephant for a dime is only a good deal if you need an elephant and have a dime.

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