Paying off debt? Celebrate in the middle

Paying off debt? Celebrate in the middle

Paying off debt?  Give yourself a tangible reminder …

Paying off debt? Celebrate part-way through!Prudence Debt-Free recently posted on their fourth anniversary of debt reduction, and the numbers are impressive:  more than $150,000 of debt paid back in four years, which is about 60% of their total.

They’re doing the slay-little-dragons-first method, getting rid of three debts in that time: $8,600 in car debt, a consolidated $12,800 debt, and an $80,800 business debt.  All that’s left is a bit over $100k in mortgage debt.

Paying off debt and celebrating

One thing they did after paying off the business debt (the second largest) is that they dropped $12,000 on long-overdue renovations and freshening up of their home.  This included hardwood floors, new office equipment, new furniture, electrical work, and some other niceties.

This was on their radar for a bit, and they waited for two things:  (a) to pay off their non-mortgage debt, and (b) save up to pay for the renovations with cash.

Paying off debt isn’t tangible, so add some in

Let’s say that your house has failing trusses.  (These are the main sources of support for the roof.)  Until the roof caves in under the next snowstorm, it’s difficult to see the difference between this roof and a roof with all of the trusses intact.

Fixing trusses isn’t a cheap venture.  It can run well into five figures, and sometimes into six figures, depending on the size of the roof and the type of roof.

After spending the money to avoid having the roof cave in, you’ll have … a house that looks pretty much the same as it did before.

This is kind of how it is with paying off debt.  You’ve repaid all of that money, and although you have a zero loan balance, that’s it.  You look around, and nothing’s different.  There’s nothing to show for it.

Now, there is of course the argument that you have the things you bought with debt.  In fact, you had them when you took out the loan, and it’s the way things works that you don’t get anything when you pay it back.

Paying off debt is an accomplishment

But you’ll need to add in the celebration.  (Certainly your bank won’t be the one celebrating.  It’s a sad day for them)

That’s what Prudence Debt-Free did with their remodel.  They had gotten rid of a lot of debt and had saved up for their celebration.

And that’s awesome.

No Credit Needed speeds up mortgage payback with micropayments

No Credit Needed, a long-time debt reduction blogging colleague, after having gotten rid of his non-mortgage consumer debt, has been chipping away at the big one: his home mortgage.

He’s on track to pay off his 15-year fixed rate mortgage three years early, and is aiming to get it paid off five years early.

They’re making additional micropayments throughout the month.  These are principal-only payments.  This has two effects:

  • The micropayments reduce the balance immediately.  This means that the interest accrues on a smaller balance, immediately.
  • The next regular payment will include more principal and less interest.  Every payment following an extra principal payment works a little harder than it would otherwise.

So this is a great thing to do, especially if you have an ample emergency fund and have a consistent, well-planned budget.  Any extra money that comes in can be thrown at the debt.

Keep doing what you do, NCN, and we’re praying for a mortgage payback time of less than ten years!