I’m finding it really hard to pull myself away from the Olympic Games coverage! Ever since my early teens, I’ve manifested symptoms of Olympic Addiction Disorder (not a real thing – at least I don’t think so). So I’ll make this quick!
Here’s a recap of where we are in our journey out of debt since June of 2012:
- Consumer debts of $21,400
- Business debt of $80,800
- Mortgage debt of $155,000
- Grand total debt of $257,200
Following Dave Ramsey’s strategy as outlined in The Total Money Makeover, we attacked our two smaller consumer debts first, and then moved on to our business debt. It took us just over 3 years to pay off all non-mortgage debt. In July of 2015, we were left with the mortgage to tackle, and the new step of saving up our big emergency fund (to cover 3-6 months of expenses in the case of job loss).
From June 2012 to July 2015, we paid about $27,000 off our mortgage just by our regular monthly payments. Starting in August 2015, we put extra against our mortgage, and in the last year, we have paid off almost another $26,000.
- The grand total of our debt (just the mortgage) now sits at $102,800
Psychology of debt-reduction: Focus on what has been paid off, not on what’s left
In June, I made the discovery that it is better for the psychology of our debt reduction to focus upon what we have paid off rather than what we still have left to pay. In the first few years of our debt reduction, it was natural to think in terms of how much we had paid off. Once we got past the half way mark of our grand total, it became natural to think in terms of what we had left to pay off. But that had a discouraging impact, so I’m trying to focus again upon how much we have paid off.
In July, we paid $2,000 against our mortgage, bringing our total mortgage reduction since June 2012 to $53,000.
2 significant milestones
- Our emergency fund is now full (I should be more excited about this than I am), but we will continue to save at the same rate for big upcoming expenses as well as for retirement.
- The mortgage that we have left is roughly equivalent to the total amount of non-mortgage debt that we paid off from 2012-2015.
A wall of exhaustion? Or a wall of complacency?
Ramsey talks about people “hitting a wall” when they reach this stage of debt reduction. Consumer and other non-mortgage debts are gone; the emergency fund is saved; and all that’s left is the mortgage. Ramsey compares this wall-hitting stage to a marathon runner reaching mile #18 out of 26. Exhaustion sets in, and every muscle in the body screams, “Enough already!”
I think I might be facing a wall, but it’s not of exhaustion. It’s of complacency. We are at the point now where we’re “normal” – even for people in our age group (in our fifties). No longer do we have a debt-to-income ratio that is way above the record breaking household national average. We’re well below that average. While we felt a sense of urgency about our non-mortgage debts, it’s hard to muster that same urgency for a mortgage – and a pretty modest one at that.
Hold on here! We were never going for “normal” to begin with. We were going for complete freedom from debt. When it comes time for us to retire, we don’t want to fit in with “normal” – which is to retire while still in debt. So time to refocus, to stare down that wall of complacency, and to attack our mortgage debt like champions. The Olympic athletes, whose competitions I’ve been watching, strive for way beyond “normal”, and they certainly don’t give up before they reach the finish line. My finish line still lies ahead. The course has changed, but it still needs to be covered. On to the next stretch of the race!
Do you have a lower sense of urgency about your mortgage debt? Do you have Olympic Addiction Disorder? Do Olympic athletes inspire you – either towards physical fitness or some other pursuit of excellence? Your comments are welcome.
Image courtesy of PublicDomainPictures.net.
Thanks for reading our report for July ’16! Please check out my weekly posts at Fruclassity.