Debt Freedom: How I Became Debt-Free!

Debt Freedom: How I Became Debt-Free!

“3,2,1,”  
*screams*  
“I’M DEBT FREEEEEEEEEE!!!” (this is my fave segment on the Dave Ramsey show lol)   

$29 000 (approx. without interest) paid off in 10 months!!! I’m extremely relieved, exhilarated and proud of myself!!!!! 

It was a gruelling 10 months, but doing this got me out of increasing debt (aka debt plus interest. The Devil’s work tbh). If I didn’t have a plan, it would have taken at least 14 years to pay off both debts! 

I did say that I would pay off my remaining debt the same way I paid off my student loans, but I ended up doing certain steps differently. I’ll go over the things I kept doing as well as the different approaches I’ve taken to become debt free. 

First, let me tell you a bit about my car loan: 

CAR SITUATION  

  
In January 2019, I needed to decide if I was going keep my car, get a new one, or just return it to the dealership. Those were my options as it was a leased car. It didn’t have any damages or excess mileage so I decided to keep it. I wasn’t looking to spend more money on another car when I already put thousands of dollars towards this vehicle!   

My car was worth $23 000 (approx. base price). By the time the lease ended, I had $11,779 left to pay. Since I choose to keep my car, I had to finance the buy-out because I didn’t pay the total. When this happens, the person you owe now isn’t the dealership, but rather a lien holder (aka the bank). 

The lender (the bank) ended up charging me a couple dollars more for financing. 

The only thing you do with the dealership is choose the length of your repayment period and the down payment you want to put towards the car, which is optional. I should also add that there’s a hoopla of tasks and other expenses such as a safety test that you need to do before you become the sole owner of the car and begin payments.

Moreover, as my lease was ending, the car salesman tried to convince me to get a new car. His way of doing that was to have me test drive a car while he asked a myriad of questions (spoiler: I knew the tricks. It didn’t work. I still drove around for the fun of it though lol). He then thought it would be best to give me a couple days to “think things over”. Regardless, I had the same answer: “I’m keeping my car”.I saw no sense in changing a functional car for a “newer and modern” car.   

 So that’s a brief overview (and probably unnecessary anecdote) of what was happening in terms of my car. Now here’s what I did to pay off my remaining debt:  

1. I Had An Emergency Savings

After paying off my student loans, I built an emergency savings fund again. Personally, I was eager to get the ball rolling so I didn’t save as much as last time. It was still a good buffer since my car loan was less than my student loan. 

2. I Kept Things Simple 

I didn’t need to make major lifestyle changes this time around as I did enough in the earlier stages. Although I did notice throughout this journey that I tend to eat out often when I’m depressed. I bring lunch to work most of the time, but when depression hits I seek comfort food (aka junk). It was bad for me in April and May as I was grieving the loss of a loved one. I wasn’t so hard on myself then or consciously limiting my spending then as I needed time to cope with the loss. 

Moreover, I continued to live at home.  I voluntarily contribute my share to household bills, which is far less than what I’d pay if I were on my own. Living at home is another factor that gave me room to become debt free in 10 months. I feel that now that I’m debt free, moving out is less of a challenge as I’m not bringing liabilities along with me (well Toronto housing prices are a challenge in itself, but you get my point lol).    

3. I Changed My Financial Plan  

I picked the highest pre-authorized payment I could make for my car. That way, I can figure out how I would pay off the remaining balance before October 2019. There was so much going on at the time that it was safer to go with the set monthly payments while I save as much as I could on the side. There were possibilities that I had to end up using what I saved due to certain situations that my emergency savings wouldn’t be enough for. Therefore, I continued making the minimum payments for 5 months until it was safe enough to pay off my car. 

4. I Saved More

My savings increased because I got a new job. The pay wasn’t higher, but it gave me room to save more money because my commute was shorter (I used to spend 3, sometimes 4 hours a day commuting y’all! I was tired but I did what I had to do!).

The final payment I made towards my debt. I cried tears of joy on my way out!

 

CONCLUSION 

In short, all of these factors contributed to me becoming debt free. It’s really possible folks. I know by default it requires having at least one source of income to start paying off your debt. However, you don’t need to be a 6-figure earner to get it done!  

 If you are ready to get started on your debt free journey and need assistance, please contact me and we can get started! 

All the best, 

Nisha 

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