Get Out Of Debt Series
Marc is a personal finance blogger at Vital Dollar, where he writes about different ways to save money and ways to make more money. He’s been blogging full-time since 2008, with past blogs in industries like web design, photography, and travel.
Table of Contents
What do you do for a living?
I’ve been self-employed full-time as a blogger and internet marketer since 2008. Prior to that, I had a few different jobs in the finance industry, most of that time working as an auditor.
My current business started as a side hustle, and after about 1.5 years I was able to quit my auditing job and pursue my business full-time.
My wife has been a stay-at-home mom since we became parents in 2012. Before we had kids, she worked for about 8 years in the finance and banking industry. We’re hoping that once both of our kids are in school she’ll work with me in some capacity.
Do you have a degree and are you currently using your degree?
I have two Bachelor’s degrees: Business Administration and Bible. It would definitely be possible to run an online business without a business degree, but I would say that I am somewhat using my degree.
I didn’t have any courses specifically on internet marketing or entrepreneurship, but I’m sure that the general business courses I took have helped me in some ways.
I never really had plans to use the Bible degree for my career. I went to a college where every student took Bible courses and earned a Bible degree, regardless of your major.
How long have you worked in your field and what is your current salary range? Only if you want to, however, it is better to give our readers some perspective. If they are low-income earner vs high-income earner, the strategies might differ.
I’ve worked in this field for a little over 10 years. It’s hard to say what my salary is because it changes pretty significantly from one year to the next, but for the past 9 years, my income has been six figures.
Almost anyone who is self-employed will have fluctuations in income, but mine is more variable than most people’s.
A big part of that is because I’ve sold several websites and online business. When I sell a website/business, I get a nice lump sum that boosts my income that year, but then I lose the ongoing income since I no longer own that site. The end result is a lot of peaks and valleys.
Having an above average income has definitely helped us to pay off debt and save/invest for the future. We’ve always lived below our means, so we’ve been able to save a good bit over the past 10 years.
If my wife goes back to work in a few years (regardless of whether that is in a traditional job, or if she’s working with me in my business), hopefully, that will give us more money to save and allow us to reach our goals for financial independence.
What major debt have you paid off that you feel is a hurrah moment for you?
My wife and I paid off a 30-year mortgage in 4 years. We purchased the house for $230,000 and put $50,000 down, so we had a mortgage of $180,000.
Describe to us in detail, the strategies you used to pay off your mortgage at an astonishing rate
Originally, we were planning to make the regular payments and pay it off over 30 years, but later, we decided to change our strategy and pay it off ahead of schedule.
Our mortgage payoff experience was kind of different than most people’s. We never paid anything extra on it until we made the final payment.
During the time we had the mortgage, I think we paid down $20,000 – $30,000 of principal from making the regular payments. We paid it off with one final payment of $150,000 – $160,000 (I forget the exact amount).
When we purchased the home in 2010, my wife and I decided to prioritize retirement savings over paying off the mortgage. In 2013, I sold a website for $500,000.
I got $400,000 up front and we invested as much of that as we were able to (taxes took out a good chunk).
The last $100,000 was paid to me exactly a year after the sale. With the amount that we invested the previous year (plus we had been saving/investing for a few years), we felt like we had a good start to our retirement savings.
We decided to use the money that we got in 2014 to help with paying off the mortgage. We also took money out of savings in order to have enough to pay it off.
The main reason we changed our approach was because, in 2012, we had gone from a dual-income couple with no kids, to a single-income family with a daughter. My wife left her job, and with my income being inconsistent, we felt it would reduce our stress if we paid off the mortgage.
So it was in 2014 when we paid off the mortgage. At that time, I was 35 and my wife was 33.
In 2016 we moved to a different house. Because we had gotten used to not having a mortgage, we decided to pay cash for the house and remain debt free.
Do you have any other debt left? What kind of debt? What are your goals to pay off this debt?
No, we haven’t had any other debt since the mortgage. Both of our cars are paid off (we’ve owned them for 7 and 8 years) and we have no credit card debt or other types of debt.
We do use credit cards for almost every purchase and expense, but we pay the balance in full each month to avoid paying interest.
Do you budget? Why or why not? Which method do you use?
Yes, but to be honest, we don’t follow it as strictly as we did when our income was lower.
Since our income is extremely variable and we never know what it’s going to be any given month, we simply have a budget that lists our expense categories with an amount set aside for each category.
We try to keep our living expenses very consistent, even though my income goes up and down.
Typically, we use a savings account to fund our monthly expenses. Money that comes in will usually stay in my business account for a while, and then a few times per year I’ll move excess to our personal accounts.
We use a simple spreadsheet for our budget. I’ve tried different budgeting apps, but I find a simple spreadsheet to be the easiest for us to manage. I do use Personal Capital for net worth tracking, but I don’t use the expense tracking features.
What percentage of your monthly income do you save?
It varies drastically. One month it could be 90% and the next month it could be negative. As a result, I have no idea what our actual savings rate is.
Even if I were to look at it from an annual basis, the percentage would change significantly based on whether I’m calculating it before or after deductions from things like business expenses, 401(k) contributions, charitable giving, etc.
I personally don’t even bother trying to figure out our savings rate since there are so many variables. My goals are for us to keep our living expenses reasonable and steady, and then try to make more than we need to live.
This is why we advocate that you live below your means. If you do that, you might not need a strict budget. Here are 7 easy step to live below your means.
Do you have any passive income sources?
We have some investments that pay dividends (a little bit in dividend stocks and more in REITs and real estate crowdfunding), but we have the dividends reinvested.
When it comes time to retire we could easily switch that so we’re getting paid for the dividends.
Within the past couple of years, as I’ve gotten more serious about pursuing financial independence, passive income has been something that gets more of my attention.
So far we’ve had pretty good results with the dividend stocks and the passive real estate investing, but there are also a few other passive income ideas that I’m hoping to try over the next year or two.
Do you rent or own your own home/condo/apartment?
We own our home. We bought it in 2016 with cash, so we have 100% equity in the home.
Which side of the argument are you in terms of paying off mortgage vs investing?
Earlier I mentioned that we initially prioritized investing but then later decided to pay off the mortgage. My feeling is that there is no right or wrong approach, it just depends on what you prefer.
Even though we chose to pay off the mortgage, we always felt that on paper it probably made more sense to invest the money since we had a low-interest rate on the mortgage. But there is a lot more to the decision than simply numbers. For us, the peace of mind of having the mortgage paid off is really important.
We now have two kids, and with a single-income that varies a lot and has no guarantees for the future, and that can cause some stress.
If it makes our lives a little easier I think it’s worth it, even if we might be able to earn more money by investing. I haven’t had any regrets about paying off our mortgage 4 years ago or buying our current house with cash.
Main takeaway:
Although our situation is a little unique because we had a lump sum that allowed us to pay off our mortgage, I think there are a few keys that can be relevant even if you’re not currently in a similar situation.
First, we had a good income for several years before the lump sum, but we lived below our means and saved as much as possible.
Since we had a few hundred thousand dollars already saved for retirement in our early/mid 30’s, we were in a position to pay off the mortgage when we got the lump sum.
If we had increased our living expenses as our income increased, we wouldn’t have been able to do that.
Second, when I was still working in a typical job more than 10 years ago, I didn’t have a very good salary.
I wasn’t happy with my situation, so I started a side hustle. That side hustle turned into a full-time income that allowed us to become debt free and get a good start on retirement savings.
If you’re not happy with your current income, a side hustle has the potential to be a game-changer.
Here is the link to binge on all the get out of debt series
Other posts in the series include
Xrayvsn crawled out of $600,000 debt and the worst divorce in history and still managed to reach financial freedom.
From one Geek To Another became debt free at a tender age of 27. Phenomenal post, soo good, it also got featured by passive income journal club MD.
Money Saved Is Money Earned is the master in stretching that dollar. Low income did not stop him from getting out of debt.
How We Paid Off $340,000 Mortgage In 3 Years By Saving 86.5% Of Our Income (By HisHerMoneyGuide)
Wealthy Doc became financially independent in 17 years after starting his real job.
Check out some of the tricks we used to pay off over $200,000 student loan debt by 6 months out of training.
Let us know if you have paid off a certain debt and would like to inspire others.
Please comment and let us know what you think or add your own story
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I am a pulmonary and critical care doctor by day and personal finance blogger/debt slaying ninja by night.
After paying off close to $300,000 in student loan debt in less than 6 months into my real job, I started on a mission to help others achieve the same. There is no magic to this than to strap up and get it done. Some of the ways we achieved this include side hustle, budgeting, great negotiation skills, and geographical arbitrage.
When I was growing up, common knowledge in Nigeria is that there is one thing you cannot trust anyone else with, and you guessed it – your money.
Being frugal came easily to me based on my background. However, the concept of building wealth did not solidify in my mind until when I finished medical school. I wish I knew what I know now when I was 14. Still, I don’t know enough and I am constantly learning to improve my knowledge.
My goal is to reduce financial illiteracy among young professionals. I am catering to the beginners – babies and toddlers in financial literacy.
xrayvsn says
Very impressive work Marc. I know it can be challenging especially when your income is variable. It makes budgeting that much more difficult. I have been fortunate that my entire career has been pretty much an expected base salary with bonuses sprinkled here and then. It is much easier to handle financial issues when it’s a steady source. Congrats on being debt free. It is a great place to be.
Marc says
Thanks! Yeah, having an inconsistent income presents a little extra challenge, but it’s not too bad once you get used to it. I like the opportunity to increase my income, and for me that makes up for the lack of consistency.