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Why I’m Glad We Didn’t Pay Off the Car Last Year

I must be crazy, right? How could I be happy that we didn’t decrease our debt as much as I’d hoped over the last year?

On Wednesday, as I was adding new materials to the library’s catalog, I took some time to compare the job I’m doing now to the admin assistant position I was doing last year. Both pay the same and have similar benefits. If I’d stayed at the old position, I might have even had a raise in the last year.

Yet being where I am now makes me so much happier. There’s lots of work to do (vs. 4 hours a day where I can comment on blogs), I feel like I’m part of something meaningful (vs. not getting a sense of purpose at work), and I have coworkers who I get along with quite well (vs. only one coworker who was perpetually negative).

Plus, when I look back on the work I was doing until recently, I can see so many places where I’ve developed skills (both technical and practical). I’ve figured out what I want to do in the future. I’ve built up a side business which is now entirely “extra” money that can go to debt repayment and/or savings.

But if I’d stayed at the old job and built up consulting/blogging as I could, I might still be farther ahead financially.

This brings up the question, then, why we choose to get out of debt faster. We didn’t choose it because it’s critical to our survival. We didn’t choose to because someone is forcing us.

We chose to pay off our debt faster because it brings us happiness and peace.

Paying off debt frees up our future.

Paying off debt gets a burden off our minds.

Paying off debt helps us feel more secure.

If I’d chosen to stay at a job that made me miserable even though I had other options, just because I was afraid I wouldn’t be able to pay off the debt faster, then it would nullify all the reasons why we’re paying it off in the first place.

So I’m glad that we didn’t pay off our car last year, like we might have. I’d much rather have the skills, the sense of purpose, and my current work situation. Now that I’ve got a good and steady income, we can recharge the snowball and go from here!

You tell me: Why do you want to get out of debt? Will it open up possibilities for you? Does being in debt make you feel like you’re under a crushing weight?

{ 3 trackbacks }

The Friday Gathering - 1 degree edition
January 17, 2009 at 8:59 am
Why we want to be out of debt | Sense to Save
January 20, 2009 at 1:18 am
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January 25, 2009 at 6:38 pm

{ 17 comments… read them below or add one }

Jim @ Change Jar Savings January 15, 2009 at 9:12 am

Peace of mind! The ability to go on a vacation. The ability to buy my wife flowers just because without having to think do I need the money to pay Dr. Xxxxx.

I could go on. The freedom.

Ron@TheWisdomJournal January 15, 2009 at 11:09 am

My biggest motivator is to be able to explore other job possibilities (shh – don’t tell my boss). I had to turn down a job this past August that I would have loved to have simply because it was a large cut in pay ($20,000 in base, $18,000 in bonus). Once I have all my non-mortgage debt paid off, I have more options in that regard.

I’m getting pretty close. My wife is at Bank of America right now writing a check to pay off our car. We just paid off my daughter’s braces, and we paid the rest of the private school tuition for the year. Those three things free up $1,500/month in after tax cash. I plan to have my student loans paid off by March and will then only have a mortgage!

Options, options, options.

mrsmicah January 15, 2009 at 12:00 pm

@Jim, those are all reasons I can get behind! I’m so excited at the thought of freeing up $250+snowflakes when we get the car paid off. Of course, that’ll just make the snowball bigger, but it’s such a great, dramatic sum!

@Ron, that’s a great point. If I hadn’t been able to meet minimums, then I might have had to stay at that old job. But you have a lot more freedom to choose your work situation when you have fewer financial obligations.

Revanche January 15, 2009 at 1:01 pm

Funny, I was dragging my feet on paying off the car today until I read this. I think I’m still going to do it because it’ll be one less monthly payment, doesn’t affect my decision to go or stay at my job, but might make the sale go more smoothly.

PT Money January 15, 2009 at 1:03 pm

We just so happened to have paid off our car loan yesterday. We’re done with auto debt. Feels good. But I totally see where you’re coming from. Last year we didn’t rush the car payoff since we wanted to have a bit more saved up (new baby coming). Now that savings is in place, it’s time to pounce on the debt.

Allison January 15, 2009 at 1:17 pm

I have $11K left on a car loan. It isn’t crushing me, but it would certainly be nice to have that $400/month to save! My (oldish) car was totaled last year, leaving me with not very much money to purchase another one. Of course, this was when gas was $4/gallon, so there were no gas-efficient used cars to be found.

Long story short, I got lucky and found a (new) Prius, which is the type of car I was saving up for anyway. The whole experience taught me the value of a) an emergency fund and b) putting monthly car “payments” into an interest-earning savings account even when your current car is paid off. How wonderful it was to pay cash for my old car and go 5 years without a car payment!

Allison January 15, 2009 at 1:19 pm

And — congratulations on finding fulfilling work. What a blessing, especially in this economy. Building all those skills is certainly going to make you freer in the long run!

Travis @ CMM January 15, 2009 at 1:19 pm

Freedom. Freedom to do what I love. Freedom for my wife to be a stay at home mom. Freedom to travel. Man those things would be so nice. When you really sit down and think about it, you’ll start thinking twice before getting that fast food or that $4 coffee.

Christine January 15, 2009 at 2:42 pm

Mostly I think I want to pay my debt off quickly because it’s sensible and the honourable thing to do — I am indebted to the government for my education, and once I’ve graduated, I think that finding a job and repaying that debt is simply the right thing to do.

Carla January 15, 2009 at 3:30 pm

Freedom, savings, vacation, etc.

I have about $5K left in medical debt, but I’m currently adding to that now as I write. There comes a point where you just need to make MORE money.

MrsMoney January 15, 2009 at 7:28 pm

I’m going with peace of mind!! I think that is the main motivating factor in me wanting to pay off our debt quickly. I hate knowing that we owe for things and don’t own them outright. I hate making payments each month knowing how much goes towards interest.

At the same time, we’re currently saving more money than paying off debt. The reason being, in this economy if we lose our jobs, who knows how long it would take us to find new ones. I’d rather have the cash in the bank and be able to make minimum payments than pay extra and still have to make the minimum payments and not have the money to do so. 🙂

Funny about Money January 15, 2009 at 7:51 pm

Yay! I’m so glad your new(ish) job is much, much better than the last one. Hope my son, who is truly miserable in his present gig, soon can find a way out, too.

Debt-free for me means… Not worrying if I will starve should I be laid off; having enough cash flow to live comfortably; knowing the house & the car can’t be taken away from me if I lose my job; being able to pay for everything I need in full, in cash; having every dollar I spend equal 100 cents, not 100 cents minus whatever the rate of interest I’m paying on debt; being able to max out my Roth IRA every year.

Jason January 15, 2009 at 8:04 pm

For me the idea of freeing up so much of my take-home pay from debt repayments to other things (saving for the future, saving for some work on the house, etc) is the main reason I want to be debt free. Plus, I guess, the advantage of lowering our monthly expenses in case anything ever happens to my income.

Squawkfox January 16, 2009 at 1:11 pm

Debt freedom does equal freedom. I’ve been debt free for countless years. This opens up huge opportunity to find work for beyond financial compensation. 🙂

Sam January 18, 2009 at 3:13 pm

I think in this economy, being debt free is the new cool thing to do. Everyone is worrying about paying their bills and keeping their job.

Not being in debt frees you up to do whatever you want. It is really priceless.

Jen @ Next Rich Girl April 28, 2009 at 11:19 am

Peace of mind! I finally conquered all but my student loan debt and I can’t even accurately describe how happy it made me, how relieved I felt, etc. In fact, getting rid of that debt a few years ago has helped me stay afloat in the current economy. If I still had all those balances to carry, there’s no way I’d still be treading water (financially speaking) now.

Jen @ Next Rich Girl’s last blog post: Recession Hitting Men Harder Than Women

JMK May 27, 2010 at 11:36 am

To me debt free mean you have control over your choices and your time.

When you have your finances under control your money becomes a tool you can use to make your life what you want. When a large part of your cash flow is not longer going to debt repayment you have the luxury of deciding whether the excess is going to retirement savings, travel, helping children/family/charity, and perhaps even a few completely unecessary fun toys you did without while killing the debt.

Having your finances under control also buys you the luxury of time. If you’ve been working extra hours or a PT job on top of your fulltime job, it’s nice to be able to cut back your hours and enjoy the fruits of your extra effort. For some families it means one parent can stay home with the kids, for some it may be the time to volunteer, for others it means retiring earlier than planned because covering debt repayment or a mortage isn’t part of funding your retirment.

Our only debt is our mortgage. If we pay only the regular biweekly payments we’ll be done in 14yrs, but because we’re making extra payments every month we expect to be done in about 7 years. Paying off the mortgage is the biggest factor controlling how early we retire. We’ve saved enough to cover our retirement from 65 onward. Now we’re working on what we need to fund the years before pensions start and we begin pulling funds from our retirement accounts. Cutting mortgage payments out of the equation makes early retirement a whole lot more likely. Everytime we consider spending on something unnecessary we pause and think about the trade off. Is this object or experience worth as much as paying off the mortgage x days/weeks/months earlier? Cutting out the stuff you don’t really value is much easier when you have a goal clearly in mind.

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