Today I want to share our missteps, mistakes and where we’re at on our quest to be debt free. If you’ve been around the internet long enough, I’m sure you’ve heard the stories of people working their way out of piles of debt, and shouting from the rooftops about how good it feels. Maybe you’re one of them, maybe you’re headed there like we are, or maybe you feel like debt is just part of life. Either way, I hope our debt free journey (as painful as it has been sometimes) will be an encouragement to you.
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But first… am I really going to dish about our finances to the world at large? Yes. Why? Because I have learned so much from reading other people’s stories, and I want to pay it forward. And stories are always fun, right?
Our Debt Free Journey (So Far)
The Beginning: Debt is Normal…. Right?
E and I both grew up in homes where debt was just a normal part of life. Both of our parents were pretty frugal, and we each lived pretty modestly, but debt was definitely a part of that “normal” for us.
In our single adult years we each racked up our own debt – mine in the form of student loans and one credit card, and his in credit cards and vehicle loans. When we got married, we (unfortunately) added to our combined debt when we purchased a bedroom set and living room furniture on credit. We also financed most of our honeymoon with the help of our little friend VISA. Looking back, those choices totally make us cringe! At that time, though, we really just thought it was what we had to do to start our lives together on the right foot.
The Perfect Storm
Debt wasn’t really a problem for us, per se, until life happened. In our first year of marriage we were both working full time, and making the payments on all of our debt was pretty manageable. But then E lost his job, and with no opportunities in his field locally, decided to start his own business. Suddenly we were both self employed. We found out we were expecting our first, and shortly after she was born…. Our second. And with two under two I knew I needed to stay home, so we shut down my business. Money became very, VERY tight. And suddenly the debt we carried wasn’t so comfortable anymore.
Over the next few years I worked from home doing several different things to help close the gap between the income from E’s fledgling business, and our financial obligations. At the time we had about $1,000 a month or more in debt payments, and we were barely making twice that each month. It was painful, and humbling.
Through it all though, I started to see the light. As I researched things I could do to improve our finances, I ran across so many stories of families who were becoming debt free. It was an incredible thought… I mean, how much easier would our situation have been if we had little to no debt?
But really, we both wondered…
Is it really possible to be debt free?
For people who started out doing all the right things, maybe. But for us? With a boat load of debt and a tiny trickle of income? It seemed utterly and completely impossible. Still, it was an intriguing.
Someday We’ll Be Debt Free
The switch didn’t really flip for us until early spring in 2013. We were enduring our third winter of trying to stay supported by a mostly-seasonal business, plus whatever income I could bring in with two toddlers underfoot. Up until that point, we hadn’t really considered moving. But we were desperate. Tired of the long winters, isolation and tight finances.
We used our tax return that spring to fix up our house, and listed it for sale that spring. It sold in August. Shortly after, we were able to sell E’s business as well. We sold almost everything we owned, packed the little that was left into our truck and boat, and moved 1,500 miles (from Northern Wisconsin to Central Florida) in search of a better life.
It was crazy. Even though we had researched it to death, we couldn’t afford to make multiple trips to check things out, so we just… jumped. And somewhere in all of that craziness, we started telling ourselves “someday we’ll be debt free.”
RELATED: Our Journey Towards Minimalism
The School of Hard Knocks
We knew we would need money to get started in our new life, and paying off our debt at the time would have wiped out those resources. Instead we kept our cash liquid, and continued to pay off our bedroom set, couches and vacations (cringe) while trying to find our way in a completely unknown area.
That is a story in and of itself. But suffice to say, if we had the chance for a do-over, there are some things we’d definitely do differently. The school of hard knocks can be brutal, but it’s a fabulous teacher. And in the middle of all the mess, some things went very right for us.
First of all, we discovered YNAB – a zero balance budgeting app that literally saved our financial bacon. Suddenly, instead of seeing our bank balance as thousands of unspent cash, we started being able to visually spend it before a dollar left our bank account. The only regret we’ve ever had in using YNAB is that we didn’t start it sooner. It helped save us thousands of dollars just in the last few years.
The other thing that went really well for us, is that we were able to pay cash for a fixer upper. Now, this was an incredibly awful fixer-upper. It took months of work for it to be barely livable and still it was a complete eyesore. (Talk about humbling!) But paying cash = no mortgage or rent payments, and that, my friend, is a game changer. Each month we didn’t have to write out that check for mortgage or rent, the idea of becoming completely debt free started to sound more enticing.
We’re Slow Learners Though
Despite the amazingness of finding a house with such good bones at such a great deal, and despite having an incredible budgeting tool literally in our pockets, we still made some pretty boneheaded decisions. The biggest was, letting fear control our choices instead of prayerfully choosing the wisest path and trusting things would work out for the best.
One of the things I greatly regret from that season is using some of our remaining savings to travel home for our first Christmas, instead of replacing the roof on our house. We had just moved down in September. In hindsight it was such a foolish decision, and we are just now (4 years later) finishing that roof. I let my fear of losing touch with loved ones keep us from adding huge value to our fixer upper. I’m still shaking my head at that one, but what can you do but learn from the experience and move on!?
We also spent wayyyy too much on eating out for several months. Like, we ran the numbers after a particular month and we had spent over $1,000 on eating out. That was before YNAB, when the huge chunk of change in our savings account made us feel like we could “afford” to splurge a little here and there. #neveragain
But Then We Blew Our Tax Return On This
Tax returns for us were always hot cash. I’d practically drool figuring out how we were going to spend it. But that year, we had the crazy realization that our tax return would completely wipe out one of our big credit card debts. So we did it. It was mildly painful to actually put every single penny towards debt, (and NOT on anything we felt like we needed!) but it felt amazing too. Suddenly, being debt free was more than a dream, it became a crystal clear goal.
Two Steps Forward, One Step Back
The very first step to getting out of debt is to stop adding to the debt you already have. It’s simple, but not easy, especially if (like we were) you are used to using debt as your emergency fund. This, in and of itself, has been a two-steps-forward, one-step back journey. We’ve paid down thousands and thousands in credit card debt since then, but needed to go into debt to buy a vehicle when our work truck unexpectedly bit the dust. We planned on using other windfall cash to pay down debt, only to need it for other urgent expenses like medical care and dental work. We’ve maintained an emergency fund, and then had emergencies and needed to build it up again. Two steps forward, one step back is still forward motion though. And that is what counts.
Dave vs. Dani and Where We Are Now
Long before we started our debt free journey, we had heard of Dave Ramsey and his Financial Peace University. It’s a solid system, but it just didn’t sit right with our own core values. We feel pretty strongly that this season in our girls lives is hugely important. While we could have paid down debt faster if E was willing to work crazy hours and barely see me or the girls, that wasn’t a sacrifice we were willing to make. We also wanted to travel and make memories without waiting the years it would take for us to be completely debt free.
Instead of FPU, we ended up listening to Dani Johnson’s War on Debt program. It was phenomenal, and meshed much better with our life goals. Since then we have consistently paid down debt, while continuing to give generously, travel with our kids, and move forward with our lives. Missteps, mistakes and all.
The Next Step In our Debt Free Journey is… Keep on, Keeping On.
We are still committed to being debt free. Currently, due to some health issues I’ve had we are a single income family, which hasn’t stopped our quest, but it has slowed us down. But we keep moving forward, because it’s totally within our reach. We owe less than $40,000 these days (the majority of that being our truck loan), and that number gets smaller every single month!
Keep moving forward. This has been my mantra for so many areas of my life lately, but it’s so helpful! Even if it’s tiny baby steps, we are still getting closer to our goal. I can almost taste it! Can you?