We're Debt Free!!

I thought that I'd share our journey to "debt-freeness" here on our blog hoping to inspire others...

Since the onset of adulthood, both William and I have been in debt. I began with a little Discover Card when they were brand new on the market, and William was given a Visa when he was sent off to college. I tried paying my card off every month until one month, it didn't get paid off . The interest was added for the previous 2 months, and I found myself in over my head. I joined the marriage with about $400 on my card. William was another story... He was given a Visa when he went away to school and gave it a work-out! He made minimum payments each month. He also had a gas card to keep him on the move. He brought his cards with over $2500 and a sizable loan for my wedding ring set to our marriage.

We had major income crises for the first 3 years of our marriage. Our plans to graduate from college and get our dream jobs were not fulfilled in the least as we scrambled around for decent employment. We even went into debt another $1200 to pay a headhunter for William to work at the Footlocker 12 hours a day, 6 days a week! (Major stupid tax!!!!!)

In 1994, we decided that we needed a new, dependable car, so we ordered a Sapphire Blue Chrysler Concorde that cost 70% of William's salary. We put a down payment on it and leased the rest of it, later to re-finance when we found out that leases were bad, and 17 years later, we're still driving the thing! Lesson learned.

Over the years, we used our ATM card for most of our purchases, and when the money was gone (usually a little before the next pay day), we charged it, not really thinking that anything was wrong with doing that and didn't know that we were spending 12-18% more by swiping a card. That's what everybody does, right? Occasionally, we'd receive a tax refund, bonus, or gift, and pay down our cards just to charge them back up when we hit a crisis which would happen all too often. We had investment accounts and stocks, but no savings for emergencies.

In 2009, my sister, Patti and her husband, Scott, attended Financial Peace University, a personal finance course taught by Dave Ramsey on DVD, at their church. First, I thought that they were falling info some kind of crazy christian spin-off cult or get-rich scheme, but William and I saw big difference in the way that they dealt with money. It was really good to see the change.

Out of curiosity, I skeptically began listening to Dave Ramsey's podcast of an hour of each of his daily radio shows and listened to the "The Total Money Makeover," and he actually made sense. "The same advice your grandmother would give you, only we keep our teeth in." Basic common sense. (How come nobody taught us about this? Shouldn't everybody know this stuff?)

So, in February 2010, I told William that we needed to get it together. He totally agreed, and indicated that he was waiting for me. We were so sick of living paycheck to paycheck. William makes good money, but we didn't have much to show for it and felt like we are struggling to buy necessities and to maintain our modest home and older vehicles.

At the same time, William and I both LOVE to GIVE! We were giving to several worthy organizations and supporting several missionaries, and giving above and beyond our tithe to our church, but at the cost of taking care of our family. This really hit me when I read I Timothy 5:8 "If anyone does not provide for his relatives, and especially for his immediate family, he has denied the faith and is worse than an unbeliever." So there's "giving sacrificially," and then there's giving away most everything and living off of the credit card. That doesn't make any sense! We can't give what we don't have. We look forward giving extravagantly!

Over the next several months, we began our debt snowball and attempted to make a workable budget TOGETHER as William taught me how to get into all of the places online to balance accounts and pay bills. We stopped using the credit cards. It was all very painful. We had trouble finding the right tool to balance our bank accounts and track our budget that didn't have a monthly fee because we did not need to add another monthly payment. We finally found You Need a Budget (YNAB) to do the job and have been very satisfied with it.

In September, we began Financial Peace University at our church. (William listened to the audio CD's that came in the kit since he stayed home with the kids.) Although, we had heard a lot of what we needed to know to get going with the Baby Steps, it was great encouragement and inspiration to attend the class. My mom and I graduated with perfect attendance, and it was totally worth the 13 Tuesday nights and the $102 for the materials!

Over the last several months as we have been getting closer and closer to our goal, "Murphy" has moved in. William got sick and had to go for medical tests twice, our furnace needed repair, we slid on the ice and hit a tree, we had to get new brakes, and our oven and dishwasher no longer work. For emergencies, we've had our $1,000 emergency fund, and for other things, the budget allows us to allocate each paycheck where it needs to go. We had to roll the medical expenses into our snowball, and now we'll be replacing the bumper, dishwasher, and oven with CASH!


On to baby step #3: Saving 6-months of expenses for our BIG emergency fund.

Our story, filled with so much STUPID TAX, really makes me excited to teach the personal finance course in our home school co-op, and we know that our kids are learning a lot from our experiences and openness about our family finances, so hopefully, they won't be paying so much stupid tax because they know better!