I’m Debt Free*!

the day I became debt free

the day I became debt free*

Heavy emphasis on the asterisk.

Earlier this week, with a bit of unexpected money, I paid off my car loan. Which means, technically, I’m debt free.

But only technically. I mean, there’s a whole stack of papers that say otherwise. It’s just that my first mortgage payment (which will cover my June living) is due July 1, so, for a glorious but brief period of time, I am debt free.

My friend Cait just became debt free, and she’s getting some press about it! My other friend Carrie has been debt free for an entire year now. They’re both celebrating, and rightfully so.

I feel like I can’t really celebrate, because this is… how shall we say… kind of fake?

And so temporary. I’m no mathematician, but according to the papers, I’ll be paying back this debt for the better part of three decades.

But still. It is cause to celebrate. I’m going to pat myself on the back and tell myself, “self, you’ve come a long way, baby.”

How far, exactly, have I come?

When I moved back to Portland in 2008, I had more than $20,000 in credit card debt alone. That was in addition to about $10,000 in student loans, and before long, $9,500 on a car loan.

After taxes, I make a little less than $35,000 a year. So that means, in five short years, I paid off more in debt than I earn in my day job in a calendar year.

Am I allowed to get excited about that?

Because, holy cow, I am!

And so, even knowing that I’m heading straight toward more debt than I’ve ever had at one time, I can relax.

What being debt free* means

Reaching this goal, even with the technicality, feels a little like Scarlet O’Hara in Gone With the Wind. “I’ll never go hungry again!” But, you know, I wasn’t exactly hungry.

I kept myself up many nights worrying about how on earth I’m going to pay off my burden of debt. I let it bring me down so that there was almost a physical weight on my shoulders. I would get tears in my eyes when I told people white lies about being too busy to attend some social function that cost money.

I’m on the other side.


I have money in savings for the first time. That extra money I was putting toward my debt-of-highest-pain? Now goes into my 2.25% interest bearing checking account. Last month, the credit union gave me $6 in interest. I know that sounds like nothing (and really, it’s less than two ice cream cones) but it was the first real sign that my money was working for me. I was earning interest. Not paying it.

You can get here, too!

Many people say that mortgages are “good debt” which is a silly term, because there’s no such thing as good debt or bad debt. Debt is a tool that helps you finance your future. Guns don’t kill people, people kill people. It’s a tool that has a high propensity to be mismanaged. That doesn’t make some debt better than others (just like some models of guns aren’t better than … oh jeez this analogy breaks down pretty quickly!).

I was talking with my friend the other day, who was trying to justify a very expensive purchase for his home. “If I pay it off in 36 months, it’s zero percent interest.”

I said, “that just keeps you in the debt mentality, though. Why not save up for that?”

His response was that if he took out this line of credit, he could get it now.

Debt is a sneaky way to make us think we don’t have to save for anything, ever.

And, I, for one, am never going back.

What about you? Did you celebrate when you paid off your debts? Will you celebrate when you get here? Or will you buy a condo?


  1. studentloansherpa says

    Congratulations!! I feel like I am where the 2008 version of you was… its nice to see it work out so well for you. Thanks for sharing your story.

  2. moneybeagle says

    Good work! I'm with you on how you approach debt. My goal is that every month when I pay the mortgage and student loan payments (the only ones we have), I use the ensuing balance as our new 'debt ceiling' meaning that the goal is to take on no new debt. Since we moved into the house in 2007, we've stuck with that except we did violate it once when we re-financed, but we chose to roll the closing costs in rather than pay them out of pocket, but since we cut the term of the loan by over ten years and increased the amount toward principle by over 500 a month, we 'recovered' that within 5 months.

  3. says

    Congrats girl! That is so awesome! You should definitely be proud of yourself and I would certainly consider you debt free. Unless you plan on paying off your mortgage super fast, you're debt free in my book.

    When I'm totally debt free, I'm gonna blow a whole month of debt repayment money. Then, I'm going to start building myself a nice fluffy savings cushion. Can't wait!

  4. says

    Way to go Kathleen, you should indeed take a time out to pat yourself on the back! And that new mortgage–while still debt of course, it's not the same as credit card, student loan, or auto debt. You've got an awesome, and we can hope appreciating, asset in exchange for the debt. And your income tax rate is going to drop through the floor with all the new deductions you've just taken on. Not so with other sorts of debt. So, good on you!

  5. PKamp3 @ DQYDJ says

    Good stuff! Although, it came to me half way: Debt * Free, asterisk = payment. Good as gold, heh.

    Thoughts on the Portland real estate market?

    • says

      I have absolutely no idea what you're trying to say here, PK, and I've read it five times!

      The Portland market is tight at my price point. I bought in a neighborhood that is going to have public transportation (lightrail) in the next few years, which can only mean good things!

  6. says

    Congrats. I bet you feel really good right now. I agree with Kurt and the mortgage is so much different that your credit card, student loans and any other debt. While you might not like the term good debt, its debt that can end up paying you back down the road in appreciation.

    • says

      That's true, Sean! It helps lower my taxable income, it will hopefully sell for more money later down the road, and I have to live somewhere! It's just not quite fair to call it debt free.

  7. says

    Of course you should be excited, congratulations!! I agree with everyone else, a mortgage is not the same as credit card debt, and you have lots of cause to celebrate, so enjoy it! When I pay off my student loans I am going to be putting that money toward retirement and a vacation/travel fund.

  8. says

    I have been debt free (technically) for many years. My (small) mortgage and car loan will be paid off in less than 4 years. The best part of being debt free is you have a lot more choices what you do with your money. I opt to save about 35% of of my income for retirement.

  9. says

    Congrats! I am not there yet but we are working towards that goal as I type. You should be excited you have ever reason to be. Thats a lot of work and discipline. So much done in a short time.

  10. says

    Congratulations!!! Enjoy your asterisk period of time with gusto — you've earned the celebration. :) By this time next year I plan to be done with my car loan, closer on my student loans, and have reached a big liquid emergency savings fund goal — 9 months of living expenses. You give me inspiration to say "no" to that mocha at Starbucks… I don't really need that today. ;)

  11. says

    Congratulations! We have such a strong debt culture in this country that paying off debt is a counter-cultural act. You rebel, you!

    I've never just carried debt except for my mortgages. But I hate paying interest so much it's very motivating. I've been making extra payments on my 20 year mortgage and will have it paid off after 15 years or less!

    Not having debt is tremendous freedom. I hope your stories encourages many people to follow your example.

  12. Pauline @ Reach Financial Independence says

    Well done Kathleen!! You can be proud and celebrate, it is a huge milestone. And in your own condo no less. That is awesome.

  13. says

    What is it about personal finance bloggers never being able to admit when they're debt free? You are DEBT FREE! NO ASTERISK NEEDED! No need to belittle such a major accomplishment and not give yourself the credit you deserve. After "Absolutely no debt" is "No debt except a mortgage" and that's not a bad place to be in my opinion.

  14. Catherine says

    That's amazing Kathleen!! I cannot WAIT to write my (non-mortgage) debt free post!! Like Jordann said, when we get our debt paid off we will likely do one of two things, blow a months worth of money on whatever we want or save up like 2 months worth of debt payments and go on a little trip somewhere…when we get home we'll start re-allocating the money into retirement savings and extra mortgage payments. Enjoy your total debt free month :)

  15. says

    It kind of freaks me out that you posted this today-the same day I wrote about being afraid to be debt free. Are you psychic? Congratulations on being debt free!! You have inspired me and I am trying to really getting my head in the game.

  16. doordebt says

    That is so awesome! Although you will still technically be in debt, housing is a long term "investment" for most. I am so proud of you and happy for your success.

  17. jim says

    You go girl!!!!!!!!!! Woo Hoo!!!!!! Congrats.
    (but seriously think about refinancing that mortgage to a 15 year under the HARP 2.0 program (NOT the original Harp program which totally sucked and screwed people up one side and down the other). The Harp 2.0 program is worth a few phone calls to see if you qualify. Good for YOU!!!!!!!!!!!!!!!!!!!!

  18. says

    Holy Hell!! You have a 2.25% interest bearing checking account!? Where did you find that creature!?

    In all seriousness, congrats on your accomplishment. I remember the feeling of paying off my debt and then realizing my investments were paying me vs. me paying my debt. It was an awesome feeling. Enjoy it…

    The Stoic

  19. Budget & the Beach says

    Congratulations Kathleen! I still think a mortgage is quite different in terms of debt, and at least you don't have that ON TOP of a mortgage.

  20. says

    YES! I am so happy for you, so proud of you, and really amazed at the progress you made in such a short time. Like you, I had mostly credit card debt, which seems like such a no-brainer, but it is easy to let it keep growing when you don't pay attention to it. And once you DID pay attention to it, you kicked it's ass! I hope to see you on the other side of the debt fence SOON.

  21. says

    Congrats even though it is bitter sweet it is a good thing to get rid of all the other debt. One positive to a mortgage is at least a home is better than stuff that just depreciates over time like cars.

  22. says

    Awesome! Congrats!!!!

    Are you planning to kill the mortgage too? Or concentrate on other investments and let it run its term?

  23. theoutliermodel says

    Congratulations! I still have my student loan hanging over my head and of course, the condo. But, I'm still on track to knock off the student loan in less than two years and I'm not too concerned about the condo – I can always rent it out. Enjoy being debt free, even with the asterisk!

  24. Susan M says

    Great job. Nice to have the burden of debt lifted. We do use the 18 months credit same as cash deal and pay it off in 2-3 months! So far have paid off our entire HVAC system for our home, new dryer and new grill in the last 10 months with not a penny of interest:)

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