For our boys…may neither of you ever know the bondage of debt.
I gave George the evil eye as he banged on his cereal bowl with his spoon. We were waiting on hold for Dave Ramsey. Popping his little bottom would result in shrieks and one million listeners questioning child abuse. And he seemed to know this, as he smiled back at my glares and tapped his spoon.
Dave came on the line, George miraculously quieted as Walt told our "debt-free" story in thirty seconds or so, a story six years in the making.
God brought us together.
We married while I was still in graduate school. The first few months, we were consumed with dissertation requirements and learning how to live with each other. I graduated, my paltry assistantship salary ended, and our financial reality smacked us in the face. As God would have it, our church offered Financial Peace University that same month.
Walt wanted to go. I didn’t. I needed a job and felt a job would solve all our financial woes. Besides, we needed to worry about paying our utilities, not paying down our debt.
Again as God would have it, Walt’s grandmother sent a late Christmas present – a check in exactly the amount of the Financial Peace Class. Walt signed us up.
We attended Financial Peace.
During the 13 weeks, we started embracing the principles and faced our non-mortgage debt $65,000 – mainly student loans, but also a car, and some credit card debt. Meanwhile God provided me three part-time jobs and we stayed ahead of our bills. Then finally (10 months into our marriage), I landed a full-time position. We started cranking on our debt snowball*, paying off about $15,000.
Personal finance gets personal.
What a beautiful story if we had continued that pace and paid off all our non-mortgage debt. Instead, a truck died and I insisted we finance a SUV. I knew Walt didn't want want to finance a car, so I picked the one little rig I knew he liked.
Eighteen months later, I again insisted on a larger SUV when our family grew. Between these vehicles, our debt mounted another $35,000.
We made about two payments on that big SUV and I felt sick inside. According to our culture's standards, we could easily afford this car. But I knew my desire for a nice vehicle was keeping my family enslaved to debt. Besides, if I have to finance it, who does that car really belong to anyway?
I got a job but it ain't nearly enough. A twenty thousand dollar pickup truck
Belongs to me and the bank and some funny talkin' man from Iran… Steve Earle
Deciding my status symbol was really just showing our “status” as in debt, I committed to sell the SUV. We prayed for God to provide. Meanwhile, we had a huge hailstorm and after replacing our roof with the the home owners insurance settlement, we still had money to buy a used car. If you had told us God could bless with a hailstorm, we would not have believed you.
After that time, we kept chipping at the debt. We cash-flowed** several medical expenses and another maternity leave. We were making progress, but we didn’t let go of the credit card.
But we pay it off every month... well most of the time.
Most months, we carried about a $1000 balance. We told ourselves we could pay it off in a month if we wanted, and sometimes we did. Other times, the balance would creep to $2000, we would pay it off a couple times a year, then we would allow it to creep back up. We continued that pattern, adding another $5k of debt over the years - a conservative estimate.
We continued this seesaw of “debt reduction/debt accumulation” until a real emergency happened. During my maternity leave with Samuel, our washing machine overflowed and we came home to a flooded house. The floors and the washing machine needed replacing. And of course the dryer “must” match the washing machine; well, you know where this is going.
A credit card is not a good emergency plan.
We drained our maternity savings and walked away from that maternity leave and emergency with over $7000 on our credit card.
As we stared at the $7000 balance, I rationalized. I’ll get a 401k loan then it’s “paid off.” My dad’s words rang in my ears – “you can’t borrow your way out of debt” and I knew this was a ridiculous idea.
After I rationalized, I got angry. We prayed. We knew the credit card had to go and more importantly, I felt I had to change my materialistic views. I knew my dear husband would have walked on concrete sub-floor and gone to the laundry mat before getting us in this mess. I had pushed for these outcomes.
I will say that in both instances – the big SUV and the floor renovation – I was a post-partum, sleep-deprived, and hormonal hot mess, so hopefully, I am less prone to repeat these errors now that our child bearing years are behind us (she grins sheepishly).
God continued a work in our lives.
For I am confident of this very thing, that He who began a good work in you will perfect it until the day of Christ Jesus. Phil 1:6
We began working with Russ Carroll, Dave Ramsey’s lead counselor. We got on a gazelle budget like never before. We made changes we could live with for a few months - we cut the cable, cut the grocery budget, started couponing, ate out even less than before, and (gasp!) drastically cut our personal "fun" money! (Why the heck do you think selling stuff on Craigslist has become my part-time job? A girl has to fund her extras somehow!)
As a result, we paid off the last of that credit card and the remainder of non-mortgage debt in just the last six months.
I give credit to –
God. He led our path, helped me change my views, and blessed our efforts.
Bring the whole tithe into the storehouse, so that there may be food in My house, and test Me now in this,” says the Lord of hosts, “if I will not open for you the windows of heaven and pour out for you a blessing until it overflows. Then I will rebuke the devourer for you, so that it will not destroy the fruits of the ground; nor will your vine in the field cast its grapes,” says the Lord of hosts. Malachi 4:10-11
We know this is Old Testament teaching as a promise to Israel, but we believe He has fulfilled this promise in our lives. Throughout these six years, despite our own shortcomings, we saw things happen in our financial lives that we know were the hand of God honoring our tithes and offerings.
My husband. The man finds contentment more easily than I do. He walked with me through what could have taken three consecutive years, but took three years of off/on “we like Dave Ramsey but don’t always do what he says” six years.
If you wonder why did he “let” me make these decisions, he spoke out each time, but as Dave says, “those who are convinced against their will are of the same opinion still.” I had to learn through my mistakes.
Dave Ramsey. Through Financial Peace University, showing us the basic money principles that helped us budget wisely and hopefully change our family tree.
Thomas J. Stanley. Our culture teaches us certain behaviors are associated with having wealth and most of us in the middle class emulate what we believe those behaviors are. Reading Stanley's books (The Millionaire Next Door and Stop Acting Rich) made me realize I believed many things about wealthy people and their behaviors that are completely inaccurate. Knowledge of his research findings with millionaires curbed my car obsession more than anything else - and for those of you who know my car obsession, this is a big stinking deal.
What’s next?
Pounding through Baby Step 3: A fully-funded emergency fund of 3-6 months of expenses in the bank. Emergencies happen and until we get this done, I don’t feel we can turn down the volume. We’ve loosened the budget reins in a few areas, planned some celebrations, but this goal will define the next year or so of our life.
All this to say, if I can be enabled to do this… anyone can. I want financial freedom for everyone I know!
Dave Definitions
*A debt snowball is the term for baby step 2, where you list your debts smallest to largest and pay minimums on all, throwing any extra money at the smallest debt. When the smallest debt is paid, you throw all of that money on to the next highest debt, until all are paid.
** Cash-flowing is the term for paying cash for things or services typically our culture tells us to finance. In these instances, it can make sense to slow or stop the debt snowball to avoid accumulating additional debt.
