I need a drumroll here…. I just mailed the very last check for our Discover Bill. $491 – the last of the debt we incurred to get our business going a few years ago. Happy days! We still owe some money to a doctor, but I don’t really consider that a debt, since we have the money to pay the bill in full tomorrow if the doctor’s office would shape up. Other than that, our only debt is our mortgage. Yipeeeeee!
There were times in the last three years when the weight of our debt felt unbearable. But when it would start to get me down, I would pull out my yellow legal pad and stare at the numbers, focusing on how far we had come, rather than the distance still to travel. We had a good amount of luck on our side – no disasters struck during our debt payoff time. And we were also very determined and focused on our goal, month after month, even when today seemed so far away that we couldn’t even imagine it.
Now that we’re out of debt, we’re working to make sure that we don’t ever have to go there again. We’re building up our HSA so that we’ll be able to pay our deductible if we ever have a medical emergency (our health insurance policy has a $3000 deductible, and nothing is covered before the deductible), and we’re also working on our emergency fund.
We have no plans to change the way we live now that our non-mortgage debt is gone. Instead, we’re going to focus on building up our HSA and paying off our HELOC – the smaller of our two mortgages. Our main mortgage is currently at $138,800 with a fixed interest rate of 6%. But our HELOC (which we got because we only had 5% to put down on our house when we bought it, and the HELOC made up the difference) is at 8.35% right now, with a balance of $27,500.
The way we look at it, paying off the HELOC gives us a guaranteed return of 8.35% on our money. Nowhere else guarantees that – our ING account pays less than 5%. So we’re going to start taking the money we had been using for debt repayment over the last few years, and start putting it towards our HELOC. We paid off about $40,000 in debt in three years, so we figure we should be able to pay off the HELOC in two years.