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DEBT FREE

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DEBT FREE

Cut a $25k check to pay off our last debt, and as of July 5, 2019 our household is officially DEBT FREE. We owe no payments to anybody. We owe NOTHING. I don’t think it’s sunk in fully just yet. I haven’t tallied everything up to the penny yet. Over the last 13 months we paid off roughly $55k in debt and cash flowed about another $20k in other (mostly) unexpected expenses.

It was a simple path to get there, nothing new or groundbreaking. We made a budget and stuck to it religiously, and also worked like a crazy person soaking up every minute of overtime available. It can be done.
Message 1 of 24
23 REPLIES 23
Community Leader
Super Contributor

Re: DEBT FREE

Congratulations!

Message 2 of 24
Highlighted
Regular Contributor

Re: DEBT FREE


@JTC-137 wrote:
Cut a $25k check to pay off our last debt, and as of July 5, 2019 our household is officially DEBT FREE. We owe no payments to anybody. We owe NOTHING. I don’t think it’s sunk in fully just yet. I haven’t tallied everything up to the penny yet. Over the last 13 months we paid off roughly $55k in debt and cash flowed about another $20k in other (mostly) unexpected expenses.

It was a simple path to get there, nothing new or groundbreaking. We made a budget and stuck to it religiously, and also worked like a crazy person soaking up every minute of overtime available. It can be done.

Congratulations! 

on fire.gif


Message 3 of 24
Regular Contributor

Re: DEBT FREE

Congrats!

Message 4 of 24
Super Contributor

Re: DEBT FREE

"DEBT FREE" True Freedom, Congratulations!

Message 5 of 24
Contributor

Re: DEBT FREE

Thank yall! I’d be lying if i said cutting that check didn’t hurt a little bit lol. My FICOs will most assuredly plummet, but I’ve played the credit game my entire adult life and have failed miserably. I proved to be undisciplined and frankly irresponsible at times. So far the cash-only diet has served us well, and I believe that strategy will lead to us being better positioned for the future.
Message 6 of 24
Frequent Contributor

Re: DEBT FREE

When I became debt free my scores went down about 100 points - 40 points when I paid off the car loan and 60 more when I paid off the mortgage the following month. YMMV but the hit for being financially responsible and solvent can be tough. I would think that the FICO scores would take into account the fact that a person has paid off all debt as a good thing, but since FICO is based on the premise of how likely are you to NOT make a payment in the future, it looks at being debt free as a NEGATIVE - that you won't be making any payments in the future, and the fact that no payments are due in the future just doesn't figure into the equasion. If you aren't paying somebody something, then FICO assumes you just shouldn't be trusted with money.

4/1/2017 EQ 579 TU 595 EX588
9/20/2018 EQ 810 TU 807 EX 795
6/12/19 EQ 820 TU /789 EX 793


Message 7 of 24
Contributor

Re: DEBT FREE

You make a good point and it’s something that’s always irked me about our current system. Maybe placing more emphasis on the ability to repay and weighing overall DTI is the answer. Neither of those necessarily predict future chance of default, but there’s nothing stopping someone with a 780 FICO from missing a payment or filing bk at any given time.
Message 8 of 24
Frequent Contributor

Re: DEBT FREE


@JTC-137 wrote:
You make a good point and it’s something that’s always irked me about our current system. Maybe placing more emphasis on the ability to repay and weighing overall DTI is the answer. Neither of those necessarily predict future chance of default, but there’s nothing stopping someone with a 780 FICO from missing a payment or filing bk at any given time.

My point exactly - why was I a worse credit risk when I had no car payment or mortgage payment than when I had a car payment and a mortgage payment? Between the two payments I had committed $1500 a month. All of a sudden I had $1500 a month more in disposable income, and my credit scores took a 100 point hit because of it (nothing else changed). I have since gotten those 100 points back plus by taking out some credit cards (which I didn't need and had lived 7 years credit card free without) just so I could do the AZEO method to boost my scores. The only thing FICO hates more than NO DEBT is NO CREDIT CARD DEBT. So, as long as the credit card companies are reporting SOME debt (even if it is for nothing more than a tank of gas) then FICO thinks I am a good risk. Who would have thought that owing money for a tank of gas would boost your credit score by 100 points or more? Installment loans do very little to boost your score but miss a payment on one and your score will sink faster than the HMS Hood. Owe $25 on a credit card for a tank of gas with $35,000 in available credit lines and you can have an 800 score. Pay off that $25 without charging it on some other card and you will lose about 30 of those points (I have seen it happen in my MyFico pages. My Util never goes above 3%.)

4/1/2017 EQ 579 TU 595 EX588
9/20/2018 EQ 810 TU 807 EX 795
6/12/19 EQ 820 TU /789 EX 793


Message 9 of 24
Senior Contributor

Re: DEBT FREE

Congrats on being debt free!  What a great accomplishment - Enjoy it!

Nov 2019


Garden goal: keep on keepin' on
Usually a faithful practitioner of AZE5or6or7; working on AZE1or2 and grumbling about it.
Message 10 of 24
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