Debt seems to be a constant in so many people's lives. We talked with Lauren, who celebrated her five-year anniversary of being completely debt free.
We love seeing our boards used as a way to document important events! We were so excited to see this photo – tell us a little about your debt-free journey.
My debt-free journey started 8 years ago when my husband came home one day and told me he wanted to become totally debt free. As you can imagine, there were many things going on in my head when he said that, but mainly, “Did he just say what I thought he said?" He had read Dave Ramsey’s Total Money Makeover after talking with a friend about their debt-free journey, and he felt inspired and compelled to do something. Our debt included a credit card bill ($1,871.31), the balance on two brand new cars (31,211.10), and the balance of our condo mortgage ($233,346.60).
After some deliberating, I decided to give budgeting a try. One of my biggest misconceptions about going on a budget was how limiting it would be. I learned that the opposite is true: It’s incredibly freeing to be on the same page with my spouse, and to know that I have the permission to spend on things that we both decided on during our budget meeting. We got our budget up and running, and every month we would sit down together and give each dollar a job for the following month (spending, giving, savings). He’s the president, and I’m the vice president of our monthly budget meeting.
We then worked on increasing our income, and decreasing our expenditures. I got a second job as an emergency room nurse and started working like our future depended on it: 16 hour shifts, 60-80 hour work weeks, and evening shifts. If work asked me to stay late, or come in early, the answer was almost always yes. My husband also had the same opportunity to work extra. We decreased our expenses, and lived off of 30% of our income. We started selling stuff. We started saying no to lots of purchases. We embarked on our debt-free journey together.
It was incredibly hard. I wanted to stop many times along the way because I never worked so hard for anything in my life (except maybe nursing school, that was pretty hard, too). Thankfully, the moments when I wanted to give up, my husband would be there to lift me up, cheer me on, and remind me why we were doing this.
33 months later, we did it. We were totally debt free. We paid off $266,329.01 of debt.
A year later, we purchased our fixer-upper dream home, and paid over half of the mortgage for the down payment. Three years after that, we completely renovated our home without ever going into debt. While we do now have a mortgage, it is reasonable, and we are otherwise debt-free.
Never, in my wildest dreams, did I think that we could achieve such a huge goal. I share our story because we were inspired by somebody else’s story, and never would have done all of this had we not heard that story. If you are thinking of becoming debt-free, or going on a budget, I would encourage you to do it, and start now.
What kind of steps would you recommend to those of us who are still trying to become debt free?
Be passionate about changing your financial trajectory. This is probably the single most important thing about becoming debt free. Without the willingness to work hard to change what’s currently not working, nothing will change. In nursing school, one of the biggest lessons we learned is that people will not change if you will them to, or if you try to coerce them; they will only change if THEY want to change. The same principle applies to becoming debt free.
Figure out your monthly income and expenses. You can start by writing down all of your different categories of expenditures: utilities, housing, groceries, cars, etc. Then you can start keeping track of how much you are spending in these categories every month. What’s most important is that the monthly expenses are less than your monthly income; if not, something has to immediately change.
Establish your emergency fund. This is important because the rainy day will come; it’s just a matter of whether or not you are prepared for it. Starting with $1,000 is a great start, and then you can work your way up to saving 3-6 months of your monthly income, as Ramsey suggests.
Make an actionable plan, start a budget, get a budget accountability partner. Your financial roadmap to becoming debt free is in your budget. Set goals, sell stuff, pick up an extra job, and decrease your monthly expenses. Make sure that your budget buddy holds you accountable to what you agreed on. Also, if it’s in your budget, I would highly encourage being generous with the budget that you have because it’s good for the soul -- whether it’s baking someone cookies, paying for someone’s gas behind you, or giving to a non-profit organization or church that you love.
Celebrate the small victories, and pay off your debt! Whether you are keeping track of how much interest you are saving along the way, or turning another page on your amortization schedule, or paying down another $500 of debt, celebrate the small stuff because that will give you fuel to keep going.
It’s so difficult to get out of debt. What was the hardest aspect of consistently sticking to your goal?
By far the hardest thing about consistently sticking to our goal was comparison. It’s true what Theodore Roosevelt said, “Comparison is the thief of joy.” While we were working 80-hour work weeks, hardly dining out, and hardly going on vacations, it was hard to not look around at those around you who were enjoying the things we weren’t. When I was feeling down, my husband would remind me to keep my eye on the prize. It’s so hard when you are in it, but like Dave Ramsey says, “Live like no one else, so that later you can live like no one else.” This process makes you discern that the most important things in life aren’t things. They are your time, your values, your financial freedom, and the people you love.
What resources or tools would you recommend for someone working toward debt freedom?
I would start by reading Dave Ramsey’s Total Money Makeover. This is the book that changed our lives forever. It’s a quick read, and very easy to understand for a free spirit like myself (my husband is the nerd). Dave also has a wonderful radio show on various financial topics. My husband and I had the pleasure of doing our debt free scream 5 years ago when we paid off our former home.
I would also suggest using YNAB (You Need a Budget) to manage your budget, accounts, and financial goals. YNAB is an app that you can sync to various devices, and it updates in real time. For example, if my husband and I conquer and divide the grocery shopping, we can each see how much we spent, and our balance in our “grocery” category. Jesse, the founder of YNAB, also has great videos and podcasts that are incredibly insightful as well.
Lastly, I have a blog at www.casamochi.com
where I talk about our debt-free journey, living within one’s means, and other tips on how to live well on a budget.
Now that it’s been five years since becoming debt free, what other goals are you working toward as a family?
We had a few major home repairs come up that made us dip into our emergency fund, including replacing a major supporting beam in our garage. Some of our next goals are to finish our current home repairs, replenish our emergency fund, and make an actionable plan to pay off the balance of our current mortgage. We are also working towards traveling more together as a family, teaching our children how to manage money, and cultivating joy in everyday moments.
And lastly, we always like to ask, what is currently on your letter board?
What is currently on my letter board is “Instead of giving yourself grief, and giving up, give yourself grace, and move forward.”
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