My wife Heather and I will never forget today…May 19, 2011.
As of today we are completely debt free.
We owe no one any money for anything.
We got up this morning and paid off our final debt to Citibank…goodbye graduate school loans. It has been a long, hard process, but one of the most freeing experiences of our lives.
In 2007-2008 my wife and I began to talk more seriously about moving from California to Texas so that we could be closer to family. Our daughter had just been born in July of 2007 and we were feeling overwhelmed living in Los Angeles. Don’t get me wrong…we loved living there, but we had made some unhealthy financial decisions that just left us feeling like we didn’t have any room for error, or any room to step out and take risks.
Like a lot of people in LA we were hoping that the home we had purchased in Pasadena in 2005 was going to pay us back a huge profit after we sold it a few years later. And for a while, that dream looked like it might come true. I would on occasion search comps in our neighborhood and I noticed that our home’s market value was listed about $110,000 more than what we had paid for it two years earlier. But that all came crashing when the housing bubble burst, and the home that we thought was going to make us a huge profit ended up costing us.
So in June of 2008 I quit my job as the college director at Bel Air Presbyterian Church. We sold our house in July of 2008…having to actually come up with $40,000 to pay off the loan (that’s how bad our house price sunk)….wiping out all of our savings that we had stored away in a savings account…$40,000 to be exact. And in August of 2008 we loaded up our cars and drove from Pasadena to Dallas, TX.
We felt overwhelmed.
My wife was continuing to work for her company in LA from our home in Dallas, and I was struggling as a marriage and family therapist associate…often bringing home $-0 after we figured in what I made that month vs. the amount of money I was paying for supervison.
$55,000 in student loans for two graduate degrees.
$20,000 in credit card debt that we racked up in the month leading up to the move and the move itself.
Total: $75,000….it seemed like a mountain we couldn’t overcome and we felt stuck.
So we just decided in October of 2008 that we were “sick and tired of being sick and tired” of all the debt. I had heard that phrase from Dave Ramsey who I had just discovered on the local Dallas affiliate 570AM. I had heard of Dave before, but I just thought he was that crazy guy who told people to cut up their credit cards and pay with cash for things. But the more and more I listened to him the more and more I was drawn in.
I still remember my wife and I purchasing his book The Total Money Makeover Workbook and audio CD’s. We probably actually bought them with credit at the time…sorry Dave. For a couple of nights we sat down and listened through the audio CD’s and we worked through the workbook. We were stunned. Could it really be this easy to get out of debt? No tricks? Just straight forward hard work?
Those couple of nights sitting down at the kitchen table with Heather as our baby daughter was asleep were the turning points for us. We made a promise then to just attack the debt with “gazelle intensity” as Dave talked about.
So for 31 months we drastically changed our lifestyle.
We stopped eating out…except for an occasional inexpensive meal every few weeks.
We stopped buying clothes. I think Heather and I probably have spent a few hundred dollars in the last 31 months on some necessary items.
We drastically cut entertainment. We’ve probably been to less than 10 movies in those 31 months. We cut magazine subscriptions. We didn’t buy new gadgets or spend much money on music.
We stopped buying books and started visiting our local library. (Wow…talk about huge savings there).
We stopped going to coffee and made our coffee at home.
I stopped buying lunch at work and started packing my lunch.
We drew names at Christmas. Heather and I limited our gifts to each other at 1…$25 limit (that drew out our creativity).
Heather and I went away on 1 vacation for 5 days…but that was it.
We drive 8 and 12 year old cars with 136,000+ miles on both of them. And when we buy cars next they will only be bought with cash. No car leases for us moving forward…or as Dave calls it, “car fleecing.”
And those are just some of the things we did.
Even as I talk about the things we did and didn’t do, I heard stories of others who were even more intense. We realize now that there were many things we could have done better, but we have made it. We made mistakes along the way and still kicked ourselves for overspending at times. We did get rid of all of our credit cards, but one….don’t know why…..but that is now on its way out the door.
Looking back we think that we could have knocked off that debt even sooner, but life got crazy at times and emergencies happened and we lost motivation and will at times. One of the most crucial turning points for us is when we saw Dave Ramsey speak live at the Potter’s House in Dallas in March of 2010.
Seeing Dave speak live was just the kick in the pants we needed. You see, we had paid off $20,000 between October 2008 and March of 2010, so we felt pretty good about ourselves. Our friends couldn’t believe how much we paid off. But after seeing Dave live we realized we had to pick up the intensity or it would drag on for us. So from March of 2010 to May 19, 2011 we paid off $57,000…14 months.
As we sent off that payment today we looked at each other and almost couldn’t believe it. For our entire marriage we have always had some kind of debt hanging around our necks like a slowly tightening noose. And now we finally feel free. Without the debt a lot of our decisions don’t hang on finances and we feel the freedom to make choices we wouldn’t have been able to make years ago.
But this is just the beginning for us. If you know anything about Dave Ramsey’s 7 Baby Steps, well then you will know we are only now beginning Baby Step 3. We want to buy a house (the only debt the program allows–15yr fixed loan w/20% down on the house/a payment that is less than 25% of your take home pay) so bad, but we don’t want to make the same mistakes we have made before.
So we are going to be patient. And we are going to continue to work hard. We will work on our 6 month emergency fund, and then we will work on a down payment for a house…and we will continue to work the program. It is what has worked for us.
We always believed before that somehow we would be rescued. Some new job…some huge bonus…winning the lottery even though we don’t play.
But waiting around to be rescued by someone or something else got us nowhere and left us feeling powerless. We realized we had to take responsibility for our debt and radically eliminate it.
This makes sense to me.
As a Marriage and Family Therapist I continue to tell couples that their marriages only improve when each individual in the marriage takes responsibility for themselves and stops waiting for, or pointing at their partner to change. Only then, when we own our stuff, and take responsibility for our issues..that is when true change can happen in a marriage.
The same goes for debt. Only when we own our debt and take complete responsibility for it…then we can eliminate it and live in the freedom of not being slave to the lender (Proverbs 22:7).
I was hesitant to share some of the details of our story because money is a touchy issue in our culture. But we have shared our story with friends and family…and we have seen them motivated by what we are doing and they have begun to do the same. Change is happening. I also share my story quite openly with many of the clients that I work with in the therapy setting because finances are quite often the main point of contention within the marriage. And I have seen clients embrace Dave Ramsey’s program and have witnessed them change their lives because of the principles that Dave teaches.
And quite honestly, I don’t think Heather and I would have made it without the countless friends we have who are also working the 7 Baby Steps. They have been constant encouragement for us on this journey. Every Friday Heather and I looked forward to listening to the Dave Ramsey Show because it is “Debt Free Friday” where people call in to scream they are debt free. We have been astounded at the stories that people called in with. Many people paid off less than the $75,000 we have paid off…but I think even more people called in who had paid off way more money than Heather and I have paid off…often in shorter periods of time. That weekly show was the fuel that kept us going for 31 months and it’s going to be a huge source of encouragement for us as we continue to press on.
The work is not done but we feel a huge load of relief as we know that all of our hard work has paid off.
This Friday Heather and I will be celebrating our being debt free by dining at a nice steak house in the DFW area. But do you want to know how we are paying with it? We are paying with the cash we collected from all the coins we put in a milk jug from October 2008 to May of 2011. In fact, we loaded up the whole family last Friday. Heather, our 3 and half year old daughter and 10 month old son…and myself…and we dumped all our change into the Coinstar at Kroger as it counted up the money we had saved. That was our tangible motivation and we wanted my daughter especially to know at such a young age the importance of being debt free. Every week we added more coins just hoping that at the end of this we might have enough money to celebrate at a nice restaurant. We looked forward to this steak dinner for 31 months. And now it is here.
So no matter what your debt situation is, don’t give up hope. You can do this. Thousands and thousands and thousands of people have done this.
Our final goal is to drive out to Nashville to the Dave Ramsey headquarters so that we can scream we are debt free from the lobby of the building. I know it sounds crazy…but not anymore crazy than living in debt.