Our debt free journey started in 2018 with a recent college graduate who was 4 months pregnant, embarking on a full time seasonal job at a tax firm.
That preggo was me.
Before our Debt Free Journey
Until this point, my husband and I had been living off of one income for our entire marriage. My husband was supporting us while I was in college full time. I worked 3 jobs simultaneously in college but that wasn’t really enough to cover tuition, just school related expenses.
So we went into student loan debt.
Our plan has always been to live off one income because we both wanted me to be home with the kids.
With that plan in mind, we knew in order to live on one income in a two income society, we had to be wise with money. As of now, we don’t have car payments, and our credit cards are the ones we got when we were young (read: $500 limit) a.k.a. we don’t use them.
Literally, they expired and the inactivated replacements were stashed somewhere in a pile of “go through” papers.. because #adulting.
We have our parents to thank for instilling in us good principles such as hard work and delayed gratification. If we wanted something, they taught us to work for it. Because of them, we don’t have an entitled mindset to overcome in adulthood and for that we are forever grateful.
But that’s not to say we haven’t made our fair share of mistakes with money. Early on we had “been there, done that” with a car payment and credit card debt. Experience has been a pretty good teacher as well, however, not as kind and gentle as our parents.
Pay Down Debt or Save?
So when I got this job and we had another income source, the question was “what do we do with this?” The job was temporary – only during tax season – so we weren’t going to raise our monthly budget.
Instead we were going to treat this like a bonus. In true me fashion, I set off researching, seeking advice, talking with family, the works.
The main two options before us were: pay down the student loans or save for a house. I had just graduated so I was still in the “grace” period of student loans and repayment didn’t start for another 6 more months. In some of the research I saw, they said student loans were “good debt” and that you can deduct the interest on your taxes.
At the same time, our one bedroom apartment was feeling pretty small, especially with the upcoming addition of the little one. Plus our rent was going up again. I don’t know where you’re from but $800+ for a one bedroom apartment is pretty pricey for a small Midwestern town.
- Related: How to Rent Your First Apartment
Our lease was up in 6 months so we had to decide pretty quickly whether we were going to resign the lease or leave.
Can you tell which way I was leaning?
Our house search began and turned up.. nothing. We’ve had our eye on the market for over a year now and it’s definitely a seller’s market. We live in a college town where the demand for housing is sky high and the supply is very low. It was impossible to find a decent acceptable home in our budget.
But we kept looking.
Wake Up Calls
At the same time I turned back to Google: pay off debt or save for a house. Google led me to YouTube and YouTube led me to this video by some guy named Dave Ramsey talking about something called a debt free journey.
I’ve heard of his name in passing but I hear a lot of names in passing. Our church had just offered Financial Peace University but I didn’t feel like paying so I didn’t give it a second thought.
The video is about this family that had saved up for a down payment of a house but they were in debt. She was calling to see if they should get the house of their dreams or pay off student loans. Dave Ramsey told them to pay off the loans, regardless of how good of a deal they could get on the house. I could feel my dream of being in a house slipping away.
Yet, I was still not totally convinced.
El Numero Dos
One day after work, I was visiting my newborn niece. Her father, my brother-in-law, is a personal finance jefe (Spanish for boss). I had just discovered Dave Ramsey and was talking with El Jefe about my dilemma.. do I pay off student loans or save for a house? The conversation went a little like this:
El Jefe: You’re not paying on your loans?!
Me: I don’t have to start paying until 6 months after I graduate.
El Jefe: You can still pay on your loans.
Me: Oh.
This may seem small but it was a pivotal point in my debt free journey. I never put two and two together. When I was in school taking out loans, they just went into a black hole in my mind, only to be revisited 6 months after I graduated. Then I really started thinking.
WE COULD HAVE BEEN PAYING ON THEM THIS WHOLE TIME.
Of course it wouldn’t have been much.. hello broke college student, but even just a little bit over the years would have helped! Lesson learned. Student loans was the way we decided to go. And thus began our debt free jouney.
Then life got in the way.
Between the new arrival of our child, a move to a cheap rental house, and fixing my husband’s car, we didn’t want to overextend ourselves and decided to wait until repayment started to actually start repaying the loans.
We began paying 150% of our minimum loan payment when they came due. For some reason, I thought paying 150% would shave off a significant amount of time in repayment.
It didn’t.
But it was a comfortable payment and we weren’t super motivated to change it.
Fast forward through the rest of 2018 where we moved again after almost buying a house.. and a car. But each time we sat down to work it into the budget, it just wouldn’t fit, not with our goals of wanting to pay off our debt early.
Gazelle Intensity
In 2019 we really got serious and really began our debt free journey. Call it a New Year’s Resolution (#newyearnewyou) or what have you, but I think I realized that if we could somehow make room in the budget for a house payment, or a car payment, we could and should make more room for paying off loans.
I also realized that unless we were intense about it.. like gazelle intense.. we would be comfortable on our current trajectory: making payments for 8+ years.
We set a goal.
A big goal.
To pay off all our student loans in 1 year.
1 YEAR
The 150% we were paying had to become 800% if we were to achieve our goal.
In January, we buckled down.
- We listed our debts smallest to largest as suggested by the debt snowball.
- We diverted 100% of my side hustle funds to debt repayment.
- Goodbye entertainment fund, goodbye shopping fund.
- We went down to one car.
- My husband got a second job.
- We rearranged our budget to squeeze every dollar we could, to throw it at our debt.
Our fridge got a makeover and up went a big red debt thermometer with our goal on it.
This journey hasn’t been without some setbacks but we found motivation and are currently on track to have our debt paid off by the end of this year!!
Like anything in life, the intensity at which we are working on our debt needs to be met with balance. We are continually reevaluating to make sure we are not going too far.
THE WHY
Why are we doing this? Why are you working like mad to get out of debt?
We have goals.
Money is not that goal.
Time is. Family is. Traveling, missions work, and giving back is.
Financial independence is the vehicle. Money is what turns the ignition.
Why Dave Ramsey?
Of all the financial plans out there, we’ve found that Dave Ramsey’s aligns the closest with our beliefs. Though, we have tweaked the baby steps to fit our personal situation.
- Related: A Beginner’s Guide: Emergency Fund
He teaches what the Bible teaches: “the borrower is slave to the lender.” Debt makes it difficult to serve others when you are enslaved to the lender.
Our goal of financial independence means that one day we hope to will have the option of working because we want to, not because we have to.
Financial independence is the vehicle. Money is what turns the ignition.
Once we’re out of debt, we’ll save up for a down payment on a house. We will try to pay off our house early. Then we will save, save, give back, and save.
All while enjoying the process and the freedom that a debt free lifestyle brings.
Follow along on our debt free journey over at our YouTube channel: Family Makes Cents or on Instagram @familymakescents
Are you interested in embarking on a debt free journey? Start here:
A Beginner’s Guide: How to Get Out of Debt
How the Debt Snowball Works in 4 Easy Steps
4 Money Saving Challenges You Can Start Today
5 Ways to Stay Motivated on Your Debt Free Journey
Budget Friendly Rewards for Becoming Debt Free
Are you currently on or have you completed your debt free journey? I’d love to hear about it in the comments!
How exciting! You’re a great inspiration, and I love your writing style. You are a beautiful preggo lady 🙂
Thank you, don’t get any ideas 😉 Tell Dr. Jefe he made it in my story!