My Favorite Thing About Paying off Debt

by Evan

I have been aggressively paying down my auto loan since the beginning of the year.  Every time I am about to waiver and change course I remember my favorite thing about paying off debt.  What is my favorite thing about paying off debt?

I don’t believe that debt is religiously evil, nor do I think debt is good or bad so those two things can’t be it.  I am not throwing away money since the loan was associated with my vehicle that I need and it is a relatively low interest rate, so that can’t be it.

So what is my favorite thing about paying off debt?  The net effect on your yearly income needs!

Paying off Debt is Like Giving Yourself a Raise

My auto loan costs me approximately $220/month.  That means, assuming a 20% effective income tax I have to make approximately $3,000 before taxes to keep the note current.  By paying off the note early, I am effectively giving myself a raise!

Without even worrying about the money saved with paying an amortized loan quicker, I am helping future Evan out.  With a lower net monthly (and yearly) income need I have more money to either spend or throw at another debt and this pumps me up!

While it may be unrealisitic, I would love one day to have a net monthly need of two or three grand.

What is your favorite thing about paying off debt? 

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15 comments

Simon February 28, 2011 - 12:22 pm

I think you can get to $2000-$3000 monthly!
Think about it. If you have no student or car loan and the mortgage is paid off, does your lifestyle need $3000 a month? You have some other bills (media/telecom and utilities) and you need to eat. Perhaps you will keep using a car (gas, upkeep). Would this all cost $3000 per month? Unlikely!

I was going to invest heavily this year – haven’t done so lately. As long as I have that student loan and personal loan outstanding I just find it hard to keep paying out to OWE money!

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Evan March 2, 2011 - 12:48 pm

Mortgage paid off?! I live in one of the most expensive areas in the Country and am only 29…so that goal is a long long long ways away

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krantcents February 28, 2011 - 12:26 pm

My favorite part is having more discretionary income. Car loan payments in particular are bad since you are paying off a car that depreciates. It has been so long (11 and 9 years) since I had a car payment, I am reluctant to buy a new car.

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Evan March 2, 2011 - 12:49 pm

I will pay off the car this year…and then I hope to keep the car for another 50 to 60K miles (so maybe 4 years).

However I told The Wife if she opts for a mini-van I may have to upgrade to retaliate

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IPA February 28, 2011 - 2:29 pm

I’m with you Evan as my favorite part about paying off debt is I have more to save. Well in our case I put the money I used to put a debt that I paid off towards another debt to pay it off faster.

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Evan March 2, 2011 - 1:06 pm

What debts are you trying to pay off currently? I see you are a property guy…have you gotten there yet? or is that your goal?

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IPA March 2, 2011 - 1:31 pm

My goal is to invest in properties but my first priority is to pay off debts.

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Jenna February 28, 2011 - 5:44 pm

I don’t have any debt, but I posed the question on Adaptu’s Crush Debt group and linked back you your blog post. Check it out here: https://www.adaptu.com/thread/1374

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Evan March 2, 2011 - 1:37 pm

Thanks J!

I see that your users had a few of their favs also

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Jenna March 2, 2011 - 2:38 pm

Yeah I love this one: “I love deleting the entry from my online bill pay.”

But I’m a sucker for crossing things off lists – it feels so good!

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Sandy March 1, 2011 - 11:15 am

I personally like watching the balance on a loan go down. It makes me feel like I’m making progress and am a little better off financially than I was the day before.

What’s the point of working if you’re just treading water and not getting ahead. That just feels so much like being a hamster on a wheel, running hard and getting no where. Paying down debt, building equity, having savings all make me feel like I’m a hamster but I’m running towards a cool prize at the end..not to nowhereland.

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Evan March 2, 2011 - 1:38 pm

The race to zero! I feel that also. I can’t even being to imagine how many Americans are just running that wheel

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Don March 2, 2011 - 8:31 pm

Geez, my post today, while not exactly the same as yours is so similar that apparently we are eating from the same trough…

I swear I didn’t read your article first! Shoot we even think the same way with respect to the tax consequence…

Great article by the way (lol, I kind of feel like I’m complimenting myself here too)…

Shoot, I just noticed your reference to future Evan… I used the same wording in a comment somewhere. I must be reading your mind (albeit slowly, since I’m a day or so behind…)

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Debt Donkey March 18, 2011 - 10:08 pm

Great point. I’ve knocked out a few debts and with each one it felt like my paycheck got bigger every month! Best wishes…

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Steve Rhode March 30, 2011 - 4:01 pm

The best thing about reducing your debt is that it gives you more time and flexibility in your life. You just don’t have to work as hard if you don’t want to.

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