Debt-Free by 25 – How We Did It

Debt-free by 25; Is that possible? Yes! How do I know? Because we were debt-free by 25! In fact, we were debt-free AND mortgage-free by 25.

So many people have asked us how we did this. To us, being debt-free by 25 just seems normal but, after all the questions and comments over the years, it feels like we beat the odds. Maybe being debt-free by 25 isn’t normal.

Recently, someone said to me, “You’ve been debt-free AND mortgage-free since 25 without an inheritance or parental assistance? I find that hard to believe.”

Why is that so hard for people to believe?

I think it’s because (after much research) I have realized that this is not the path most people take. Debt is part of life for a lot of people and for most of them, it’s by choice.

This seems especially true for Millennials. There aren’t a huge percentage of debt-free Millennials out there.

So, how did we become debt-free by 25?

Let’s lay this all out.

Debt-Free by 25 – How We Did It

I once read about someone who said that becoming debt-free by 25 had a lot to do with luck. Actually, it has a lot to do with planning and determination.

We did 13 simple things that allowed us to become debt-free Millennials by 25.

Let’s go…

1. I Paid Off My Student Loans Quickly

I graduated college with a Bachelor’s degree in Early Childhood Education and a moderate student loan bill. I mean, ANY sized student loan bill is substantial for someone going into the teaching profession but, that’s a soapbox for another day.

So, after I graduated, I moved in with my parents for my first year of teaching so I could focus on paying those loans off.

A college friend had given me the advice to just pay $25/ month for the rest of my life and forget about it. “As long as you are paying something, there is nothing they can do,” she said.

I don’t know if there is any truth to that or not but, I knew I didn’t want that to be my story.

I did everything I could to knock it out.

Once I received my paycheck each month, I would deduct tithes, car payment, and my cell phone bill. I would allocate money for gas each month and a microscopic amount for incidentals.

Everything that was left went straight to my student loans.

It drove me nuts and often left me discouraged because I felt like I worked hard and still ended up broke the day after I got my paycheck. I mean, I was a first-grade teacher. I worked my tail off with those little ones!

However, I enjoyed checking my student loan account online and watching the balance drop…slowly but surely.

As it turned out, my first year of teaching was also my last year of teaching.

I met my husband in April of the Spring semester, we were engaged by May and married in August.

Although I loved teaching, I was very excited to be a homemaker (and eventually a homeschooling mom) for the next chapter of my life.

I worked at a daycare that entire summer before we married so I could continue chipping away at my student loans.

To say that it was a horrible experience would be an understatement. That had to be the worst summer of my life, but I was able to apply quite a bit more money to my loans.

By the time my husband and I married, I only had a balance of $2,000.

I didn’t want to bring debt into our marriage, but I had done all I could do.

My husband paid the balance right after we married, and I said “goodbye” to those horrible student loans forever!

2. He Said “No” to Lifestyle Inflation

When I met my husband, he had a great job with great pay, but he was living in a small, run-down rental house on purpose, and paying only $600 a month in rent. He even chose to keep the same truck he drove all through college when everyone else would have bought something brand new.  

Now, why would he do that when he was making good money? Because he had a mission.

He started renting that house when he was hired at his company right after college. He was making good money and could have lived anywhere, but he chose a cheap place in an old neighborhood so he could grow his savings account to buy a house with cash.

His wise choices set us up for success from the very beginning.

3. We Bought a House Well Below Our Means

A few months after we were married, the government offered a First Time Home Buyers Incentive. (This was circa 2009.) The deal was that you could get a rebate of up to $7,000 on your taxes IF you met certain qualifications.

The qualifications were pretty basic. One of them required that the home had to be your primary residence and you had to live there for at least 3 years.

We decided 3 years was something we could commit to. We began considering buying a house instead of losing money on rent each month. We found a small, inexpensive house as our “starter house” and devised a plan to pay it off as quickly as possible.

There were three main reasons why we decided to buy a house instead of rent:

1. My husband was paying $7,200 a year in rent for our small rent house (which I know is cheap but still…)
2. He had been saving intensely for the two years before we were married, and it had amounted to $35,000-$40,000. We knew that if we bought a less expensive house, a down payment of that size would go a long way.
3. If we paid the house off quickly, then the $7,000 buyer’s incentive would cover the interest we would have to pay on the mortgage, and we would probably have some leftover for savings.

It was very important to us to buy a house that was well below our means. We could have gotten a mortgage for three times the amount we applied for, but we knew that would be an extremely poor choice.

Nothing is certain…not even a good job. People get laid-off all the time. We wanted to keep that in mind as we looked for a house to buy. We wanted to buy one that we could pay for even if my husband lost his job and had to find another one making less money.

Thankfully, we live in a state with many great neighborhoods that have reasonably priced homes. After a couple of weeks of looking, we found a 1200 sq. ft., 3-bedroom home near his work.

The price? Only $73,000.

It can be tempting to buy a house that is your dream home from the beginning. However, just because you can scrape up enough for the monthly mortgage payment each month, doesn’t mean you can actually afford it.

We knew that just because the bank said we could “afford” a big mortgage doesn’t mean that would be the best choice for us. We didn’t want to begin our marriage in bondage to an overwhelming mortgage.

4. Paid Off Our Mortgage in 13 Months

After we found the perfect house, we went to a local bank and applied for a mortgage. The bank officer seemed shocked when we told her we were going to put $30,000 down and we only needed to take out a mortgage for $43,000.

We also asked her several times if we would have to pay a penalty for paying the mortgage off early. It was a 15-year mortgage, but we had no intention of keeping it that long.

We planned on having it for only 2 years… Tops.

Our monthly mortgage payment came out to only $400 a month. That was less expensive than rent! Even if Timothy were to be laid off, we would have to live SOMEWHERE, and $400 was less than any rent house we would have found. So, we felt safe taking out a mortgage.

Each month, I would make 10 to 13 months’ worth of principal payments. The first payment would be the standard $400 monthly payment. Then I would include at least 10 more months of principal-only payments.

Thirteen months later, we were mortgage-free.

5. We Did Some Crazy Things to SAVE Money

I’ll be the first to say that paying off debt can be a ton of fun if you just look at it the right way!

We were always looking for frugal ways to save money. We were on a path to be debt-free by 25 and nothing was going to slow us down!

We wanted to be debt-free Millennials FAST!

I am a homemaker, so we set out to accomplish our debt-free dreams on only one income. That meant that it was my job to find ways to save us money!

So, what crazy things did we do to save money?

I cooked EVERYTHING from scratch.

For every recipe that called for milk, I substituted water.

In fact, we learned how to save HUNDREDS every month on our grocery costs.

We had no paid TV service (and still don’t).

We took home all the leftovers from family Thanksgiving meals…shamelessly.

My husband brought home all the extra (unopened) containers of food from company parties. I mean, who doesn’t love a full barbeque dinner that lasts for several nights that they DIDN’T HAVE TO PAY FOR?!

We downsized to only one cell phone (I loved the quietness of not receiving texts all day!).

We searched until we got the BEST inexpensive cell phone plan available.

We took advantage of cheap/free events in our community (art festivals, discount plays, craft fairs, Dollar Day at the Zoo, etc.)

I still look back on those 13 months of paying off our mortgage and remember all the fun we had! All the people who jumped right into a big mortgage for 30 years have no idea what they are missing.

We had a blast and I would do it all over again.

We paid off our $43k mortgage in 13 months then went on our first Caribbean cruise.

Stepping on that cruise ship felt so good. It was an awesome reward for our hard work and determination!

Side note: Cruising turned out to be one of our FAVORITE things to do. As of today, we have been on 10!

6. We Did Some Crazy Things to MAKE Money

Since we seemed to be racing against ourselves to set a world record in paying off a mortgage, we also made efforts to make extra money when we could.

We had garage sales and sold TONS of stuff.

We also sold some of our higher-priced belongings on Ebay.

However…

I mentioned that I am a homemaker, so we were accomplishing our “debt-free by 25” goal on one income.

We were doing great and on track to accomplish those goals, but I still felt bad that I wasn’t contributing monetarily.

Then, an idea fell into my lap.

I had been cooking from scratch since my husband and I married.

I would pack amazing, home-cooked meals for his lunch at work. He would warm up his lunch and his co-workers would always comment about how good it smelled.

They were always asking him what I had cooked for him that day.

Most of them didn’t cook from scratch and neither did their spouse so a homecooked meal like that was like gold!

One day, one of them said, “Lindsey should sell lunches!”

So, I did.

I would make up a little menu each week and send it to work with my husband. He would pass them around and bring home the orders.

I would get up each morning and cook lunch for 8-10 of his coworkers. He would come home at lunchtime, eat his lunch quickly in the kitchen, then transport the to-go boxes of lunches back to his office.

It was so much work!

I only charged $5 a lunch but most of it was profit.

Since I was using simple ingredients, my cost was exceptionally low.

It was fun to help with our mortgage pay-off!

I cooked for his co-workers for several months then took a break so we could move out of our rental house and into our first house.

His coworkers started getting restless and asking when I could start cooking for them again.

So, I started my little side hustle back up even though we weren’t even unpacked yet!

I did it for several more months then eventually quit because my workload at home was growing.

We had a lot of projects around our new home that needed to be done and I simply didn’t have time to cook for an additional 10 people each morning.

It was fun while it lasted!

7. We Lived frugally

Becoming debt-free by 25 has everything to do with how you live your life and the financial choices you make every day.

For us, living frugally has allowed us to accomplish things that most people think are impossible.

Here is a simple fact: we are willing to cut things out of our life that a lot of people just aren’t. We have always “lived differently” than most people.

From the outside, we look like average Americans but it’s those small, seemingly insignificant, daily choices that set us apart.

For example, we have never had paid TV service, we buy used cars, we don’t enjoy buying “stuff”, we have always shopped for the best inexpensive cell phone plans around (more on that below), we don’t have home internet (we hotspot our cell phones), we don’t eat out much, and I don’t frequent the salon or spa…just to name a few.

When you adopt a frugal mindset, it changes how you look at everything….even though I’ll admit that we’ve had some hilarious frugal fails.

Read: Grandpa’s 25 Frugal Living Tips From The Great depression

Why do people spend so much money on nonsense stuff? Because they don’t choose to tell themselves “no” AND because they choose not to tell their kids “no.” Most of the time, if they stopped to think about each purchase, they would realize that they are wasting a lot of money each month.

In my adult life, I have learned that people love instant gratification.

If they drive by Sonic, they feel like they need to treat themselves.

When everyone else in their office is going out for lunch, they feel like they deserve to eat out too, so they go.

When the neighbor drives up in a brand-new car you know they can’t afford, some people think they need to do the same thing.

I encourage people not to get caught up in this game. Before you start shopping on Amazon, ask yourself a few questions: “Am I shopping because I’m bored? Do I NEED anything?”

You might be surprised at your answers.

Many of us have homes filled with more than we need anyway. How many magazine articles are focused on minimizing our stuff? YET, people keep hitting “Buy Now.”

It makes no sense.

I know it leaves them wondering, “Why is it so hard to get out of debt?“

We think about every purchase before we make it because our money is valuable to us. We work hard for our money so everything we consider buying has to earn our money.

We aren’t those people who say, “It’s only $10. I’ll just get it.”

This mindset also enabled us to save our first (extra) $180,000 before we were 30!

Read: Money Secrets of the Amish

8. We Created a Budget

We created a budget and posted it on the front of the fridge. We wrote EVERY expense on that spreadsheet and evaluated it each month.  

If we got a little crazy one month and spent unnecessary money on eBay, Amazon, etc., we corrected the mistake the next month. We consulted our budget daily and corrected spending mistakes.

Remember: Your budget isn’t your enemy. Consider your budget your friend. It isn’t restricting. It’s actually freeing. It’s like a written set of goals that prevents you from having to continually repeat them in your mind. With just one quick glance, you can stay on track.

Don’t forget to pad your checking account!

9. Inexpensive Cell Phone Plan

About that inexpensive cell phone plan I mentioned…

We have never been the people who take things at face value. When we want a cell phone and a service plan, we don’t just walk into the nearest AT&T store and buy it.

We shop around. We ask questions. We get the most value for our money.

We searched far and wide for a cell phone service provider that would meet our needs, not charge high prices and be upfront about their costs (nobody likes hidden fees).

We tested many low-cost, no contract cell phone service providers and Red Pocket exceeded them all.

Here is how Red Pocket works:

Use your existing, unlocked phone (Red Pocket can tell you how to unlock it…it’s easy) or buy one from Red Pocket.

Keep your phone number or get a new one.

Choose a service plan that fits your needs.

Choose a network you like.

Pay.

Then, they mail you a sim card to put in your phone (which can be customized to fit your phone- including standard, micro, and nano sizes).

Activate it when you get it and you’re all set!

You can get exactly what you have now: YOUR phone, the SAME network, the SAME amount of data…FOR LESS MONEY and NO CONTRACT! And you can turn your phone into a hotspot for FREE.

Read: Red Pocket Product Review- Best Inexpensive Cell Phone Service Provider

10. We Used a Credit Card to Our Advantage

This subject is a little touchy because so many advisors say that people need to stay as far away from credit cards as possible.

I completely agree with this if we are talking about a person who is not going to be wise with their credit card.

However, we have learned that we can use a credit card to our advantage.

We put every purchase we make onto our credit card each month.

Those purchases include health insurance, car insurance, groceries, gas, etc. We even bought our (used) minivan on our credit card!

Here is the trick though: we pay the balance in FULL each month.

We have NEVER left a running balance on our credit card.

By using our credit card this way, we have been able to rack up tons of rewards points!

Over the last 10 years, we have been on 10 cruises and half of them have been free because of our credit card rewards points.

Being debt-free by 25 (or anytime!) is about using services to your advantage.

Credit cards are usually a pitfall for many people. They are tempted to rack up debt that they have an extremely hard time paying off.

However, we have avoided the pitfall and came out on top.

Read: 5 Reasons Why You Should Be Reading This Debt Blog

11. Learned to Say No

We became debt-free by 25 by learning to say no.

“Do you want to go out to eat with us?” No, how about you come over to dinner instead.

“Do you want to upgrade that?” No.

“Do you want anything else with your dollar burger?” No.

We have learned to say “no” to ourselves and others. Now, I don’t mean this in a negative way. We don’t deprive ourselves and we don’t withhold generosity to others.

But, when the subject involves wasting money or spending money on things we don’t need, the answer is always “no.”

Read: 12 Cheap Things for Self-Care at Home

12. Never Thought About the Joneses

We have NEVER compared ourselves to anyone else.

There have been people who have gotten to where we are today faster. I mean, they have nice vehicles, their dream home, and all the awesome vacations.

But, here is what I know for a fact: they aren’t debt-free. So, it’s not as sweet as what we have accomplished.

I know that sounds harsh but it’s true.

Having your dream home but going to bed each night thinking about the mortgage payment that’s coming in the mail each month isn’t satisfying.

Driving your new car to work each day isn’t pure joy when you’re working hard to pay for that baby.

That’s why we don’t compare ourselves to others. We know that we are on a completely different path. We’re on a path that few have been on. We don’t work for the “American Dream.”

How many people can say that they have been debt-free since 25, paid their first (and only) mortgage off in 13 months, saved their first $180,000 before they were 30, bought 15 acres of land, and built their dream home with cash all while having/raising three kids and going on ten cruises?

I can’t think of anyone besides us.

13. Surrounded Ourselves with Financially Wise People

In my experience, there are two kinds of people in this world. There are those who will make fun of you for being frugal and there are those who will join you.

We have always chosen to surround ourselves with those who join us.

We have close friends who are on the same financial path as us who we can bounce ideas off. They live frugally, they save, and they have achieved great things too.

Being around them helps us to stay focused.

If you are trying to pay off debt, save, and live frugally, hang around people with your same goals. Otherwise, you will constantly be tempted to waste your money with those who have no control over their finances.

Read: How to Become Debt-free

BONUS Content:

I’m always saying that living frugally and choosing to swim upstream pays off. For us, it has paid off in many ways. One HUGE way was being able to build our dream home debt-free and plan our retirement at 45.

We Built Our Dream Home with CASH

After saving and living frugally for about 6 years, we finally had enough cash to buy land and build our dream home. I was 29 and pregnant with our second child.

We contracted our house ourselves and did as much of the work as we could.

We even drew our own house plans.

Our house is 2300 sq. ft, with 5 bedrooms, two and a half bathrooms, and an attached 900sq ft garage. (We use it as three bedrooms, a sitting room, and a man/game room.) The house includes 5 walk-in closets, a FEMA approved concrete safe room, a clubhouse under the stairs for the kids, an area for homeschooling, and a screened-in porch overlooking our land. 

It appraises for OVER DOUBLE what we spent on the house and the 5 acres together. We could sell it today and make a HUGE profit!  

It was a huge accomplishment to buy land and build our dream home at such a young age WITH CASH.

All our frugal living and smart money choices literally paid off.

Put Money in 401ks and Retirement Funds the Entire Time

During all our time of paying off our first mortgage and saving for our dream home (and all those cruises), we never stopped saving for retirement.

It has always been very important to us to never drop the ball on our future.

We have always had a goal to retire early and we’ve never lost sight of that goal.

We have continued to put money into our 401ks and retirement funds so we can retire when we’re 45.

We save like millionaires.

What are we doing now?

We still practice living frugally even though it’s been over 10 years since we paid off our mortgage. It’s a habit. We just can’t help it. However, we also enjoy it!  

We have built our dream home (with CASH) on 5 wooded acres near my husband’s work. We also own 10 acres in the Western part of the state near my husband’s family where we hope to live one day. We own our vehicles (which we bought used, naturally) and our UTVs.

We owe no one for anything.

We carry no balances on credit cards. However, we have a Capital One card that we charge all purchases on so we can get the bonus points. We pay the ENTIRE balance each month. We have bought and sold 2 campers over the years before we decided we didn’t like camping.

You can read about the first camper adventure here. (It was a 1970s camper and a really odd shade of pink…)

Read: I’m Debt-Free. Now, What?

As of today, we have been on 10 Caribbean cruises. The first one was a celebration of paying off our mortgage back then!

We actually went on 4 cruises in a year one time because we got crazy. However, we can now afford to be crazy because we have no debt, and we continue to put money away in savings EVERYweek.

We enjoy continuing our money-saving habits so we can max out our 401k, Roth IRAs, etc. to prepare for early retirement when we’re 45.

I even started a side hustle with VIPKid to pay for my blogging habit…just so I could prove to myself that I could do it without dipping into the family funds. 😉

What Is It Like to Be Debt-Free?

Being debt-free is amazing for many reasons.

I don’t fret about the mortgage bill coming in the mail.

We save more now than ever.

We plan for the future/ early retirement.

We don’t worry about layoff or loss of income.

We travel a TON.

We have more cash on hand for things. Because, it’s true…money talks.

When we finally found the land we wanted to buy to build our dream home, we were told that someone else had already made an offer.

But…

We had cash and the other person who had also made an offer on the land wanted to do owner financing.

Guess who got the land?

We did.

The owners of the land didn’t want to get into an owner-finance situation. We were able to buy the land at a slightly lower price because we had cash in hand.

Debt-Free by 25 – How We Did It

If you have questions or comments about how we became debt-free by 25, I would love to hear them! Just fill out the comment box below.

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…I know…It’s a lot.

But you can do it!

All the best,
Lindsey