We Are Officially Debt Free!

I’m going to take a moment from my regularly scheduled blogging to post a more-than-humble brag today.

Today marks the date when my wife and I can call ourselves 100% debt free. We have no debts what-so-ever. No credit cards owed, no car payments owed and we own our homes outright!

No, we will not be on the Dave Ramsey show.

It’s been a long time coming. Lots of long hours, hard work, saving and not splurging on trips and on “want” items.

The couch in our living room was one that was given to us. The dogs of torn up the chairs and our deck is falling apart.

No worries, already hired a company to come out and replace our deck in June.

We have some home and landscape improvements to do around our main house with almost nothing to do at the lake house. For those improvements we plan on saving up and then doing them.

Without our two mortgages, we will be able to save an extra $33,115.08 a year!

Where did the money come from? I sold one of my business interests and was able to receive enough money to pay off what was owed.

Could I have invested the money instead of paying off a 3.25% and 4.125% mortgage? Of course. I don’t mind sharing those numbers either. I could have tried to arbitrage the situation, pay taxes on the money made and ended up with a tiny % more… Maybe more if I risk the money and leveraged it, but hey, that only works when the market is good. I know too many folks that got burned in real estate by leveraging themselves fully – and then the market turned on them – only to file for bankruptcy. Oh they’re at it again in this bull market.

It is something that works… Until it doesn’t.

This was a guaranteed – tax free return!

The calculation to figure out what you need to make to compare a tax-free to a taxable investment is: Rate/(1-Tax Rate)

So if you’re in the 33% tax bracket, to get 4.125% tax free you need to receive: 4.125/.67 = 6.15%

Tell me, where am I going to receive a guaranteed 6.15% ?

To me, the peace of mind that comes from having no debt is well worth any opportunity cost I may have lost in monetary gains. You will sleep better knowing that you don’t need to work tomorrow. Not happy at your job? Look around! There are plenty of jobs out there with less stress. Sure there will be less pay, but you no longer need that money. You are no longer a slave to your debt

So what is next? I wish I knew. There is very little information out there for folks that have reached this point. Plenty of advice by people telling you how to get here, but since I have a gut feeling that most of the people dishing out advice (not all, but most) are no where near their goals, I have a hard time accepting advice from them.

Maybe I’ll finally look into that rental property.

First, we’re having a well deserved party!

I’m having that Cigar and a Whisky Sour in the photo!

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