How we Paid off $40K in 10 months.“We’re Debt Free!” Ever listened to the Dave Ramsey show? At least once per episode they invite a family who has followed The Total Money Makeover to do their 'Debt Free Scream.' They travel to Nashville for their moment in the spotlight. Some couples are making $120K a year while others are only making $30K and are truly inspiring. The Beginning For Christmas 2012 my husband Ben got a book from his father. The Total Money Makeover by Dave Ramsey. Honestly, I didn’t notice or remember him receiving this gift. But this was around the time that I had to start paying back my student loans. When the time came to pay off the debt, my husband and I sat down and looked at the variety of loans we needed to tackle and wondered: “How much should we pay each month?” With little financial know-how, we decided we might as well consolidate the loans and choose the payment plan that would be the least expensive. It would take 30 years but it wouldn’t be a burden each month. So I started making payments. Enter Dave Ramsey to the Rescue A few months into this process of paying off my loans my husband Ben approached me, “How much are you paying in loans each month, again?” He couldn’t remember where we left it off last time. I reminded him we were just doing the minimum. “Okay,” he said. Long Pause. “Maybe we should try to pay it off faster.” And so our lives changed forever. Ben explained that he had recently read a financial planning book. It was all about getting out of debt so you can live and give like nobody else later in life. I was fine to go along with his idea but once I read the book I was fully inspired. If you haven’t read it, you should. Ramsey’s easy to follow plan matched with really inspiring testimonials is amazing! There are a lot of you who would probably disagree with some of his financial philosophies (no credit cards!) but it’s still worth a read. Why Interest Sucks Once my husband and I actually educated ourselves on how loans really work, we saw clearly the huge importance of interest. I had about $40K of debt. If we took 30 years to pay it off, it would cost us $75 thousand dollars. WHAT?! That’s almost double what I borrowed! So we attacked it. We were able to pay off all forty thousand dollars of my student loans in about ten months. Ben’s dad had graciously paid for Ben’s schooling so mine was all we had. Once we hit that last payment (Right before my 25th birthday!) we were free. Steps we took on the road to financial freedom. 1. We saved $1000 and kept it in savings for emergencies. If you don’t have an emergency fund in place, your entire plan can get derailed when your brakes need replacing or your dog gets sick. $1000 should cover most small emergencies (or at least provide a quick fix until you can save to fix the real issue.) I had about $5000 in savings at the time we started so I kept $1000 and put the rest to the loans. 2. “Plastic Surgery” as Ramsey calls it. We cut up all credit cards we had. I only had one and Ben hadn’t had any. We each kept a debit card to our joint account. 3. We worked extra jobs. And I mean a LOT of them. In addition to working our day jobs we both had a variety of side gigs. (Pizza place, movie theatre, tutoring, summer camps, etc). We each were putting in 80 hours a week for almost a full year. We hardly saw each other for that entire stretch. But I’m telling you, it was worth it. 4. We worked together. This was MY debt. But as soon as we said “I do” it became our debt. We chose to combine our incomes and bank accounts entirely. We worked together to pay the loans off. For the entire year after we graduated college, we lived on what my husband made. His paycheck went towards rent, food, gas, date night, and everything else. I put my entire income toward the debt. I made a payment every two weeks. The money came in, the money went out. Like clockwork. 5. We didn’t buy new cars. We both had junky hand-me downs we got for cheap from other family members. We’re talking '90s rust magnets that you can hear coming a mile away. Ben’s coworkers would literally make fun of him saying “we can always hear when Ben pulls up!” But we stuck with them. He didn’t replace that car until recently (3 years later). When my car broke down the spring after we paid off our debt, we got a ‘96 Accord (which I’m still driving FYI!) Help along the way: My dirty little secret Of course, I couldn’t have done it without another important person. This is a huge factor that I can’t brush over. Throughout this entire process, we were living at my Grandmother’s house. My Grandma started living in Branson, MO full time a few years ago and hasn't sold her Middleton home. Over this stretch of time, we took care of the house for her but we didn’t have a huge rent payment. Just a few hundred dollars a month. This is a big deal. It would have taken us twice as long if it hadn’t been for her generosity. Of course, you can only live off someone else’s generosity for so long before you start to feel guilty. Once we had the loans paid off and had saved a down payment, we got our own place. All in all we were at my Grandma’s house for about two years.
Reality Check I understand that we were really lucky to come across the Dave Ramsey Plan early on. We didn't have a house, kids, or car payments yet. Most people who do the Total Money Makeover aren't like us. So if you found yourself rolling your eyes at my post because we had an easy start, read The Total Money Makeover. It is possible to find financial peace, no matter how deep a hole you've dug yourself into. Extra Resources: The Total Money Makeover by Dave Ramsey http://www.daveramsey.com/get-started/debt https://www.rachelcruze.com/topics/category/debt-free-living Mary Ann Raemisch Vlog: https://www.youtube.com/channel/UCkZPM-kedLUiSkdry583bCQ/featured
4 Comments
Dale Ripley
3/7/2017 01:59:00 pm
Awesome job, Kendra! Very impressive....congrats! Dave Ramsey is a smart dude.
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Lynn Vilker
3/7/2017 08:21:14 pm
This is really impressive Kendra! I just love the way you two approached this together!
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Christina Rumbel
3/8/2017 03:18:15 pm
Great Job! We will be able to do the debt free scream eventually. Thank you so much for posting the story of your journey to being debt free, it is encouraging.
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Kendra
3/15/2017 09:35:24 am
Thank you! We are really lucky to have been exposed to his program early on. Now I get to focus more on getting everything else in my life organized! Feel free to follow me on facebook: https://www.facebook.com/onemidwestminimalist/
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My name is Kendra and in 2017, I'm giving minimalism a go. Follow me as I work to declutter my house, my diet and my finances.
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