6/23/2008

We're (still!) Debt Free!

It was two years ago that that we were first able to make that statement in our adult lives. June 23rd is our Debt-Freedom Anniversary. It has occurred to us, that while we have told a lot about ourselves, we haven't told our story of where we were and how we got here. This is as good of a time as any.

It was about 26 months prior that we started our journey towards debt-freedom. One evening we got in my wife's car to go out to eat and do some shopping. As we pulled out, I realized that she had the radio tuned to an AM station. "AM?", I asked. "What are you listening to, ABBA?" She didn't like that to well. She said that she had found a talk radio show that she really liked, and it happens to be on AM. I gave her a break.

We had been in our first house a month or so, and things were great. Or at least they looked great. The two of us with good jobs and a new baby. Just purchased our first home with two nice cars parked out front. Things felt normal. How true that was.

The Mrs. started talking more about money and our financial situation - something I was blissfully ignorant of. I was supportive, yet distant. This is until it started affecting me directly. First, the hammer came down on my thrice-weekly trips to the corner store for a Coke. "Do you realize that we could buy a whole 12-pack for what you are spending on 3 20-oz bottles?" Ummmm.... ok. Soon I was still making the afternoon walk with co-workers, but skipping the Coke.

At some point we had the real talk. I suppose it was once she had enough time to really assess our financial situation. $39,247.50 That was our total debt, not including the house. She had already done away with a couple pesky gnats of debts, but that behemoth amount remained. What was it all?

  • $5,500 on a personal loan from a family member
  • $10,223,39 on one car
  • $10,538.30 on the other
  • $14,152.02 on a student loan for the Mrs.
Crap. None of them seemed like bad ideas at the time. But here we sat with nearly forty thousand dollars in consumer debt. Yuck! Then she started telling me about what lit this fire under her. "You know how you keep finding my radio on the AM stations?" She had discovered the Dave Ramsey Show and her eyes were opened. We had a long talk about debt and our situation, and I agreed that it all sounded good. But I wasn't really 'on-board'. I was still at an arms length to it all. "That's fine, Hun, you do what you think is right."

Over weeks and months, she slowly got me more involved, discussing what we were doing, having me review the budget. One day, she was so excited. Dave was having a Live! event in a nearby city and she wanted to get tickets. A 5-hour financial seminar didn't sound terribly exciting to this reluctant spouse. But she told me how much it meant to her, and how important to her it was that I went with her. I agreed. That was a very important decision.

We spent the next few of months chipping away at our debt and getting our financial act together. Our budget was starting to work, our spending was less frivolous, we had money set aside in savings for emergencies, and the credit card was parked. Then it happened. My job hadn't been good for some time, but it suddenly came to an end. After a bit of consoling, we looked at what would be our new budget, and found something surprising - we were ok. Our reduced lifestyle was going to take a hit, but we could live on her income. We met with our Pastor and got some good council from him. What started as a day in turmoil, ended with some piece of mind. That's not to say it wasn't still a bit scary, but we knew we would could survive because of the changes we had already made. I was starting to come around.

A few weeks later, and still out of work, and the date of that Live! event was nearing. Despite our situation, I was still not looking forward to it. How silly that was. Not only was it very engaging and entertaining, but I learned a lot. I learned what a dork I had been. I learned how important pronouns were. I learned what dorks we had been. My eyes were opened and I was on-board.

Fast-forward a few months and not only was I working again, but our debt-snowball had a big shot in the arm. Since we lived on that one income for a couple months, why couldn't we continue? My new income went to our debt. We had done ok before, but it's amazing how your debt melts away when you're throwing that kind of money at it each month. We had also seen how as we handled our money better, we were blessed with more of it.

That summer we started as coordinators for Dave Ramsey's Financial Peace University. The good we did and the lives we touched will make for a great post some day. But as we were leading those classes, we were taking part as well. We were being held accountable. We were learning from Dave as well as our classmates. We were getting support in our journey as well as giving it, and that is worth a lot. One big takeaway was learning just how prevalent debt is - even in families who seemed to be well off. The stuff you hear on Dave's show is real. Those are real Americans in real situations, and there are a lot more of them living paycheck-to-paycheck than you think.

It would be another year of teaching, learning, scraping, sacrificing and succeeding before we were debt-free. We knocked out those debts one-by-one, smallest to largest. During that time, we went to see Dave live a second time. He was back in the area and we needed a shot in the arm. We got it. During those last 12 months, we payed off our three largest debts. They were each so big that it felt so great to watch them get knocked out - especially the cars. It was an event when that title would come in the mail and it was officially ours.

June of '06 was approaching and the Mrs. brought the budget to me with a big smile on her face. I quickly saw why - our amount budgeted for debt was a lot less than usual because that was all we needed to pay off the last one. That would be our last month of servitude. June 23rd was, specifically, our last day as slaves. We would no longer work out butts off just to pay so much of it out in payments. We would no longer be bound by what we owed. Our lives were changed forever, and we had never been happier.

The cars drove better.

We had control of our income.

And we felt amazing.

It's been two years since then, and we've never looked back. We've never regretted shredding the credit cards. We've set ourselves up to win and have done so repeatedly, and without debt, without credit cards, without micromanaging our FICO scores. Those have nothing to do with long-term financial success, and are a side-bar at best. What was almost equally amazing was watching FPU students become debt-free. Just surviving an emergency was a big deal to some of them, and that was a big deal to us. It can be done. It is sustainable. You can do it too.

Are you ready? Have you had it with debt? What is stopping you from becoming debt-free?

2 comments:

Jen said...

What would you say made the biggest impact in getting you on board? I ask this as I sit her with almost $40,000 in debt as you once did. My only problem in all this is getting my husband to come around. He just doesn't "get it". How did you finally get it? He won't read any books, he won't change his spending habits. I am spinning my wheels. We are doing better, but I feel like if I could get him more involved he could help me find even more ways to get our debt paid off. Thanks!! Great story btw!!

(not) the Jet Set said...

Glad you enjoyed the post. My wife was likely saying the same exact thing when we were getting started 4-1/2 years ago. This is a fabulous question and I'm glad you asked.

For some of it, it was the simple math of the stupid spending habits. Like the 'Coke at the corner store' story. I was litterlly doing that ~3 times a week, which would buy a whole 12-pack. One of those duh moments. But the other half of that one was, "Ok, then buy me a 12-pack".

Another part was seeing the problem. No one will listen to a solution without first recognizing the problem. See the debt, and how it controls our income. See the budget and how it doesn't balance. See our bleak future if we don't get it together NOW.

But what really did it, what really got me to open my mind and listen to begin with? It's the part that all of those 'good-debt', 'listen to the math', personal finance goobers overlook: the personal side. It was when my wife sat down and talked with me (not at me) about this stuff. It was when the woman that I love a respect more than anything told me how increadibly important this was to her. Not that I get 'on-board'. Not even that I curb my spending. But that I give it a try. Buy tickets and go to the Live event. We could discuss other stuff from there, but all she wanted (surprise, surprise, guys) was for me to listen.

You can do it. But make it about the two of you. It's not "Dave said...". It's not "let's get gung-ho about investing and budgets". It's about the two of you, and your future together.

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