Friday, August 16, 2013

Milestone Reached: 80% Debt

When I graduated high school and was first in the driver seat of my own financial situation, I figured debt was always just a fact of life and we all had to learn to deal with it.  I understood the general rule of 'spend less than you make and you'll be okay.'  But emergencies always popped up and I didn't understand how to let my money work for me.  This was the basic formula behind my financial disaster.

During 2010, I found myself drowning in a financial mess.  Debt was always piling up, and in fact maxed out by the end of the year.  I knew something had to change and fast.  After doing some research online to help me, I discovered Dave Ramsey and began listening to his show and reading his work, I was fascinated and instantly hooked.  As part of a New Year's resolution, I wanted to begin tracking my finances closer (to the penny in fact!) at least every month, to make sure I was going in the right direction.

In January 2011 I had a net-worth of $-531.06.  At first I couldn't believe it!  But after looking at the big debt figures and the smaller asset figures, it all began to make sense.  Every month since then I have been tracking my finances and have never given up on that resolution!

I just updated "My Big Financial Picture" page and found the current debt level was below 80% of my original peak debt levels.  This is great news!  Since January 2011, I have gotten rid of over 20% of my debt!  And let me tell you, it feels great.

Without the power of compounding, I should be debt-free about 10 years from now.  Being in my mid-30s, I would still have plenty of time to build my assets and continue working if I want.  I stress the "want" part because once I'm completely debt-free, I will have 3 rental houses (paid for) that will more than cover my expenses.

But WITH the power of compounding, I'm projecting myself to be debt-free in under 6 years.  To make sure this happens, I will continue monitoring my financial situation and celebrate my successes.


  1. Are you considering your mortgages on the rental properties as debt?
    I am not sure if that is bad debt. Not that debt is great but it is leverage getting you income so its not too bad.

  2. Many loans have been paid in full. At this time I still have a student loan and 3 rental mortgages. The student loan will be paid in march 2014.

    I was a close follower of Robert Kiyosaki's methods of real estate investing. Go in with nothing down and start cashflowing a property. I got my first house in 2006, with around $800 of my own money in the form of a cashier's check. Ever since, I have profited about $150-$200 each month. It was so easy that I did this again in 2007 and again in 2009. My plan was to get a house every year. But the mortgage crisis began and I started a family and it became impossible for me to continue my strategy. Making under $15/hr I was way too leveraged to get loans of any kind.

    With the discovery of Dave Ramsey and the idea that 'cash is king'. I'm wanting to get all debts paid 100%. Leaving me with huge cashflows that I can use to buy additional properties or some serious stocks.

  3. Dave Ramsey > Kiyosaki. By far.
    Kiyosaki is a clown. Yeah now that the free credit gravy train is gone how does one get into real estate? 20% down payments.

    I go back and forth on putting money into stocks or paying off my rental mortgage early and can't decide which is better. I suppose it is a 1st world problem.

    1. I agree on the Ramsey/Kiyosaki comparison. Kiyosaki's technique worked back in the day for him. He continuously acquired properties until he had the ability to pay one property off a month from all cashflows.

      Nowadays, good luck with 20%down. If 20% means $30,000, to me its like throwing 30 grand down on a single stock purchase when I normally spend $500-$1000 at a time. This makes diversification difficult.

  4. Congrats on chipping away at your debt! Glad that you've found a method that works for you. You seem very disciplined, now that you know what you need to accomplish and how to do it. The 6 years you projected sounds very doable to me. Good luck! -Jaden @ Irving Burton LTD

    1. Thanks for visiting jaden. Yes the key is discipline! It can be difficult to spend money on things that would be great to have but not necessary for me to get by. Even if I miss my projection and it takes 8 years, I will still be just as excited (and stress-relieved)