26

My Get Out Of Debt Success Story – $70,000 In Four Years

by The Happy Rock on May 15, 2007

brokenchains.jpgThe title of the site mentions gaining freedom through personal finance, so it is about time that I share some of our journey. The family’s finances are now on auto pilot, but that is only after 4 years of blood, sweat, and tears. The idea is to not only share the overview of the last 4 years, but also highlight the key concepts that we encountered while paying off over $70,000 in debt.

One would think that defaulting on a Sears credit card freshman year in college, and then having to get an 8% deferred interest student load to finish sophomore year would have changed my life. Well it didn’t. What it did do was set the stage nicely for my vengeance against debt. The chains started to loosen during my two year engagement as we started preparing for marriage. Take a look at the post on the book that started most of our great conversations during that time. What happened was that we began to evaluate our thoughts, philosophies, and relationship towards money. This evaluation started to give us power and was our first step to financial freedom.

Evaluate Your Relationship with Money - During many long conversations, we explored what we learned in our family of origins about money, how we currently operated, and what we thought money would look like when we were married. Our eyes were opened and we felt like we could have power over money and not let our finances control us. With my brief sordid history with debt and my wife’s loathing of credit cards, we were encouraging each other to despise debt(Step 2)

Despise Debt - Shortly after we were married in October of 2002(paid with $10,000 CASH), we had about $72,000 in debt. 70% school loans and about 30% in cars. We rented a reasonable apartment for a year, but were still feeling the bondage of the debt on our life and relationship. Frustrated, we started randomly attacking our debt with extra payments. This is where I came across Dave Ramsey, and was inspired to learn as much as possible to help us out.(Step 3).

Get Knowledgeable – Dave Ramsey’s book launched me into the world of personal finance. I checked out arm loads of books from the library, and devoured anything and everything I could find on the subject. I eventually returned to the Ramsey Snowball method. It suited me and I enjoyed the motivation his free streaming radio show provided. The best part was the simplicity of the plan and the ease at which my wife to climbed on board. With the new found plan, and all of the other information I was soaking up we began to take control of our finances(Step 4).

Take Control of Your Finances – We were renting DINKS(Dual Income No Kids) armed with a pretty shovel to dig out of debt. We watched our spending, trimmed our expenses, and put every extra penny towards debt. We learned how to plan, save, and spend CASH on larger items. We set up Microsoft money, created a budget, and communicated about how we were spending our money. The growth of control bred more motivation and energy. We sold our junk on eBay, and were able to put a $1,000+ towards debt each month. The debts began to fall, and with each one we became more focused. We even saved for a small down payment on a condo. An amazing thing happened when we got down to under $30,000 in debt…a world of options started to open up. We could envision a great future, and it seemed attainable. Things like working for myself, pursuing jobs we wanted, and having a family were definitely things that were within our grasp. Now that we were in control, we could have perspective on our life(Step 5).

Gain Perspective - In about three years, we were debt free; $24,000 a year towards debt!! As our money became our own and not the banks, we talked a lot about were we wanted to go in our lives. It was a wonderful feeling to realize that we could seek things that we truly valued in life. We saved $10,000 for the adoption of our son, increased our giving, and started building an emergency fund. In about 4 years our lives, finances, and marriage had been transformed. What an amazing ride it was, and journey is just beginning. As Dave Ramsey says : “We changed our family tree”. Our lives and the lives of our children will feel the effects of the last few years for a long time.