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.
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?