Why do you want to get out of debt? “Why?” is the most important question. Do you want to be more generous? Is there a beach that is calling your name? Maybe your debt is the only thing standing in the way of having a pet kangaroo. Maybe not. Maybe it’s because you want to save for your kid’s college education. Or maybe you just want to be free of the shackles of debt and its litany of misgivings.

Without a clearly defined purpose (the “why?”), you are unlikely to achieve financial freedom. Ask the “why?” question. Be honest. Dream big. Target a destination. Cast a vision long and awesome.

Dreaming big and answering the “why?” question is the key in the ignition. “Why?” starts the journey. But asking “what?” is the fuel. And the tires. Maybe the axle, transmission, water pump, and steering wheel too. “What?” keeps you going.

“What?” demands a specific response (“How?” is just a whiney question). To figure out “what?,” list each step you know you’re going to have to take to reach your desired “why?” destination. List the obstacles too. Write the answer to the question “what?” next to each step and obstacle. As in, what do you need to do to make this happen? It will be daunting. To avoid discouragement, revisit “why?” and then get back after “what?” with a vengeance.

Being Debt Free is awesome.  Financial freedom does not, however, always make for a compelling story.  While I’m no social media expert, I don’t think “5 ways to wait while you slowly stockpile cash” is gonna go viral.  Not salacious.  Not rebellious. Not filled with cat pictures.

That’s where we’ve been living though.  We’ve  scraped together a fully funded emergency fund of 3-6 months worth of expenses.  Woooo (The King doesn’t woohoo).  Slow and steady.  Today, we took our next step and invested money outside of an employer sponsored retirement plan.  I’m pretty stoked about that.  Our lives are forever changed because we’re debt free.  The biggest change has been my pants.

I bought new pants.  In full disclosure, this wasn’t a noble, we went without during our debt slaying journey so now we will never go pantless again sort of moment.  It also wasn’t a treat yo’self and literally buy some fancy pants as a reward for our frugality moment either.  Nope.  I had to buy new pants.

For the first time in 20 years, my pant size increased. 20 years.  Maybe it was the year long victory lap.  Maybe it was because we bought our first TV in 14 years.  Maybe it was the biscuit and gravy eating tour that commenced after the streak ended.  It matters not.  The principles that got us out of debt got shelved because the goal was met.  The dog caught its tail.  New goal.  I wanna wear my old pants.  My old pants were fine. So begins OP:OP (Operation Old Pants).  No more restaurants.  No more eyes off the wheel.

My name is the King of Free.  Our family paid off over $127,000.00 of consumer debt in 4 years.  It has been two days since I ate food from a restaurant.   And, as the Court of Free as my witness, I will not eat at a restaurant again until I can eat there wearing my old pants.

PAY IT OFF AS SOON AS YOU CAN
if you just uttered the word duh, the 1980’s called and wants its slang back. burn. there are folks (some really bright) that suggest to take your time repaying your loan, especially if the interest rate is low.  don’t do that.  debt is debt. it’s an albatross and the sooner you break free of the chains of oppression, the better.  theoretically, you might be able to out earn your student loan interest rate by investing additional funds instead of accelerating student loan repayment.  theoretically, i might be able to dunk a basketball.  practically, ain’t neither gonna happen.  the whole misnomer fails to properly account for risk.

THE RISK
words like oppressive aren’t hyperbole, it’s pretty much the way it is.  student loans don’t die on their own.  the federal government can garnish your wages (even social security income) or take a tax intercept – sans opportunity to be heard by a court of law. the collection charges will make the loan almost impossible to repay.  student loans, but for the rare exception (read: like never) are not dischargable in bankruptcy.  defaulting on your student loan is like credit score suicide.  the royal family doesn’t worship fico, but this could set you back for a while.

INTEREST REDUCTION
some providers will lower the interest rate (think .25%) if you pay by automatic debit. lenders may also reduce the rate even more (think 1.0%) if you make several (48) monthly payments in a row. Such reductions may not make a huge difference if the balance is low, but it’s definitely worth an inquiry – especially if the balance is large.

NEVER
and the king means never, consolidate a student loan with a spouse’s student loan. your student loan discharges when you die (you will die, hopefully without student loans).  let’s say your spouse has $20K in student loans, you consolidate to shave off some interest, and your spouse dies.  that extra $20K is all yours now.  had you not consolidated it would have been discharged.  but for extreme circumstances, don’t forbear the payments. the interest will accrue and capitalize. you will pay interest on the interest during the forbearance period and be straddled with more debt for a potentially longer term.

ne ne ne never cosign.  for anything. ever. especially student loans. even for your kids.  don’t do it. seriously. don’t.  all the aforesaid risk transfers to you when you cosign. bad idea. you’ll end up paying it. the societal pressure to cosign coupled with a desire to help a kid/your kid is powerful.  separate emotion from a major (does anyone else salute when someone says major?) financial decision.  folks get roped in to parent plus loans for the same reasons.  don’t do that either.  the KoF has a heart, but you aren’t the one getting the degree – so as a practical matter, parent plus loans are even worse than regular student loans for yourself.

TAXES
tax deduction.  you can deduct up to $2,500.00 of your student loan interest on your federal income taxes. you do not need to itemize to do this but have to fill out the 1040 or 1040A form.  lots of good people don’t know this.

OTHER WAYS TO PAY
check it out, but upromise sounds tedious. while every little bit helps, don’t forget the time value of money.  plus, you’d have to be spending a bunch to save a bunch.  reducing expenses altogether is what’s gonna gain you traction (assuming the created margin is applied toward the student loan and not a gnarly stereo – what? the kids aren’t saying gnarly anymore?).  some public service gigs will pay the student loan back if you work for 10 years.  do the math.  don’t get stuck in a job where the difference in what you would make in the private sector is larger than what the student loan balance is.  this is definitely worth investigating, especially if you are planning on or are already working in a qualifying position.

BEST PRACTICE
go frippin’ bananas on this thing and stomp a mudhole in it.  reduce expenses, increase revenue, and apply the seemingly created income to the loan.  as much as you can as fast as you can.  most student loan companies calculate interest daily, so it works a little different than if you were paying toward principal on a home mortgage.  it matters not.  kill it.  the sorceress has cast her spell on the entire nation and the amount of student loan debt held by americans has surpassed the amount of credit card debt held by americans.  the loan terms are complicated and the longer you play with fire the more likely it is that you’re gonna get bbq’d.  the royal family atomic elbowed its way out of $127K of bondage – most of which was the maniacal student loan sorceress.

you can do this. you can do this.  you can do this.

seek the advice of a competent professional as all situations are fact dependant.  this post is not meant to be considered as legal, accounting, or other financial advice. 

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When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left, and could say, I used everything  you gave me. Erma Bombeck.

Put all politics aside for this moment. It’s obvious you prefer a monarchy anyway. Your king is telling the story of how we paid off over $127,000.00 of debt in 4 years. This post is recollection as opposed to commentary.  Fact is we received a stimulus check. Truth is we did not send it back. We used it. We used it to pay down debt. The point of this paragraph is not that the government should give me another stimulus check, I’m not waiting for it nor do I want it. I also have no idea if it stimulated the economy. Not the issue here. My household was in debt. We received a check near the beginning of our DSJ. The point is that we didn’t buy a TV or some new threads, we stabbed the Dragon with it.

If you receive unexpected funds, whether it be from Uncle Sam or Uncle Buck, use those funds wisely. If you are in debt, use it to pay down debt. Do not pass Go. Do not blow $200.00. Kick the Dragon in the knee with the found money. We did. It accelerated our progress. We gained momentum with it. It takes more force to slow momentum down than it does to keep it going so we were thankful for any money that appeared.  We also have a saying in our castle: we serve a God who wastes nothing. So likewise we don’t waste found money.

For us it started with the stimulus check, where will/did it start(ed) for you?

READ THIS: The Tipping Point by Malcolm Gladwell

A wise man will hear and increase learning, And a man of understanding will attain wise counsel. Proverbs 1:5 (NKJV).

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Raise your right hand.  Repeat the following: “the King of Free is not a tax advisor. The following is not tax advice.  I will seek the services of a competent professional to advise me on tax matters and not a guy that uses the third person and lives in a fairy tale.”  Thanks.
You can adjust your withholdings. It is allowed. Talk to a tax professional to double-check. See your HR person or office manager – whoever is in charge of tax matters at your employer, and ask for a W-4 form.

Adjust your withholdings so that you are not paying the government as much during the year. Your HR person may tell you this is not ok. Be prepared for that.  Once we adjusted our withholdings we had more disposable income during the year for our DSJ. The admonition here is to have a purpose for the extra weekly income.

Note: your tax refund will most likely be less than in prior years. Also, don’t withhold a ridiculous amount so that you owe the government a ton either. Use an online estimator to help you on this one.
Prior to our DSJ, we always treated the tax refund as a bonus or found money. Not a bonus – IT’S YOUR MONEY. You just don’t get to use until the following year. Why people get excited over a tax refund, I’ll never know.

We didn’t want to give the government an interest free loan anymore. We wanted to use our money during the year so that we would pay less interest ourselves on the debts we owed personally. So that’s what we did. We were withholding too much. Most Americans are. We liked our tax refund. Most Americans do. We stopped withholding so much and we got out of debt.

What are your thoughts: refund or no refund?

READ THIS: The Millionaire Mind by Thomas J. Stanley.

Just say no.
No to convention.
No to salespeople.
No to consumerism.
No to old habits.
No to impatience.
No to greed.
No to being like everybody else.
No to being a hamster in a wheel.
No to living paycheck to paycheck.
No to expensive invitations from your friends.

No worked for us.
No is a positive.
No is powerful.
No launched an epic battle against the Dragon.
No slayed the Dragon.
No will keep us out of bondage.
No can get you out too.

I do not believe one can settle how much we ought to give.  I am afraid the only safe rule is to give more than we can spare. C.S. Lewis.

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If you are trying to get out of debt, your car is going to explode.  The Emergency Fund (#3), handles the replacement, but what do you do with your lifeless carriage?

When our original car (the Plymouth Breeze – sweet ride – photo is similarly sweet, but not ours) passed away it was like losing an old friend. An old friend that gave you money on a regular basis so you could slay the Dragon. We didn’t owe any money on this vehicle so it was a major help. Having a car go down in a breeze of glory (see what i did there?) could have been a major hit to our progress. And prior to our DSJ, I would have junked it. But, a DSJ makes you think differently. So does a good CPA. A wise man surrounds himself with wise counsel. Our CPA suggested donating the vehicle to have it repaired and sold. This is different than just donating the vehicle to any non-profit.  Sometimes, you don’t get much for a straight up donation.  If I would have junked the vehicle, we would have received about $100.00 (maybe we could have got a little more if I would have sought out a metal scrap yard instead of a straight up car junkyard).

We donated the Breeze to a mission that trains homeless men how to work on cars. The mission gives the homeless men a life skill. The mission sells the vehicle and uses the money to train more homeless men how to work on cars. It’s a brilliant plan and a brilliant strategy.  Without the mission, the Breeze would have been in a junk heap. Instead, it was a gift unto this world. Economically, it was a gift to us. We were able to claim the value of the vehicle after it was repaired and sold for tax purposes. At our tax rate, it benefited us three to five times as much than if we would have just junked it. We win. The mission wins. Homeless men win. Society wins.

Please be reminded, I don’t give tax advice. See your tax professional. If you see ours, tell him we said hey.

READ THIS: Think and Grow Rich by Napoleon Hill

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The wise woman builds her house, but with her own hands the foolish one tears hers down.
Proverbs 14:1.

You can tell a lot about a person by what they sell at a garage sale. 

We actually held a garage sale. I love garage sales. Probably not the best use of my time. Sure we were in hock to our eyeballs, but we really didn’t have that great of stuff. Our garage sale failed. Miserably.  We even had an ad in the local newspaper. It poured rain the day of our sale. I began to fashion an ark just in case. We barely made money back for the ad. I don’t wanna have a garage sale again. Eh ver.  As for you, somebody may want your stuff. It may not rain on you. Garage sales can be a great way to increase revenue to fight off the Dragon. Garage sales are also great experiences for older kids. We don’t try anymore. Instead, we’ve been donating unwanted, outgrown, or excess goods (we try not to have excess) – see #18.  If you have a garage sale, be willing to negotiate prices with people.  Make a sport out of it.

READ THIS: Guerilla Marketing by Jay Levinson

This post contains affiliate links. For more on my disclosure policy, go here.

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“The man with the gold rules.” Mr. T.
The King loves his bling. Not true. Just wanted to give you a comical mental image of me in a Mr. T starter set. We did not sell gold until later in our DSJ, but it did help defray costs one Christmas. Gold prices went outrageous and we cashed in on some old broken gold jewelry fortunately still in our possession. We’re not jewelry people.  If you’re getting out of debt, any attachment to jewelry has to go.  If you’re contemplating a jewelry purchase, you’re not ready to get out of debt.  Exceptions for selling your gold would include wedding rings and heirlooms.  Shop it around if you’re going to sell.
 READ THIS: More than Enough: The Ten Keys to Changing Your Financial Destiny by Dave Ramsey.

This post contains affiliate links. For more on my disclosure policy, go here.

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