I Am Debt Free

For the first time in four years.

Photo credit: Sean MacEntee, CC BY 2.0.

Last Friday, I paid off the remainder of my outstanding credit card debt.

I am debt free for the first time in four years.

As long-term Billfold readers know, I’ve been putting 20 percent of my pre-tax freelance income towards debt repayment since April 2015. It took me 19 months to pay off something like $17,000 in debt, give or take, and I had a bit of a boost because at the beginning of 2015 my parents gave me an unsolicited $14,000 loan to put against my credit card debt, which meant that the vast majority of my debt repayment was actually to my parents and was interest free.

So this accomplishment, while certainly something to be proud of, came with a number of advantages:

  • An income level high enough that I was able to commit 20 percent to debt repayment
  • The ability to maintain my commitment to debt repayment over 19 months (no medical emergencies, no non-medical emergencies, no major income loss, etc.)
  • An unexpected interest-free loan from my parents

As I wrote in my most recent income round-up, all of my smart financial decisions right now—the debt repayment, the emergency fund, the plan to save for a Roth IRA—are directly related to my ability to earn “more than enough” money.

I got into debt because I wasn’t earning enough money, and I got out of debt when I started earning enough money. That’s the simplest way I can explain it. Yes, we can analyze every purchase I’ve made over the past five years and say “you could have been slightly more frugal there,” or “you didn’t really need that,” but the years I was getting into credit card debt were also the years I was sleeping on the floor in a group house share in Los Angeles, or living in that microapartment where I had to wash my dishes in a bucket in Seattle.

I was spending as little money as possible while trying to earn as much as I could, and I was using credit to fill in the gap.

I also used credit to fund my professional development, including buying the laptop I am currently using and booking travel to conventions. Which, I have to say: NO REGRETS. I had the privilege of being able to invest in my career and I took complete advantage of it, and then I paid it all off.

I have no idea what will happen next in my life, financially. I’d like to think that I’ll remain credit-card-debt-free forever and that any future debts might be mortgages, small business loans, or something that isn’t “putting thousands of dollars on an Ann Taylor Loft MasterCard.”

But I also know that this plan will only work if I keep earning “more than enough” and keep saving as much as I can.

So here’s to being debt free! Let’s hope it lasts for as long as possible.