We wanted it paid off before Thanksgiving. We cut it kind of close but it's done. We paid it off in about 2.5 years or so. The balance was zero yesterday, a day before Thanksgiving. That means that we'll be going through the holiday season with one less bill and when we get the title in our dirty little hands, we'll call the insurance company and get our insurance lowered.
We're going to ease off on paying things off (things? My Saturn and a house that's up for sale) until January. We are planning on putting the extra money from January into savings to prepare for my wife to cut down to one job. She works in a school where 9 months of work is spread out over 12 months of pay and we aren't sure what will happen if she quits in the middle of the year.
Once we know that outcome, we'll be off and running to pay off the Saturn (and then lower the insurance again - schwinggg!).
Unless we sell the house.
If we sell the house for what we're asking, we are going to put the majority into savings for a down payment on our next house but anything over what we want in savings will go toward the car. It will just about pay it off. Of course, with no van payment, rent lower than a house payment, and utilities lower, we'll be able to pay off any balance on the Saturn just about instantaneously.
If we sell the house and pay off the car, we will be debt free.
We won't own a house which is part of our plan and we'll probably end up getting another mortgage down the road sometime but for a while, we are going to be debt free and completely free to do what we want. That's the goal for now. When we move, it will be much easier to do without any debts weighing us down.
One thing that I haven't stressed enough about being debt free is the financial agility that it gives a person. You can make changes more quickly when you are debt free. That's the point of selling the house. It's not to get the money out of the equity but to get out of the loan. The money is very nice icing though. We call the house an anchor because it keeps us from moving. It would be difficult to sell the house if we lived a couple thousand miles away. Trying to pay the house payment plus the rent payment in the new place might also encourage us to take a deal less than we would like to get out of the payment. Selling it now, without any pressure, means that we can freely turn down any deals that don't meet our needs or wants. We'll live here until someone makes an offer that we are willing to accept.
Let's face it, the person under the most financial pressure or time constraints is the one that has to give in the most during the negotiations. In this case, we are allowing ourselves about 19 months to make the sale. We would prefer 6 months but we aren't going to take a deal where we feel we are being screwed to make that goal. We would like to move around May if we can but if we can't, oh well.
The nonchalance of our position gives us strength in the negotiation for the sale of the house. Take or leave it? If you leave it, we'll sell it to the next guy. Do want the house or not?
One thing that I haven't neglected to mention is that the debt free person or the person paying with cash has the upper hand in money negotiations. People who have to borrow have to wheel and deal more. People who have to borrow with poor credit just about become beggars taking whatever deal is offered to them. There are people that buy cars at 22% credit. That's about the average for a department store credit card and is a crazy way to buy a car (it's a crazy way to buy anything). When you destroy your credit, interest away your money, and need a car, you take the deal that's being offered and feel thankful.
When you walk in with cash, it's a completely different story. You shop around until you find the best deal. You let all the salespeople know that you have the money and you're going to buy from the person that gives you the best deal.
It's the golden rule. Who ever has the gold makes the rules (or at least is in control of the situation). If you are going to borrow money, the lender negotiates a deal in their favor and at a rate that is as much as they think they can get away with. If you walk in with cash, you tell them to take or leave it. You can take your cash somewhere else.
By trying to sell the house 19 months before we feel we *have* to, we give ourselves a chance to turn down unsatisfactory deals.
Here's my Thanksgiving message for this post. I am so very thankful that we started our journey toward being debt free 20 months ago and that as part of that journey, I started blogging about our efforts, and because of the blog I researched money more in depth than I ever would have otherwise. I have completely changed how I think about money in 20 months. I have learned so much from reading articles and books on money that financially, I am a completely different person that I was 2 years ago.
I am also very thankful that my wife agrees with how I see money. I do most of the research and share it with her and we never have arguments about money. We discuss how to spend it and don't always agree but we don't argue. We might compromise here and there but when there aren't bills pressing, it's easier to compromise. Will it really hurt us to not pay an extra $100 toward the Saturn or is it okay if she gets new clothes or I get to invest it? It's much easier to wheel and deal as a couple when you're talking about the extra money.
Happy Thanksgiving!