Paying off Debt: 2019 Year in Review

It’s now 2020 and I have had an opportunity to assess how my financial life went in 2019. Overall, it went pretty well. In this post I specifically want to talk about how I did at paying off my debt. Check out this picture below of an email I got from Credit Karma about my debt.

I paid off $327,658 of debt in the year 2019. You may think there is nothing to be ashamed of with that. Mostly there isn’t, but there are a couple of things. I want to discuss the things I am ashamed of and the things I am proud of, as well as my debt goals for 2020.

Things I’m ashamed of

1) I only paid $7,153 of principle towards my home? Ouch. That means I paid double that in interest. I hate paying interest. However, I had a 30 year mortgage that was only a year old at the beginning of 2019. That early in the mortgage most of your payments will go towards interest instead of principal. I had a lot of other needs for my cash for loans with higher interest rates as well as investing.

Don’t fear though, I have already taken one step in remedying this problem. I just refinanced to a 15 year mortgage. Cutting 13 years off of the mortgage plus getting a 1% less interest rate means I will be paying a lot less interest over the life of the loan. Also, as my other debts are destroyed and cash flow opens up, I will start to pay extra towards the principle each month. I don’t plan on taking 15 years to pay it off.

2). I paid off a $25,000 car loan? Why did I have a $25,000 car loan in the first place? In late 2018 I bought a $30,000 car. It didn’t seem too crazy to me as I had seen a lot of my dentist friends buy cars that were $60,000 plus. But as I started to get heavy into my initial financial education at the beginning of 2019 mostly from the White Coat Investor, I started to realize I shouldn’t have a car loan at all. If I can’t afford to pay for a car in cash, then I can’t afford it.

I contemplated just selling it and buying a much less expensive car, but I had gotten used to the car. I liked it a lot and so did my wife. So I just decided to pay it off instead. I still contemplate just selling it and buying a $10,000 car like I preach. I realize I’m a little hypocritical. This isn’t the only financial mistake I have made. But hey, at least I didn’t buy a Tesla.

Things I am Proud of

1)Paid off $327,658 of debt

I don’t even make double that so it is pretty significant. I can’t wait until I can start investing that much rather than just pay down debt.

2)Paid off $295,440 of my practice loan.

That is a huge chunk. That payment comes out before I even cut my paycheck so I didn’t even realize I had paid off that much. Out of site out of mind kind of. It will be a glorious day when the practice loan is paid off and then that money can go to me.

3)No more car loans

We have two cars. One is now 7 years old and has been paid off for a few years. Above I spoke about the other car. It feels really good not having a car payment. I have employees that drive nicer cars than I do. However, a quarter of their income goes to their car payment. I can’t even imagine that. I’m not really much of a car guy though.

Goals for 2020

To go along with my Financial New Year’s Resolutions, here are some goals I have for this year for paying off my debt.

1)Pay down more than $7,000 principal on my mortgage

That is seriously so bad. It will happen because of the refinance. I don’t think I will be able to pay a ton down though because my focus this year is on investing more and paying down my practice loan since it is at a higher interest rate. Which brings me to my next goal…

2)Pay off my practice loan

It’s a little bit of a lofty goal. I will make less money this year. Only because I had sold off some business ventures in 2019 and made money from that. In 2020, it will only be my practice income. However, it is an attainable goal. I will just have to work hard, and not get tempted into succumbing to lifestyle inflation.

Good riddance debt

As I stated in a previous post, the only two debts I have are my home and my practice. I destroyed my student loan debt in 2018, paid off my car loan in 2019, and have no other debts. I hope to say good riddance to my practice loan in 2020, and if not, shortly thereafter. That will leave me with my mortgage. And after that, my goal is to never have any debt ever again.

Remember, you don’t have to be a slave to debt. Together we can become debt free.

-Debt Free DDS

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