All the talk about stocking up like we did for Y2k brings to mind what I am doing this year. Since I stocked up for Y2k and have continued to do that, I decided that this year was the year that I would try to get rid of all debt except for my mortgage. Then in early next year, I'm hoping that mortgage rates will be even lower and I plan to refinance my mortgage and then start making extra payments to get it paid off early. I'm planning to convert from a thirty year to a fifteen year mortgage and then make extra payments. Since my current interest rate is 8.5% I figure that I should save enough on payments at the lower rate to shorten the life to fifteen years and only have to pay a few dollars more a month. My plan is to be able to retire in nine years so I want to have the homestead all paid for by then. It is doable and that is what I am doing. I do like seeing those bills go down as I start paying them off. THen the payments go towards the other debts to get those down as well. My car will be paid off next year but since I got a deal of 0.9% financing when I bought it, it doesn't make sense to pay that off early so I will let that one expire on its own next summer.

Just wanted to know if anyone else is concentrating on getting rid of their debts.

-- Colleen (pyramidgreatdanes@erols.com), June 05, 2001

Answers

We are doing our best to pay things off so we can work on saving money for a down payment for some land somewhere. its going to take a bit, but man its already dragging. And we still got a long way to go

-- MikeinKS (mhonk@oz-online.net), June 05, 2001.

If you have an amortization schedule in front of you, you can make a double house payment simply by paying what is due plus just the principal which would be due next month.(Then skip that payment and go on to the next, next month). On the first years of your mortgage, the principal amount each month will usually not be big enough to set you way back, and you'll be pleasantly surprised how fast you can pay it down. I hate paying interest and pay it only on my mortgage.

-- mary, in colorado (marylgarcia@aol.com), June 05, 2001.

Well, we actually got ourselves into terrible debt because of y2k. We quit paying bills, especially the last few months of 1999 because we figured the whole system was going to collapse anyway. We took on as much credit as we could find and funneled all our money into preparations. Even most of our retirement since we figured it'd vanish anyway once society went to hell. Well, we were wrong. We've been trying to sell off things to make it now but we're definitely paying dearly.

-- Jeannie (user1000@hotbot.com), June 06, 2001.

Mary, and all

If you want to pay down your mortgage more quickly, you don't even need the amortization schedule. Simply make the the equivalent of ONE extra mortgage payment per year, in a separate check (or checks- it deosn't have to be in one lump sum) marked on the memo line and noted for your mortgage compnay "Principal Only". On a 30 year note, you will be paid off in 19 years. I believe 2 additional payments brings it down to 11 years.

We're trying to lower our spending now, as we have very little debt at this point, but I sure would like to pay less per month for our house : )

-- Kristin, in LA (positivekharma@aol.com), June 06, 2001.

Definitely go for paying off your mortgage. We did it several years ago and was the best thing we ever did. What we did was pay several hundred dollars extra ( I even wrote it on a separate check) and put that it was to be applied to principal only. We paid it off in several years and it really helped when I had quit work to stay home with the kids and he was laid off and had to take another job at a much lower salary. We have no car debt, and no credit card debt and it is wonderful! You can do it!!!!!!!

-- connie in nm (karrellewis@aol.com), June 06, 2001.

I second that motion! We have been debt free for a little over a year now and it's a wonderful feeling. Our biggest debt was our mortgage which originally was for 30 years. We paid it off in 20 by making extra payments. Since then, we've continued to apply the amount of the morgage payment directly into a money market account where it continues to accumulate. We had gotten quite used to not having that money to spend, so there has been no change in our spending habits. We only use one credit card (occasionally) and never more than we can pay off in one month. We had to buy a replacement vehicle when my truck died and were able to pay cash. Being in control of your finances is a great step towards independence.

Thanks for reading.

-- Dianne in Mass (dianne.bone@usa.net), June 06, 2001.

Paying off credit cards is the best thing to do to help with debt. These cards are usually the higest interest and cause more credit problems than a mortgage would. It also gives you more imediate feedback that your actually doing something to your debt. And when you do pay it off you can take that money and roll it into paying off other bills. Unless your twords the end of your mortgage, even double paying your mortgage will not show any income outlay changes for many years.

Several people have also suggested paying off your mortgage by paying extra payments or paying interest or possible even paying two times a month at /2 payments. These will only work if your mortgage company will allow them. My last mortgage company would not allow me to 1/2 pay my mortgage even in advance and save any interest. A 1/2 payment for the next month was kept until the second 1/2 was received. When A full payment was received it was then applied. Make sure you know what your mortgage will allow. Now most are more than willing to setup a plan at $5-$10/month to allow to 1/2 pay but without paying its may not be allowed.

-- Gary (gws@redbird.net), June 06, 2001.

I too believe in having no debts . . .

When my wife and I designed and built our home (well, self contracted anyway; we left the hard stuff to the experts), people made comments which were a little insulting to us. Its not big enough, not fancy enough, etc. Maybe they were right as far as looks went. It isn't a palace, just 1600 sq. ft. of LIVING SPACE. But that house was paid off from the beginning; we owed about $900 dollars on the appliances which we paid off quickly. Those same people are complaining about how hard and long they work and then turn around to pay a banker or loan company their hard won efforts.

If people carefully consider what they want to store inside their homes, you might be surprised on how little living space you can live in. I have heard a general rule that if something doesn't get used at least once every couple of months, then it is probably easier to rent or borrow it rather than store it for extremely casual use. I have seen whole rooms or garages full of items that belong in a garage sale or junk heap. Imagine the cost savings to that home if that space had not been built to accomodate the things we collect for the sake of collecting. Some people can even rent out that room for others to live in, bringing in more money if they choose.

GET RID OF YOUR DEBTS. The work that goes into that will pay off later with peace of mind. If you should run into troubles such as job layoffs or medical emergencies, that peace of mind goes a long way.

-- j.r. guerra (jrguerra@boultinghousesimpson.com), June 06, 2001.

We are selling 55 acres of our beloved land,we would be left with 5 acres and the use of our bush for firewood,it has been a horrible decision,but it is so important to us to be debt free.We don't farm it anyway,but going from 90thousand in debt to 35thousand is a big deal.It has been in the family for 150 years,but at what point do you let it go?is it just pride to hang on to something like that?...teri

-- teri (mrs_smurf2000@yahoo.ca), June 06, 2001.

For us, getting out of debt was a major focus of Y2K. We certainly stocked what we could but the debt was even bigger. Unfortunately afterward we got into the credit trap again, although in a much smaller way than most people. Now we're trying to get out and stay out. Have less than $1,000 to go. WAHOO!

-- Deena in GA (dsmj55@aol.com), June 06, 2001.

Teri- Your response caused me to wonder- if this land has been in your family for 150 years, how does it happen that you owe 90k on it now? We heard a lot of similar stories from farmers at the beginning of the most recent farm crises- how land that had been in families for generations was being sold. I suppose on a working farm some debt was probably incurred for operating expenses on crops that lost money, but you said that you don't work your place anyway. As for letting it go, it seems a shame, but, I don't think people should have to knock themselves out to make payments, especially if you don't use the land. As for j.r. guerra, I agree with you wholheartedly. I hired an architect to design a home for me and I insisted it be no more than 1200 sq. ft. I had carefully worked out how much space I needed, and was not willing to pay to construct; maintain; pay taxes, etc on space I did not need. We argued quite a bit about that. In the end we never built the house. When I inherited 2 kids I bought 10 acres with a 2000 sq ft home. We filled it with "stuff". I am now selling the stuff on ebay to get rid of it in anticipation of another move. The stuff is overwhelming- and I am a lot more frugal than most people I know! Also, regarding space, when my nephews moved back with their father and his new bride last year I rented out one of the bedrooms. My roommate pays $450/month plus 1/2 utilities. Helps out financially, and I don't feel so bad about the wasted space.

-- Elizabeth (ekfla@aol.com), June 06, 2001.

Am I paying off debts? Gee, I don't know. If I am, I'll finish this month - if I haven't already. And it feels good! First time in thirty years I'll be debt-free. Mind you, I was getting close twelve years ago, when a marriage break-up left me gutted and hung out to dry. Had some illness since then too. This time round, I don't really have anything in the way of big assets, but I'm comfortable, and I don't/won't owe anything either; and that means an awful lot of my income becomes available for saving. Next step, save enough for a cheap vehicle - I'm deliberately living where I don't need one, but it would be a convenience; so in two or three months I'll have enough saved to grab a bargain if it comes my way, and no desperate need to buy something until the right deal does present itself. Then save enough for a deposit on a home - or at least some land and some building materials. God willing, this is the only debt I'll ever undertake again. I've done the sums, and living where I do - small rural city - I could pay off a home in as little as five years (maybe even less), but fairly comfortably in seven years. You need to pick your spot and your time though - I couldn't do this in a major city, and I couldn't do it if interest rates were higher. You need to pick a situation and a property where required payments aren't much more than rent would be, where you're not penalised for additional payments or early payout, but then pay more - as much more as you can manage. One extremely effective trick, if your loan and your salary allows it, is to budget for monthly payments, but make the payments every four weeks. Works out a lot easier for a lot of people, particularly if you're being paid weekly or fortnightly. Doesn't hurt too much, but it REALLY brings the freedom-date right back into your lap. If you can't manage that, you might be better off renting (as I'm doing at the moment, while I save). You can find situations where renting is less than what you'd pay in interest, and if that's the case, and if you CAN save, then you're better off renting and putting your savings towards a deposit, until the scales tip your way.

-- Don Armstrong (darmst@yahoo.com.au), June 06, 2001.

I went on a major spending spree after my divorce and racked up a huge chunk of debt. Then to make matters worse, I fell prey to one of those TV commercials that promise that you can consolidate your debts with a loan for up to 125% of your home equity, and the interest will be tax-deductable. Home prices in my area are only increasing 0 -1% a year, so the result is that I now owe more on my house than what I could sell it for. Talk about stress and sleepless nights! I got a promotion at my job a couple of months ago, and combined with frugal living I have been able to make triple payments on the home equity loan each month, so I should be able to have the 15-year loan paid off in another 2 1/2 years (4 years total). With the way the economy has been lately this has been a huge stress on me. I would definately advise anyone considering a debt consolidation loan to think twice, and then think twice again.

-- Sherri C (CeltiaSkye@aol.com), June 06, 2001.

We started 4 years ago. Got rid of all credit cards and converted the mortgage. Prepay the phone, use LD cards and cellular. House payment and utilities are it as far as bills go. Thank You Y2K and Countryside, this time around is a breeze :>)

-- Jay Blair in N. AL (jayblair678@yahoo.com), June 06, 2001.

This sorta doesn't have to do with the question, but I wanted to respond to one of the responses . . .

Elizabeth, I work for an architect and am not surprised at your architect's attitude toward housing. We mainly specialize in in commercial buildings, but occasionally do plans for custom homes. Some clients come into the office or call us asking for a price on a set of "house plans". Some of them are VERY surprised at the cost; sometimes they leave skid marks. . . LOL.

A drafting design service probably would be a whole lot friendlier to people needing efficient homes. High falutin' architects are mainly interested in high fees (Architects are normally paid by the square foot of the home, hence his interest in large spaces).

By the way, a good book for designing an efficient, earth friendly home that looks like it belongs on the property rather than 'shock architecture' is a book co-written by Malcolm Wells and ???, named Designing your Natural Home (at least I think that is the title). Check your local library or a book search company, I think the book is out of print. Lots of ideas on landscaping, energy efficiency, space planning. If you are looking for ideas for a house, try this one.

-- j.r. guerra (jrguerra@boultinghousesimpson.com), June 07, 2001.

Hi Colleen! I belong to an online group of Debtors Anonymous (www.debtorsanonymous.org), and also combined this with Mary Hunts books (Money Makeover, Complete Chepskate, Debt Proof Living), and her wonderful newsletter, Cheapskate Monthly. On the website, if u subscribe to her online newsletter vs. the snail mail version, she has tons of "calculators" that help u to figure out the term of all your debts, how long to pay them off, how to do it, etc. I highly recommend her books. I checked them out at the library originally, but then bought them, as to me, they are invaluable. Her website is www.debtproofliving.com and you don't have to be a member to partake of many items on the site. Good luck! I know you can do it! Blessings, Traci in KY

-- Traci Rae Davis (krystalgrace61@yahoo.com), June 07, 2001.

I was really surprised to find so many people like us, DEBT FREE!!! Our house is not fancy, 1625 heated sq ft and a few acres but it is all ours. Our vehicles are all ours too along with everything else we own.

We only need $600 a month to live comfortably. We draw that in interest a month - well we did until the rates fell so low. I quit work in 1999 and DH could quit if he wanted to but wants to wait a few years, he is only 45, and make sure we can live off the interest even in bad times.

-- Viv in TX (kudzu1@webtv.net), June 09, 2001.

Jeanie Said...

"Well, we actually got ourselves into terrible debt because of y2k. We quit paying bills, especially the last few months of 1999 because we figured the whole system was going to collapse anyway. We took on as much credit as we could find and funneled all our money into preparations. Even most of our retirement since we figured it'd vanish anyway once society went to hell. Well, we were wrong. We've been trying to sell off things to make it now but we're definitely paying dearly. "

#1: Sorry, but, you're a moron and now I guess you're paying for it.

#2: How are you going to pay off your debt, when you're so busy organizing your ANARCHY thing to stop Burning man? (http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=005lPW)

Sounds to me Jeanie that you have more of a life Priority problem than a debt problem.

- Patamon

-- Patamon (patamon@patamon.com), August 07, 2001.

Anyone that thought that Y2K was the end of the capitalistic era was sold out by all their the capitalist's propaganda to make everyone to go out and buy, buy, buy. You were fooled. It was all an avertising stunt! Ha! Ha! Ha!

-- Apollonaris Zeus (montanaman@hotmail.com), August 16, 2001.