Last week, I reviewed how we started our road to debt freedom– be sure to go back and read that post first!
After completing The Total Money Makeover, one of our biggest takeaways was the importance of having a strong why. This “why” helped guide us in every decision we made going forward. Ben and I asked each other: why do we want to get out of debt? Why do we want to have a better financial future? What is our end goal? After talking in length, these were our reasons for taking hold of our finances:
- Change our family tree so our children and grandchildren could have a better life than us;
- Afford our children the opportunity to attend college without having to worry about student loans;
- Take my photography business full-time, thus, allowing me to have more time at home with the kids;
- Complete our home renovations and additions; and
- Become everyday millionaires 🙂
The entire week after returning from our Italy trip was spent tweaking our budget, cancelling subscriptions, pausing retirement contributions, reviewing life insurance policies, and writing out our debt snowball. We combined all of our credit cards into one pile and cut up every single one. With one card left, I had a moment of panic. Were we doing the right thing? How will we get by without any credit cards? Ben saw my hesitation, grabbed the card from my hand, and proceeded to cut it into tiny pieces. That was it– we were officially on our way to becoming debt free!
The Baby Steps
Now, if you aren’t familiar with Dave Ramsey and his teachings, let me quickly summarize his seven baby steps:
- Save $1,000 emergency fund
- Pay off all consumer debt utilizing the debt snowball method.. i.e. list your debts smallest to largest
- Build up your 3-6 month emergency fund
- Invest 15% of your income into retirement (no more and no less)
- Save for kids college
- Pay off the house early
- Live and give like no one else
The reason these baby steps work is because it forces you to focus on one thing at a time. When you try to do to many things at once nothing gets done.. or at least it doesn’t get done well. For example, if you are paying a little bit toward all your debt, contributing a large sum of money to your retirement, building up a savings, and putting money toward your house.. you really aren’t making any progress. That is exactly what we were doing, and when we decided to focus our energy on one baby step at a time––we truly began to see progress!
15 Long Months..
When we began our debt free journey in April 2018, we had $70,000 in consumer debt consisting of student loans, vehicle loans, credit cards, a lawn mower, four-wheeler, and personal loans. With the help of our budget and the Everydollar app, we were able to quickly pull together $1,000 for our initial emergency fund. Baby step one was completed!
We knew baby step two (pay off all consumer debt) was going to take us at least two years to accomplish. As a way to speed up the process, we decided any extra money we made from our secondary jobs would be thrown at our smallest debt! We were both already so used to working multiple jobs that it really wasn’t too much of a sacrifice for us.
Month after month our consumer debt slowly started to dwindle. Some months we made a ton of progress, while other months we hardly made any. I became obsessed with our numbers. Constantly checking my self-made spreadsheet, updating the numbers, and calculating how much longer it was going to take us to make that final payment.
Within the first eight months, we paid off our lawn mower, credit cards, student loans, Ben’s truck and four-wheeler. At twelve months, we paid off my minivan. Then on July 30, 2019, just fifteen months after we began our journey, we made our very last payment to my parents! We were officially DEBT FREE!
To keep us motivated throughout the process, one thing we did was have small celebrations. Each time we clicked submit on a final payment we would go on a cheap dinner date! It felt so good to celebrate that small win, but it also provided us that motivation to keep pushing forward.
When we finally paid off that final debt we knew we had to celebrate in a big way. Since we are both big steak and seafood lovers, we went out to an expensive restaurant and ordered whatever the heck we wanted! It felt so good to be able to spend that amount money and not have to worry about it! During dinner, we talked about our journey up to that point, how excited we were for the future, and how amazing it felt to not owe not money to anyone. Now, going forward all the money we earn will stay in our bank account!
The Keys To Our Success
There were a few keys to our success:
- We lived on less than we made
- Followed the baby steps in the proper order
- Stuck to our monthly budget (The Everydollar app was a HUGE help!)
- Used the envelope system
- Worked, worked, worked!
What’s next for us? We have completed our fully-funded emergency fund and started contributing 15% toward our retirement. Now, we are working toward saving for our children’s college and paying down our home mortgage! We have many home projects and renovations we would like to complete, but we will slowly save up to pay for them in cash. Everything we do going forward will be done by paying for it in cash! It’s our motto that if you can’t pay for it in cash than you can’t afford it. Isn’t that the truth?
Personal finance is 80% behavior and 20% head knowledge. Once you realize that–– everything changes. We live in a culture where having monthly car payments, credit cards and student loans are just a way of life– it’s just what you do. Want to purchase a new lawn mower? Put it on credit! Want to go to college? Take out student loans! We are taught (even at a young age) it’s a good thing to have a high credit score– people are praised for having a credit score above 750. It’s completely normal to live paycheck to paycheck, heck, 70% of Americans do it! But, you can choose to live differently.
The bottom line is, you are responsible for your own choices. You are responsible for your attitude. You are responsible for your behavior. When you own up to that and still make the hard, right choices, the reward far outweighs the sacrifice.
Now, the question is, are you ready to sacrifice for the short term in order to reap the rewards for the rest of your life? As Dave Ramsey says, “live like no one else, so later you can live and give like no one else.“
That is exactly what we did.
It’s Never To Late To Begin!
Want to get started on your own debt free journey? It’s never too late to begin! Here’s how:
- Read The Total Money Makeover
- Attend a Financial Peace University class (online or in-person)
- Put together your budget on Everydollar (it takes a few months to finally get it right.. so don’t get discouraged!)
- Utilize the envelope system (It seriously works!)
- Decide on your “why” for wanting to go on this journey. Make sure it’s a strong one!
Looking for more one-on-one help? Get on the waitlist for my financial coaching! Launching later in 2021!
Be sure to check out my financial resources for creative business owners by browsing my online shop!
Have a question related to your finances? Send me an email to firstname.lastname@example.org and let’s chat!
*This post contains affiliate links