It was December, 2013. My husband was working full time, I stayed home with our three children (at the time, they were 4, 3, and 1 year old.). Even though, we had enough to eat, our bills were paid, and we had all of our needs met, we were scared. We were tired of living paycheck to paycheck, unsure how the month would turn out. We had medical bills, student loan payments, a mortgage payment. We were struggling. Some months, we had just enough to get by. When I mention things here on my blog about being on a budget, knowing what it’s like with money being tight, and keeping costs down…I really know what it’s like. But God is faithful.
My husband and I were both scared, though, I could tell that the weight of the finances was a significantly heavier burden on him than it was on me.
I was reading a blog one day with a title very similar to the one on this post. It was something like “How We Paid Off $20-some Thousand Dollars in Debt in 9 months.” I clicked the link only to read about some guy named Dave Ramsey. I had heard of him. I knew he was “the money guy.” But I had never looked into his show or books or anything. Well, as I read the post, the author mentioned his book, The Total Money Makeover. She said it changed their lives. She said it laid out the plan for getting out of debt. I shared the article with my husband and we both started listening to Dave’s radio show. Over the next month or so, we read the book. We were fascinated with the concepts laid out in it.
Could it really be possible to pay off our debt?
What could we do with all that extra money if it’s not going toward debt?
What would it look like to not have to live paycheck to paycheck?
Is it really possible?
It didn’t take us long to try it out. We were convinced we needed to do something. I’m thankful this is the something we tried.
Finally, we had a plan.
The first part of the plan is getting on a budget. We had to see where our money was actually going and we had to get in control of our spending. So, firstly, STOP borrowing money. Period. We cancelled our credit cards, we cut them up. We stopped taking on debt.
Then, we learned how to make a budget. It was amazing, when we got on a budget, it was sort of like getting a raise because we could tell our money where to go. We saw how much money we were wasting and where to put money to actually work for us instead of against us. Once we got a grasp on budgeting, we’ve moved onto what Dave calls, The Baby Steps:
Baby Step #1. Save a $1000 Emergency Fund.
Baby Step #2. Pay off all consumer debt, smallest to largest. This is called The Debt Snowball.
We’ll get to the rest of the baby steps soon, but I really want to hone in on these 2.
Baby Step 1.
Saving $1000 emergency fund. This might be one of the hardest steps simply because at first, you’re thinking “Where in the world am I going to find $1000?” But really, it gets easier as you do it. When you set up your budget, you will find a little money here, and a little money there. It adds up fairly quickly. All extra money goes toward your E-fund until you reach $1000. Then that money sits, never to be touched until an actual emergency.
Baby Step 2. Proverbs 22:7 (NIV) says, “The rich rule over the poor, and the borrower is slave to the lender.”
In this Baby Step, pay off all consumer debt from smallest to largest. Pay the minimum payments on all your bills, then throw any extra money toward your smallest debt. Remember your budget? This is key in seeing how much extra you can spare to put toward the debt. Get an extra job, sell things, have garage sales, sell on Amazon, ask for a raise…earn extra money to throw at the debt. Once you pay off the smallest debt, take what you were paying on that one, and roll it onto the next one and so on. As you pay off your smaller debts, the payments will get bigger and bigger and you’ll see real progress. Here’s an article that explains the debt snowball in detail.
I couldn’t believe it when we paid our first loan off. We were so excited! When you start seeing progress, it’s even more motivating to keep going.
Here’s where it gets real. As time went on, I got frustrated and tired. The debt was going down, but we were growing weary. It seemed like there was no way we would ever be finished. People would share their stories about how they became debt free in 9 months, a year, 7 months… I was just getting burnt out. 9 months came and went, a year, eighteen months…. then about 2 years in, we saw that we only had a bout $2500 remaining. We put a bunch of money together, scraped and scrimped, whittled down our budget… and paid off all of our debt in around 26 months. Just over 2 years. Whew.
There’s nothing like that feeling. It’s freeing. It’s empowering. It’s amazing.
We had this weight lifted. We had less burdens. We had more money. But not only that, we had done something together. We worked together to make it happen. We have quite a way to go still, but the Debt Snowball taught us so much and brought us so much peace. So much so, that we began facilitating Financial Peace University classes in our area and not only did it inspire us to keep going…but we also got to inspire others and see them begin to have freedom and peace with money too.
I have so much to share on this topic, but right now I just want to encourage you if you find yourselves in the place where we were…
There is a way out.
You can do this!
If you want more information on becoming debt free, please send me a message. I’m happy to steer you in the right direction. And with it being January and a new year, now is the perfect time to start fresh and fight for your financial freedom.