Needing a break from sports, my buddy and I were looking for a new podcast to listen to while we were at work. I had remembered the name “Dave Ramsey” from someone, so we threw on The Dave Ramsey Show. An hour into the show my life had been changed. I had motivation. I was excited. I was driven. For the first time in my life I wanted to save money, and rid myself of debt.
Welcome to our Journey to Financial Freedom!
Deciding if I should post this series or not has been an internal battle. It’s awkward talking about money! What will people think?!
I mean I know what people will think because I’ve already shared our story with some. Some will find inspiration, some will share their own journey, some will ignore it, and some will realize, “well that’s not any fun!”
WANT HELP? If you want to get out of debt and aren’t sure where to start, or have questions, or need an accountability partner or couple, then please email me at firstname.lastname@example.org, or message me on Facebook here. We’re here to help you achieve financial freedom!
But for me, it’s a proud accomplishment considering where I came from, the battles that we’ve faced, the choices we made, and where we are today. This blog is an open journal to whoever reads it (a select few), and years from now I’ll likely want to look back on this journey.
In this series I’ll breakdown each of Dave’s Baby Steps. I’ll talk about how we personally tackled each one, how long it took us to accomplish that step, plus provide you with a tip from my past mistakes, or what I wish I knew back when.
Oh, wondering why you should listen to us? Don’t blame you! We started this journey in February 2016 and are currently on Baby Step 6. We paid off $35,500 in debt within 13 months … and that’s all you need to know as we’ll get into further detail in future Baby Steps.
I’ll also tell you over and over again how this was easily the best decision we made as a couple. Debt is a huge burden to your marriage. It provides stress and tension, and that leads to arguments and restless nights.
Becoming debt-free was an instant boost to our marriage (you know what I’m saying?!). No longer am I in trouble for eating out once a month. The only
arguments discussions we have now are all about the friggin’ temperature in the house.
Now let’s flashback to that February 2016 day when I came home from work and told my wife my brilliant idea, “I want us to get out of debt!”
“FINALLY!” she said.
My wife and I came from two extreme money-handling backgrounds.
My family loves to spend! We have money in our pockets, we’re buying something! The latest, the greatest, let’s do it! I have no idea where my money went growing up. I had a decent paying job for a 21-year-old that had no student loans. I did have a car payment. I did pay $300 for rent. But I had nothing to show for it! Translation: Lots of movies, lots of fast food, lots of alcohol, no savings.
LEARNED MISTAKE TIP 1: Kids and young adults! Put 10-percent of your money away NOW! Just automatically put it in a savings account and don’t touch it unless it’s for emergencies!
My wife meanwhile came from a family that paid cash for everything, and saved for everything, but never did anything. My wife always had money saved. She never had a credit card. She never had a car payment. You can imagine the shock when she was introduced to the lifestyle in the United States.
So yah, when I came home from work in February 2016 and said I wanted to get out of debt she thanked the Lord and said, “FINALLY!” We’d been married 13 years and for the first time in our life, I had finally made sense.
“Not that I was ever in need, for I have learned how to be content with whatever I have. I know how to live on almost nothing or with everything. I have learned the secret of living in every situation, whether it is with a full stomach or empty, with plenty or little. For I can do everything through Christ, who gives me strength.”Philippians 4: 11-13
The above scripture has become our family mantra. As mentioned above, when it comes to our finances we’ve had our struggles. We went from a two-income house to an immediate one-income house when Lis was diagnosed with cancer. We lost her $14 an hour job, and went straight to my $12 hour a job (it was the early ’00s). It was difficult but God provided and we managed to live contently.
The struggle made us realize we could manage on one income, and we did, as Lis was able to stay home with our eldest, and again when our daughter was born. What a blessing that was!
In 2007, they were handing out home loans to anyone. We had been in the market for our own place so, with that one-income, we decided to by a 1200-square foot rambler in Podunk, USA for $260,000. No worries, we’ll be able to afford it because we will have a first and second mortgage, and a line of credit on top of that, which will help with the down payment. I’m pretty sure this isn’t how it was explained, but we were excited, clueless and signed everywhere!
Check out The Big Short for our story.
A year later we had a baby – without having health insurance – and constantly lived paycheck-to-paycheck. My buddies constantly teased me about not being able to spend $10. The wife and I argued over why I couldn’t spend an extra $10. It wasn’t until 10 years later when I realized, there wasn’t an extra $10 to spend.
In 2014, we decided to cut ties with Podunk, USA and were forced to short-sale the house. We wanted a fixed-rate loan, turns out we signed on to an interest-only adjustable-rate mortgage. We were closing in on Year No. 10, which meant our payment would substantially increase to an amount that was more than my monthly income. The house short-sold for $160,000, a mere $100,000 less than what we bought it for, a mere seven years after we bought it.
LEARNED MISTAKE TIP 2: If you’re looking at a second mortgage, and need to borrow money for your down payment, then it’s not the right time to buy a house. Also, fixed-rate all day, every day. In fact, I’m not sure they even will do ARMs after the 2008 housing-bubble crisis.
In 2012 we took a risk and opened our own insurance office. It was a great learning experience, but in hindsight, with the financial situation we were in (no savings, crazy home mortgage, $20k-plus in debt), it was a bad decision.
Though I was getting a small salary from the office I worked for, it was also a commission-based position and as the months passed, the salary would decrease, and the stress-level increased. Towards the end of my term I was having months I’d make $900 a month. The stress to perform, coupled with the stress to pay the mortgage. It was just too much, and I had to throw in the towel.
LEARNED MISTAKE TIP 3: If you’re starting a business from scratch, have your emergency fund in place. Really you should be completely out of debt, but at least have a stack of money set aside in case you run into $900 a month paychecks.
I think that gives you a background on where we were, and brings us back to February 2016.
Ramsey created seven baby steps, to help you gain financial freedom. People love to argue with the steps and the process, but speaking from experience – it works. Want to get your Financial Action Plan, click here.
If you’re a list-maker and goal-setter like myself, it really works. I have a list of steps, I set my goal to achieve that goal and move up to the next level. It’s that simple … except it’s not cause it takes discipline.
It’s made it easier having a spouse that was always in that mindset. It’s made it easier cause once we got on the same page we knew what needed to be done. If you’re both spenders it’s going to be rough. If you’re both stubborn it’s going to be really rough. It’s a team effort.
LEARNED MISTAKE TIP 4: Not really a mistake, but a HUGE step in this process is being on the same page as your spouse. This doesn’t work if one is all-in and the other isn’t. I know for a fact this doesn’t work. You both have to be all-in, and on the same page. No separate his/her accounts. Nothing! If you have a spouse that is anti-debt, best of luck to you. Have them listen to Dave, have them read Dave, have them read our series and story, because eventually I’ll get to the point and tell you how great this is for your marriage!
Baby Step 1: Save $1,000 for Your Starter Emergency Fund
As mentioned, my wife’s always been a saver and she had saved about $5,000 in our savings when I decided to change our lives forever (like how I’m taking full credit for this?!). Saving the $1,000 was easy as it was already there, now taking the other $4,000 and throwing it at debt was a bit harder for her (we’ll talk more about that in Baby Step 2).
Get that $1,000 put away fast. It shouldn’t be too hard to do, and when you have it in savings you’ll feel good and accomplished. That’s the point of Dave’s snowball effect with debt. I’ve put $1,000 away and I get to cross a task off the list. I’m motivated. I’ve achieved a goal. I’m fired up for the next one!
Except that next one is a doozy!