OUR BUY NOTHING CHALLENGE:
2019 & Debt-Free!
See the main page of Our Buy Nothing Challenge (BNC),
for an explanation of how our challenge began if you aren't already familiar with it.
for an explanation of how our challenge began if you aren't already familiar with it.
From Theresa:
I am writing this at the end of 2019- and I feel blessed to be able to report:
At the end of 2018 we paid off our mortgage and became debt free!
In 2019, Bear and I subsequently both switched to working part-time,
and we’re trying to see if we can make it on two part-time salaries.
We could have kept working full time and had a lot of extra money, but
instead of wanting more stuff,
we wanted more time.
I am writing this at the end of 2019- and I feel blessed to be able to report:
At the end of 2018 we paid off our mortgage and became debt free!
In 2019, Bear and I subsequently both switched to working part-time,
and we’re trying to see if we can make it on two part-time salaries.
We could have kept working full time and had a lot of extra money, but
instead of wanting more stuff,
we wanted more time.
Our Path to Becoming Debt-Free:
Here are some of the key things that we did to get to this point in our lives:
1. We Read the Amazing Book, Your Money or Your Life (YMOYL)
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I first read YMOYL (by Vicki Robin & Joe Dominguez) in 2010 and it is one of the books that has changed my life (they recently released an updated 2019 edition). The book offered a very good way to get out of the endless American consumer cycle by looking at money differently. The main message is that money is something that we choose to change our life energy for:
Money = Life Energy If you’re, for instance, 40 years old, you only have 174,882 hours of life left (after subtracting sleeping, eating, etc.). If you make $15/hour and you want to buy something that costs $60, YMOYL suggests that you ask yourself if you are willing to exchange 4 hours of the time left in your life to work so that you can buy it? Note, however, that your true pay is not really equal to your hourly wage. YMOYL suggests that we need to determine our true hourly wage by subtracting all the expenses entailed in having a job, such as transportation, lunches out, necessary clothing, paying taxes. Next, YMOLY recommends that you track your expenses, decide how many hours of life energy you had to lose at work (making your true hourly wage), in order to buy each thing, then ask yourself, for each type of expense, did you receive fulfillment and satisfaction in proportion to the life energy you spent? This can help you pretty quickly decide where you don’t want to be putting your money. It can help you resist the messages from our consumer-oriented culture that say buying anything and everything will make our lives and the economy better. Instead, YMOYL helps you spend money only on what you truly want in your life. It helps you figure out what is ENOUGH for you, as in, I have enough of that type of stuff already and only need to keep buying this type of stuff. This all aligns with our homesteading philosophy, the core of which means we try as much as possible to spend our life energy directly making the things we need, instead of working to make money to buy the things we need. |
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2. We Created Our Buy Nothing Challenge
We weren’t very good at tracking every penny we spent, which is what is recommended by YMOYL. Instead, we found that our Buy Nothing Challenges (BNC), which we began in 2014, helped us figure out where our money was going and what we really wanted to spend it on. For the BNC we stopped buying everything that we didn’t consider a necessity. The process of negotiating Bear and I went through to agree on what we thought was necessary and what we could spend our money on rather than make it ourselves or just not have it, taught us what is important to us. We’ve whittled down our spending so that we realize we only want to spend our live energy (money) on:
What we don’t want to spend our life energy (money) on:
- For Theresa: supplies and instructional books and classes for gardening & homesteading
- For Bear: some books & DVDs, beer, coffee and good food
- For Both: local, organic food; farm to table restaurants; being able to travel once in a while
What we don’t want to spend our life energy (money) on:
- new cars (we buy only used, and for 7 years were able to have only one car for both of us)
- a bigger house (ours is 1400 sq. ft, which is small by American standards, but I would actually prefer a smaller one that is easier to keep clean)
- stylish clothes & shoes (neither Bear nor I were ever very interested in these anyway)
- the latest electronics (when we bought our last TV we had to go to a dark corner of the store where they had some that still had small screens)
- cell phones (Bear says we’re 20th Century Amish)
- cable TV (We only have Netflix)
3. We Aimed for This Goal:
become debt free and have 3-6 month’s income in the bank
YMOYL taught us that if you don’t have any debt and have 3-6 months of income in the bank, then you are free. You can leave any job you don’t like, and still have enough money in the bank to survive until you find the next one. You have the flexibility to try new jobs, or the courage to advocate for yourself in your current position (Because the worst they can do is fire you, and you don’t need to worry about that anymore. Bear calls this the "F- this place fund" and really enjoyed using it in 2018 - 2019 when he took five months off ).
Our debt included my student loans and our mortgage:
Student Loans: It took me 17 years to pay off my $25,000 in student loans, which was ridiculous, and the amount was much less than students are accumulating now. This has left me telling young adults to not go to college unless they know they can get a degree that leads to a job with a large enough salary to pay of their loans. My Masters of Science in Social Work did not do that, now have I ever had a job where I've used either of my degrees.
Our Mortgage: We bought our home in 2005 for $70,000. This was really cheap, which has allowed us to pay off our mortgage faster. Our house was cheap for two reasons, the first being it's location, which really is the most important factor in the real estate market. We live 30 minutes from the large town where most of the jobs are. Our house would have cost at least twice as much if it were located any closer to that town. If you go 60 minutes away from that town, it would have cost half as much. Even at our current location, though, it was cheap because it was a fixer upper and most people would not have been willing to buy it and spend the next 15 years of their weekends remodeling every room (we might be done soon).
Refinancing was Key: We got our 30-year mortgage at 5.625% interest in 2005. This was a good rate at the time, before the Recession hit in 2008 and the real estate market crashed. After the Recession, there were lots of refinancing programs available for people who had bought a house they couldn’t afford. Although I wouldn’t want anyone to lose their home, I was kind of angry that no programs applied to us, since we had bought a house we could afford. We continued to be able to make the $800/month mortgage payments throughout the Recession. We tried to refinance so we could take advantage of the much lower interest rates, but because of the Recession our home had lost value instead of gained it, so we didn’t have enough equity in the house to get a new loan. Finally, when we still had 20 years of our 30 year mortgage left, I was listening to a financial show on NPR that encouraged me to try refinancing again. We were able to get a new mortgage at 3% interest for 12 years and our monthly payments did not go up. Actually, since we were making more income, we were able to pay enough extra each month that we expected to pay the loan off in 10 years. So by refinancing, we effectively cut an entire 10 years off of our mortgage payments.
An Unexpected Inheritance: Bear’s father passed away, and although we knew we would be getting an inheritance, we had no idea it would turn out to be so much. Since we had been working on reducing our debt and spending, we were able to use the inheritance to pay off our mortgage about 5 years early and become debt free. It was also enough that we now have 3 months of income available to use in case we lose our jobs. The bulk of the inheritance is in an IRA, which we have to pay income tax on if we take it out (but no extra penalties), but since we are in the lowest tax bracket, we don’t need to wait until we retire to take out the money. (If we were in a higher tax bracket, we would presumably go into a lower tax bracket when we retired because we stopped working, so that it would make more sense to wait until then to withdraw the money and pay a lot less taxes on it).
Neither Bear nor I come from rich or even well-off families, so I never thought I would be someone whose life would be changed by an inheritance. I am incredibly grateful that Bear’s father lived a frugal life so he could leave the bulk of his retirement money to his sons. I guess that’s where Bear learned to be so good at spending less and saving more. And the moral of the story is, when you’re trying to be frugal and get out of debt, the universe might send you some unexpected help. It could happen to you too.
Our debt included my student loans and our mortgage:
Student Loans: It took me 17 years to pay off my $25,000 in student loans, which was ridiculous, and the amount was much less than students are accumulating now. This has left me telling young adults to not go to college unless they know they can get a degree that leads to a job with a large enough salary to pay of their loans. My Masters of Science in Social Work did not do that, now have I ever had a job where I've used either of my degrees.
Our Mortgage: We bought our home in 2005 for $70,000. This was really cheap, which has allowed us to pay off our mortgage faster. Our house was cheap for two reasons, the first being it's location, which really is the most important factor in the real estate market. We live 30 minutes from the large town where most of the jobs are. Our house would have cost at least twice as much if it were located any closer to that town. If you go 60 minutes away from that town, it would have cost half as much. Even at our current location, though, it was cheap because it was a fixer upper and most people would not have been willing to buy it and spend the next 15 years of their weekends remodeling every room (we might be done soon).
Refinancing was Key: We got our 30-year mortgage at 5.625% interest in 2005. This was a good rate at the time, before the Recession hit in 2008 and the real estate market crashed. After the Recession, there were lots of refinancing programs available for people who had bought a house they couldn’t afford. Although I wouldn’t want anyone to lose their home, I was kind of angry that no programs applied to us, since we had bought a house we could afford. We continued to be able to make the $800/month mortgage payments throughout the Recession. We tried to refinance so we could take advantage of the much lower interest rates, but because of the Recession our home had lost value instead of gained it, so we didn’t have enough equity in the house to get a new loan. Finally, when we still had 20 years of our 30 year mortgage left, I was listening to a financial show on NPR that encouraged me to try refinancing again. We were able to get a new mortgage at 3% interest for 12 years and our monthly payments did not go up. Actually, since we were making more income, we were able to pay enough extra each month that we expected to pay the loan off in 10 years. So by refinancing, we effectively cut an entire 10 years off of our mortgage payments.
An Unexpected Inheritance: Bear’s father passed away, and although we knew we would be getting an inheritance, we had no idea it would turn out to be so much. Since we had been working on reducing our debt and spending, we were able to use the inheritance to pay off our mortgage about 5 years early and become debt free. It was also enough that we now have 3 months of income available to use in case we lose our jobs. The bulk of the inheritance is in an IRA, which we have to pay income tax on if we take it out (but no extra penalties), but since we are in the lowest tax bracket, we don’t need to wait until we retire to take out the money. (If we were in a higher tax bracket, we would presumably go into a lower tax bracket when we retired because we stopped working, so that it would make more sense to wait until then to withdraw the money and pay a lot less taxes on it).
Neither Bear nor I come from rich or even well-off families, so I never thought I would be someone whose life would be changed by an inheritance. I am incredibly grateful that Bear’s father lived a frugal life so he could leave the bulk of his retirement money to his sons. I guess that’s where Bear learned to be so good at spending less and saving more. And the moral of the story is, when you’re trying to be frugal and get out of debt, the universe might send you some unexpected help. It could happen to you too.
4. We Reduced the Amount of Advertising We See:
I think this has been a significant step. We are normally bombarded by ads in our culture that tell us what we should want our lives to be like. These aren’t benevolent ads, and I’m really amazed that we continue to let them be a part of our lives. Most ads are just about making money for big companies. But we can fight that, because we can’t want what we don’t know exists. I recently stumbled on a podcast that discussed whether AirPods would make us sick. I was confused, because I didn’t know what an AirPod was. Now, some people would think that is because I’m in my 50s and so old that I don’t know nothing about technology, but I don’t care if I am inadvertently fulfilling that stereotype, because the real reason I didn’t know what an AirPod was is that I’ve never seen an advertisement for one.
Here’s how I removed advertising from my life:
There are some sacrifices here. I am not as well informed and I’m sure I’m missing out on some things I would like to know about. But, to me, being able to live the way I want to live without being influenced by people trying to make money off of me is more important.
Here’s how I removed advertising from my life:
- stopped watching TV, except when it was ad free (as in Netflix)
- stopped buying magazine subscriptions (they are full of ads and the articles were becoming repetitious anyway)
- stopped listening to radio (except commercial free, like NPR)
- put myself on lists to get rid of junk postal mail (google “How do I get off junk mail lists?”)
- taught myself to ignore pop-up ads on the internet, which are so annoying that I usually just say no and click away from sites that are full of them, no matter how enticing their content might be.
There are some sacrifices here. I am not as well informed and I’m sure I’m missing out on some things I would like to know about. But, to me, being able to live the way I want to live without being influenced by people trying to make money off of me is more important.
5. We Got Lucky with Health Insurance:
This is a big problem for most when it comes to being able to work part-time. Bear and I are very lucky in that I work for the State of Wisconsin, and they offer health insurance to everyone who works 20 or more hours a week, and the monthly cost is not more for those who work less than full-time. If you’re looking for jobs that offer this, I also remember that the last time I was unemployed I saw some jobs in the non-profit sector that included health insurance for working 30 hours a week. The jobs looked really interesting, but I couldn’t afford to work less than 40 hours a week back then. Although I’m grateful that I’m personally in a situation where I can get health insurance, I also want to say that I think it’s ridiculous that we think we live in the supposedly "best" country in the world, but we don’t have universal health care like they do in European nations.
CONCLUSION
Those are some of the highlights of our journey. Now that we are living the life we have tried to manifest for so many years, I can say that I am feeling happier more often than I have ever felt in my life, even though we’re back to running out of money between paychecks since we’re working part-time. I work Tues-Wed-Thurs and then have a four day weekend every week. I don’t know if we’ll be able to maintain this financially, but it’s definitely worth the try. I have remembered how to relax, and still have time to get things done that have been hounding me for a long time.
I encourage everyone to start their own journey to more financial freedom.
I have been poor most of my life, but we were still able to do it.
I am poor again, but I don’t care because I am rich in time.
You can do it too!
And here's an update from late 2022- we are still part-time, still poor, and still loving it.
I have been poor most of my life, but we were still able to do it.
I am poor again, but I don’t care because I am rich in time.
You can do it too!
And here's an update from late 2022- we are still part-time, still poor, and still loving it.