Day 21- Financial Spoke- We’re Debt Free!!!!!!

Day: 21
Spoke: Financial

WE’RE DEBT FREE!!!!!!!!

Today I’m changing it up a little bit. Instead of writing about one habit, I’m going to share our story. This week my husband and I made our final payment on our last credit card to officially become debt free.

We set this goal TEN YEARS AGO. It shouldn’t have taken ten years to get out of debt but we made a bunch of mistakes along the way. The last three years we went 100% on Dave Ramsey’s plan and we finally felt like we were moving forward, not backward. 

I decided the most helpful way to share this information is through two lists. One is a list of the choices we made that helped us make progress financially. The other is a list of the bad choices that created the hole we had to dig out of. After all, I am a Choose to Win certified coach, so writing about choices makes sense. 

Good choices we made:

Listening to Dave Ramsey podcast almost every single day for about two years 

Read the book The Total Money Makeover

Using the Every Dollar Budgeting app and all the features it offers 

Sitting down to plan our budget for the next month at the end of each month. Usually I would create a first draft of it and then have my husband look it over to see if I forgot anything. 

Only making changes to the budget if we agreed on it as a couple 

Paying cash for our cars. We both bought older Toyotas with about 95,000 miles on them. People have a fear of the 100,000 mile mark so the prices drop drastically but both our car models are known to get 300,000+ miles so they have tons of life in them. The repairs and maintenance are also reasonable because they’re popular cars so most any shop can work on them. By paying cash we were able to get great deals. We both bought ours private sale off Craigslist for around $4,000 and they’ve both been excellent, safe and reliable vehicles. 

Meal planning and avoiding restaurants

Cutting up the credit cards. When there’s no back up plan you figure out how to make it work with cash 

Looked for any way to slice the budget we could. One example is I went with my natural hair color and a style I could maintain easily without as frequent trips to the salon 

Found ways to increase our income. I chose to turn my business into a side hustle and get a full time job, which doubled the income I was adding to the household. 

The bad choices we made that got us into the mess:

Mistake #1: As business owners we kept thinking we could out-earn our problems in the future. There were so many times we let the balance on the company credit card grow because just around the corner we were going to have a great month and pay it down. Dave Ramsey always says “you can’t out earn stupid.” We had to swallow the reality pill and start living below our means so that on the bigger months it could all go toward savings, not debt payments 

Other mistakes: 

Buying into the belief that you need a credit card to build credit 

Purchasing a custom-ordered brand new Beetle on a 6 year loan. Expensive to maintain and repair. When I sold it four years later for the amount I still owed, I had spent $18,000 on car payments and had nothing to show for it. 

Purchasing a 1 year old vehicle. We have since learned that statistically speaking, most depreciation is in the first 4 years. So now we only shop for used vehicles more than 4 years old 

Taking out student loans to fund private college tuition 

Feeling like we were smart for putting everything on a credit card “for the points.” It didn’t work out well for us. For me, it was the equivalent of saying “I’m giving up sweets” and then on the first day accepting free Publix chocolate chip cookies to sit on the counter because I got free broccoli out of the deal too and now I gotta stare at these things all week. I would have been better off to just pay for my broccoli. If you can have Publix cookies in the house and not eat them, then by all means, take the broccoli. But I gotta say “no thanks.” Because goals. 

Believing that business debt is more acceptable than personal debt. Debt is debt, and it’s all the same. Buy what you can afford. 

Not planning meals for the week. When you get hungry and you don’t have a food plan you just swipe, swipe, swipe for those convenient options. The first time we did our budget and saw how much we were spending a month on small swipes here and there, we were flabbergasted. 

If you haven’t plugged into the Dave Ramsey materials, I highly recommend them. These were the steps we took that we learned from his teachings: 

1. Stop the bleeding. Financing anything is no longer an option. No more borrowing or using credit cards. Figure out how to do everything you want and need to do with cash 
2. Start using a budget. At the end of each month, plan how you are going to spend the next months money. Spend every single penny on paper BEFORE the month begins. Then stick to that plan. Most months, unplanned things will pop up, sit back down with your budget and adjust according to your priorities. 
3. Save up a $1000 initial emergency fund to avoid having to throw something on a credit card if something unexpected comes up 
4. List all your debts smallest to largest. Pay off the debt with the smallest remaining balance first, regardless of interest rates. And then move onto the next. The thing with the largest balance is what you tackle last 
5. Once all your debt is paid off, you build up the 3-6 month emergency fund. Determine how much you need each month to cover all your expenses and stick a few months worth in a checking account to be ready when the storms of life come 
6. Now you begin investing and building wealth for your future, saving for kids college and paying off your mortgage.