Recently we wrote a blog post detailing our milestones that were to be checked off as we progress through our journey towards financial independence. Well we are glad to announce we are checking off our first milestone:
On January 29, 2016, we paid off one of our two remaining credit cards!
To say we paid it off is an understatement – we slaughtered that card! We demolished that debt! Knocked it out the park! As noted in an earlier net worth post, Credit Card 1 had a balance of $5,020.65 at year end. We are still in shock that we knocked out over $5,000 in credit card debt in a single month! That’s a testament to frugal living and keeping financial waste to a minimum. There is no way that we could have done this if we had 4-digit mortgage payments, a $200 cable bill, $100 a week for eating out, etc.!
Paying that debt off frees up $101 a month! Those funds can be put towards more debt repayment as we prepare to demolish the final credit card or additional funds towards a stock purchase. Although the interest rate on the card was only 4.99%, very low compared to current credit card standards, that still calculates to over $20 a month in interest, which per month, is more than we receive in dividend payments!
We believe debt of any kind is a detriment to achieving Financial Independence, even if its student loans used to get a degree, car loans to drive to work, or mortgage loans to have a roof over your head. But when that debt is a credit card, full of charges that we can’t even remember what was purchased, and paying interest on those charges, well that’s just a no-no! We once read that “The difference between the rich and the middle/lower class is the rich EARN interest, while the middle/lower class PAY interest”. Well, we were tired of paying interest, and that was a huge motivating factor in knocking out this debt so quickly. Not only did we knock it out but we even managed to make a stock purchase for the New Life Portfolio! Talk about a great month!
Stay tuned for our next Milestone Achievement, we have that feeling one is coming up…real soon!