Nancy and I have made it no secret that we’re completely debt free.  Cars, business, and yes, even our house.  We’re so open about those things because we hope to inspire others that you can also become completely debt free.  It is possible, no matter what society, supposed financial experts, your parents, or your banker will tell you.

But how do you do it?  When it comes to us, that’s probably the question I get the most about paying off our home.  “HOW?”  It’s something I reviewed with Talaaat and Tai on their podcast not long ago.

To that question, “How did you pay off your house?” the simplest answer I can give is this.  It came down to two things: Simple mathematics and discipline.  Lots and lots of discipline.

First, the mathematics part:

The mortgage balance when we took it out in spring of 2010 was $110,000.  As our income rose in 2010-2012 (through the growth of Nancy’s business) we were able to pay ever-increasing principal payments until we finished in December of 2012.  Though our income increased, we made sure our lifestyle did not through the utilization of a budget.

Averaged out, paying off $110,000 in 32 months comes out to a rate of $40,000/year, or a little less than $3400/month.  (That’s a hint at the discipline part.)

Now to fill in some details:

When I started with Walgreens as an assistant manager, I was making around $37,000/year, enough to cover our bills and put some away in savings (as long as we stuck to the budget).  Nancy wasn’t making anything aside from some irregular wages at a restaurant as a hostess and as a “personal cook” for a family for a short stint.  She was a student at the time and trying to grow her business, which was actually costing us money.

My income went up significantly (but briefly) when I was promoted at Walgreens, then went back down when I went on staff at our church.  Our expenses increased slightly at that time, but my salary was still enough to cover our living expenses.

We took out the [15-year fixed-rate] mortgage for $110,000 in spring of 2010, when I joined church staff.  Nancy’s business actually started to show a small profit that year, but not enough to significantly impact the mortgage, just enough to keep the business rolling.  Our income actually more than doubled with the growth of her business in those years, so with a total income of $80,000-$100,000, living on less than my salary of $40,000, the math began to work.  A few years of that, and we were pushing on debt freedom!

My life changed when I read the book, Rich Dad, Poor Dad by Robert Kiyosaki.  In it, he says [paraphrase]: The vast majority of people never make any true progress in their finances because their lifestyle goes up with their income at a one-to-one ratio.

Most people never really get traction with their money, because as soon as they get a raise they spend it on increased consumption of goods and services so they can live a higher lifestyle!  That understanding was a lightbulb moment for me.

That’s where the discipline part comes in.  Living on a budget enabled us to constrain our expenses when our income went up.  Though as a household we made more than double what we made when I started work at Walgreens, we were still living that less-than-$40,000 lifestyle!

Let me tell you, it wasn’t easy!  It meant a lot of saying, “No,” to ourselves and others for a time.  It meant a lot of wants went unfulfilled.  It meant bearing with some serious inconveniences.  It meant working like crazy for a time.  It even cost some tears (from Nancy, mainly).

But it was so rich and satisfying, too.  We had something we were chasing, something we were gaining traction on.  We had a unifying goal.  And when we achieved it, wow!  Things opened up like never before.  The things we said “no” to for so long, we were finally able to say “yes.” Peace we had never known came into our financial lives.

You may not have the ability to double your income in a few years (but then again, you may).  But if you can figure out the mathematics, and stick to the discipline, you can be completely debt free too.  Think in big numbers.  Answer these questions:

– What do you make in a year?  (consult your tax return from 2014)
– What can you get your annual expenses down to if your really cranked it down, slashed your lifestyle, and stuck to a budget?
– How much would that leave to pay on your debt, annually?
– How much debt do you have?

Divide the debt by the amount of money you could put on it annually, and you’ve got a target date for becoming debt free!

Why wait?  Start today!