debt free

Chris and I payed our last student loan payment last week, which makes us debt free!

Becoming debt free is a goal that we've been working towards since we first got married. We set a goal a month after we got married to have the loans payed off in 3 years rather than 7-10 years. We knew that was a pretty big commitment, but we didn't care. Chris's student loans accumulated during his graduate program, and when we got married in October 2008, they were still in deferment for a month or two. Some of the student loans were from his undergraduate work, which he had already been paying on for a few years before we were married, but most of it was from his grad school. Overall, we payed off $37,011.76 in about 34 months.

Being newlyweds, recent graduates and just starting out in our careers, we found that $37,000+ daunting, but we also thought we should to start our marriage off with good financial habits. Pay off the debt first, then save for the house and more reliable cars. It must have been my parent's pushing me to follow Dave Ramsey's financial advice. Dad and I used to listen to his radio talk show when I was a teenager. He would always have it on when we rode around in his truck. Thankfully, because of that child-rearing, I was able to pay for college without taking any loans. I worked a lot.  Chris's parents also encouraged us to make the decision to get out of debt. I remember Chris's dad asking both of us to read Financial Peace by Dave Ramsey around the time we got married. If you've never listened to his talk show, read his books or seen his baby steps plan, check him out: http://www.daveramsey.com

I would be lying if I said that we followed Ramsey's advice perfectly. We didn't. Neither of us was comfortable with only having a $1,000 emergency fund. We saved until we reached a more comfortable amount and then started tackling the loans harder. Otherwise, I'd say we stuck pretty close to Ramsey's advice.

These past 34 months have been a challenge, but they were also really fun. It was an awesome feeling to be working together as a team to achieve the same goal. Whenever we would reach a new milestone with the amount owed (less than $30,000, less than $20,000, less than $10,000, less than $5,000) we'd celebrate with high fives and hugs! The challenge got even greater when Chris suffered employment loss during a few of those months. We brought our aggressive payments down to the minimum during those 4-5 months. Once Chris became employed again as a substitute teacher, we brought it back and continued to chisel away at it until he became employed as a full-time teacher in August. At that point we just decided to squash it! We had originally planned a pay off in December, but the Lord blessed us with the ability to do that a couple months early!

Below are some tips on how to get debt free. These are the things that we found helpful:
1. First and foremost, create a budget in writing and stick to it. Every expense should be budgeted: gas, groceries, utilities, rent, church contributions, entertainment (dinner out, etc.)
2. Pay for things in cash every now and then. I don't do this enough, but it really makes you realize how much you are spending.
3. Give yourself a reasonable allowance for "extra" stuff. This should not be enough to cover Starbucks, lunch out and new clothes frequently. If you are able to make daily purchases such as these on your allowance, you're allowance is probably too much.
4. Drive your old car as long as possible. Though inconvenient, car repairs are generally cheaper than car payments.
5. Pay off your debt before you buy a house. Your expenses, such as utilities will be a lot lower, and your debt will come off easier.
6. Don't go to the movies. Get a Netflix subscription instead. With our $4.99 per month subscription, we're saving $15.50 every time we choose to watch at home instead of the movies.
7. Don't make frequent trips to the grocery store. If you make a list of essentials that cover, for example, two weeks worth of groceries, you are less likely to make impulse buys.
8. Don't order the filet and lobster combo. Choose modest, yet satisfying restaurant entrees. Skip the appetizers and desserts. Order water to drink- it's better for you anyway.
9. Put on a sweater when you are cold.  We usually don't turn our heat on until after Thanksgiving. Keep the house/apartment a snug 68 degrees in the winter and 76 in the summer. Just walk around bundled in the winter and half-naked in the summer, and you can be comfortable all year. We might have to rethink this plan after we start having children.
10. Make due with what you have when you can. In other words, learn how to make pinto beans and cornbread.

One last piece of advice that helped us was the advice to hide a note. I know this sounds insane, but once we had a plan to pay off our debt, we knew it would just be a matter of time. We wanted to make sure that we didn't lose focus though, so we took my sister, Jamie's advice. We hid a note in our Christmas tree box that says, "You're debt free!" We knew that accountability would either result in a feeling of disappointment if we hadn't done it yet or a feeling of joy and thanksgiving if we had. Let's just say we haven't "found" the note yet, but I can't wait to decorate for Christmas this year!