Friday, February 03, 2006

Gonna be debt-free

Sometime last fall (I think it was in November) I took an old gift card, a coupon, and myself to a Borders bookstore to find a good personal finance book. I started reading pf blogs last summer, and began tracking my net worth in August, and now I wanted a tome of knowledge that would answer some of those hard questions, like "How do I balance paying off debt with saving for a down payment on a home and saving for retirement?"

I sat in that bookstore for over an hour skimming many books. So many of them were written as if the reader already had a home and a mortgage. But there was one... the book that I knew was perfect as soon as I read that little paragraph in Chapter 8. This was the only book to tell me when I was supposed to save for a downpayment if I'm already carrying a lot of debt.

You see, it's part of Baby Step 3. In fact, Dave Ramsey calls it step 3(b). That's right, according to The Total Money Makeover, I'm not supposed to buy a house until all my debt is gone! Outta here! Otherwise, I'm "inviting Murphy into the spare bedroom."

I really liked what Dave had to say. I still believed some of the debt myths he debunked, and I loved the society he imagines when all of us become debt-free. His emphasis on focused intensity jibed with me; it all just made sense.

So right after the wedding (actually before since I'll be using my entire tax refund to help pay off my first debt), Hobie and I will jump into the debt snowball, using our wedding gifts as our baby emergency fund.

By conservative estimates, our debt-free date will be in June 2009. We'll be rid of my debts by February 2008 (six months before my 30th birthday, my original goal), and his student loan bill (his only debt, now at about $19k) will be the last thing to go.

I have no problem renting while waiting out the process. In fact, we're looking into moving to a cheaper place so maybe we can get the snowball going a little faster. Plus, we've already cancelled our land line (we both have cells) and our cable.

I know it will be worth it in the long run to get rid of this debt now while we are still young.


Anonymous Elizabeth Cronen said...

I noticed that you mentioned have an HSA. I work for a health care consumers' advocacy group and I'm interested in learning more about the experiences of people who have these accounts. Can you email me at so I can ask you some questions?

Elizabeth Cronen
Families USA

2/08/2006 10:09 AM  

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