In my 20s I did a great job at accumulating debt and then paying it off so that I was debt-free except for the mortgage at age 30. The next big thing I decided to tackle was the mortgage. To do this, I had to keep counting every penny and kept the great habit of budgeting monthly. In my 30s I paid off my mortgage. Let me tell you how I managed to be completely debt-free by age 40!
In this post, I’ll share the major things I focused on in my 30s. Of course, this wouldn’t be possible without me eliminating debt in my 20s. Let’s take a look at the big moves in my 30s.
Buy Cars with Cash and Sell Cars For Sale By Owner (FSBO)
Buy cars with cash only and sell any cars FSBO. In my 20s I bought a brand-new car and financed most of it only to be let go from my job shortly after. I learned that I didn’t want to have a car payment ever again. So, in my 30s I bought cars with cash. Not having car payments allows you to stash cash rather than throwing your cash away at interest payments. I saved a lot of money by not having huge car expenses.
The first car that I bought with all cash was a used CRV. The second vehicle we purchased was a brand-new minivan. This was a $34,000 purchase. We had stashed enough cash to pay with cash! This really was a great feeling!
Each time we bought a car we also sold a car For Sale By Owner. This allowed us to get a little more cash for the sale of the vehicle than if we had traded it in.
Mortgage Free by 40
Additional Principal Payments on Mortgage
It only took me 6 years after graduating to pay off my student loans, instead of the 20-year term. So in my 30s, I didn’t have student loan debt or any car loans. I was debt-free except for the mortgage. This freed up a lot of cash to put down on the mortgage. In my late 20’s, I bought my first home with a 30-year mortgage and without a 20% down payment. I started paying extra on that loan from the start. This was during the time I was also paying down my other debts (car, student loans) and cash-flowing renovations to our home that needed updates.
20% down on a house with a 15-year mortgage
I bought a new home with 20% down with a 15-year mortgage. We had a good bit of equity from our first home due to the many extra principal payments that saved us on interest payments and the home renovations that we did to increase the value of the home. We were also stashing cash to buy our new home. This allows us to buy a home well within our budget with 20% down. We also got a better rate on the mortgage since we decided to go with a 15-year mortgage loan.
Live on one income.
When I had my second child, my husband and I decided to live on one income. My husband quit his job and started his journey as a stay-at-home parent.
Keep a monthly budget. Stay Debt-Free!
As you can imagine, we had to maintain a really strict budget to go down to one income and work on paying off the mortgage. It was all hands on deck!
Max out your HSA account for medical expenses.
I stayed debt-free while having three children. To do this, I invested in HSAs so that once our children were born, we had the money to pay off the medical bills.
Investing in a Roth IRA
I started a Roth IRA. I had thought about opening one for a long time and I finally did it.
Living Below My Means
I lived well below my means. But really, I lived actually quite below it. This was the only way we could accomplish paying off the mortgage and save and invest as we did. I also consigned clothes and sold things online that I no longer needed to help cut down on monthly expenses.
Investing in 529s
For each of my children, I began a 529 account and automated contributions.
Increasing Contributions to 401k
I continued to invest in my company’s 401k.
Read a lot of personal finance books!
In addition, I read many personal finance books to further educate myself. View my favorite personal finance books. I like to read a lot using my Kindle.
Simplify Your Life
I simplified my home and my life. I found minimalism. Read about my journey toward minimalism. It’s helped me create a more simple life and save money along the way. Most importantly I live with more intention.
Automatically Save for Emergencies
I believed in automatically saving for a rainy day. I maintain a fully funded emergency fund. In addition, I automatically save more for other expenses that always seem to pop up. Being a homeowner and having three children means there are always unexpected expenses!
What’s Next?
Well, the next part of the journey is investing like crazy and enjoying a debt-free life to enjoy many new experiences with my family.
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