I'm not sure how often Dave Ramsey comes up with our friends anymore, but we are HUGE fans. Haven't heard of him? Check him out. He can absolutely change your life. He changed ours. He changed our friends' Heather and Tony's. Is it hard? Oh my gosh, yes. Does it cause arguments that become agreements that become amazing achievements? Oh yeah. Is it worth it? YES.
We first started our path to financial freedom in 2007 after Tim had been listening to Dave at work. (We feel like we can call him just Dave. He's cool like that.) He liked the ideas and decided that he needed to read the book. He wasn't even halfway through before he was converted to Dave's ways. I didn't fall in line quite so easily. I was about 2 months pregnant, always a bad time for new changes, and was not ready to give up my me me me centered attitude when it came to money. Eventually, and I don't know how he did it, Tim convinced me that this plan would be a good thing.
We started on the baby steps and quickly moved on to Step 2, the Debt Snowball. It's an easy concept. You list your debts, smallest to largest, paying only the minimum payment to all of them except the smallest, which you throw all of your extra money towards. When that pays off you roll whatever that payment was into the next debt, and so on and so on. That was the easy part. The hard part? Making a budget and sticking to it. Only spending a set amount of money going out to eat? Harder than I thought. Not buying something if we didn't have the money for it? Wow...difficult. Impulse buys were out the window.
We sold Tim's Mazda that we both loved and he started driving a truck that my parents didn't need anymore. (Thank you SO MUCH Mom and Dad! You helped us move forward so much faster!) When our credit cards were paid off we moved their limit down to $1000.00 and eventually canceled them all. (Before you freak out, that's part of the plan. I promise it makes sense.) We used money that was gifted to us that would have normally gone towards frivolous things, like a new television when our old one still worked fine, or trips to the mountains, and paid off the balance on my car. We started making payments towards our mortgage twice a month. We were doing well.
This is called a "plastectomy". Yes, Tim is cutting up our credit card. It was awesome.
And yes, our 7 month old son was HUGE. And way to close to scissors.
Things were not always smooth. Sometimes we messed up and bought things we should not have bought. Some things happened that were out of our control, like our house not selling immediately when we left Colorado. We lived with Tim's parents. (Thanks for dealing with us Mike and Connie!) We lived in a 900 square foot house with most of our belongings stored in the garage. We worked through everything, Tim diligently doing the budget and I following the rules, and it didn't get us down.
When we finally got a contract on our house there was an enormous difference that we had to come up with to pay off the remaining mortgage balance, realtor fees, an incentive to the buyers, and several other things. We had saved a portion of it but were looking at a loan through our bank, USAA, to take care of the rest. The loan came with a hefty interest rate, 11.75%, but we really needed to sell the house and were will to do whatever it took. Then, Tim's parents stepped up and said that they would give us a loan through their credit union. The interest rate was considerably less and we were able to fit a good sized monthly payment into our budget. Grateful doesn't even begin to cover it.
Month after month, Tim did all that he could to make the balance go down. I would get random updates from him. "Only $7500 or so left." "We're really getting close. Only $2350, now." He was ready to see it gone. And this past Friday we were able to make it a Christmas present to ourselves:
That is an real picture from our loan statement. Tim sent me a copy with with the balance circled. ZERO! I cannot begin to explain just how happy this makes us. It means that we are only one step away from being totally debt free. (We only have my student loan left and we plan on paying that off by the end of next year.) It means that we are so close to being able to save for the house that we really want. We're so close to being able to contribute to the kid's college funds like we should be. We're so close to doing all the things we want so desperately to do.
Thank you to our parents for helping us out in every way possible. Loans, giving us a place to live, a car to drive. Every little thing helped us get to where we are. I cannot wait to get to where we are going so we can give back!
Thank you, Heather and Tony, for becoming our debt busting buddies. I'm so happy Tony thought it was weird that Tim always came home to eat lunch and finally asked him why. Seeing all of your accomplishments has really inspired us. You have done such a great job!
And finally, thank you, Tim, for realizing what our lives could be like and working so hard to make it happen. I cannot believe what you have been able to accomplish. Over $70,000 worth of debt, not including the house, paid off in less than 4 years? You. Are. AMAZING.
(And just so everyone knows, I wasn't paid in any way to promote Dave Ramsey, his Total Money Makeover, or my friend's blog. If anyone would like to pay me, feel free! Although I doubt I could make you much money with the 3 people that read my blog.) :)