Monday, March 11, 2019

DEBT FREE (And Staying That Way)

This is a recent picture of Mr. LH and I on our 20th anniversary. We celebrated it with a rare night out, but instead of it being just the two of us, we took the whole family. The Boy and The Girl (a.k.a. "The Pickles") came along because this was also a family celebration. We were celebrating being DEBT FREE!

That's right! We did it! We paid off our last debt in our debt snowball! A big, ugly student loan.

Full disclosure...our debt snowball did NOT include our house. That comes later in the process.

Our debt-free journey has been a long one. We started it waaaay back in 2012 and went full force for about three years as we followed the Dave Ramsey baby steps word for word. It was incredible how much we were able to pay off!

Baby Step 1: Put $1,000 into an Emergency Fund DONE!
Baby Step 2: Pay off all debt from smallest to largest using the Debt Snowball DONE!
Baby Step 3: Save 3 to 6 months of EXPENSES
Baby Step 4: Invest 15% of household income for retirement
Baby Step 5: Save for college for children
Baby Step 6: Pay off home early
Baby Step 7: Build wealth and give!

This book changed our lives!
In 2015 we had to move because our landlord was selling the house we were renting. And even though we weren't quite ready, we were able to buy a house because our debt-to-income ratio had dramatically improved. We tried to buy the one we were renting but it didn't work out.

After buying our house, we weren't quite as intense in our debt paying as before. After all, the driving force behind paying off our debt was buying a house. And while we still wanted to get out of debt, we now had the house.

We still didn't use credit cards, we still did a budget, and we still paid extra on the debt. In fact, we only had one big debt left...that student loan. We had been paying on it a LONG time and it didn't seem to be going anywhere. But we weren't REALLY hitting it hard with everything we had, either, so of course it wasn't going to go away quickly. We painted rooms, bought some furniture, did some landscaping, went on vacation, etc. We did a lot of those things you're NOT supposed to do while you are tacking your debt snowball.

Then in 2018, almost three years after moving into our new house, it seemed like everything started to go downhill. Murphy's Law. "Anything that can go wrong will go wrong." Dave Ramsey would say "Murphy moved in with us." But truthfully, we kind of invited Murphy to stay a while.

Mr. LH and I took a vacation to Washington while The Pickles visited family in Florida.

We could have stayed home instead and enjoyed a stay-cation. But we didn't.

I loved visiting Washington and I am glad we went, but even after carefully watching every penny on that trip, I can't help but think of the money we spent that SHOULD have gone towards debt. So yes, we did contribute to the problem (although we did NOT accrue more debt from the trip).

2018 also brought some dark time to our family. A death in the family meant we needed to travel across the country on short notice. When something tragic happens, you don't want to sit there worrying about money. But when you have debt, you worry. How will you be able to make everything work?

We couldn't afford the price of last minute airfare for all of us and leaving some of us behind was out of the question. We would just have to drive. But we had to replace a power steering pump on the car first.

A few months later, a huge hailstorm hit. Two inch hail. Maybe larger.

Hail is common here, but this was the biggest hail I had ever experienced.

With the hailstorm came the need for a roof replacement. We needed to pay the deductible for that.

The timing belt went out on the car and did a ton of damage (the same car we just had the power steering pump replaced on). Thousands and thousands of dollar signs went flying out the window.

In the fall, we got news that The Pickles BOTH needed their wisdom teeth removed. We scheduled it during Christmas break so they would have plenty of time to recover.

The thought of another setback made me feel nauseous. We were so close to being debt free but after all of this, I felt broker than I had in a very very long time. We cut our modest Christmas budget in HALF so we could use the funds to take care of some of these issues (and you know, we still had a great Christmas).

Regret sank in as I remembered the vacations and those 3 years of lackadaisical debt-paying we did. If we had just kept up the momentum it would have been paid off by 2017...maybe even sooner!

In early January of this year, we took our cars in for oil changes and received another laundry list of needed repairs. For what it's worth, our cars are old...2001 and 2004 year models, and we don't usually have this much stuff to do to them. It just all coincidentally happened to hit at once.

That was IT. Murphy needed to move out. The debt HAD TO GO. We didn't have much left, but it was going to GO AWAY.

Every dime extra that we had laying around went toward the debt. I avoided going out to the grocery store and instead made some interesting creations from what we had on hand in our freezers and pantry. I avoided shopping of any kind. I spent my time freelancing or working on my Etsy shops trying to earn a little extra. Any tax return we received would be dedicated to debt and car repairs.

For motivation, I borrowed Chris Hogan's book, Retire Inspired, from the library (and realized we HAD to get moving on our retirement savings quickly).

I listened to Dave Ramsey's show while I worked and listened to people do their debt-free screams.

I crunched numbers to see how much we could save this year once we were debt free if we attacked a savings plan as intensely as we were now attacking the last of our debt.

And all of those actions combined to FINALLY push us across the finish line to FREEDOM.

The student loan now has a balance of ZERO. The car repairs have been DONE.

Our dishwasher even broke the same week but I was able to just shrug it off and order the replacement part to fix it myself without too many days in between of hand washing (we go through a LOT of dishes at our house).

If you have debt but haven't started this journey yet, do it. If you think you can't do it for whatever reason, change your thinking. It may take some time, but slow progress is still progress.

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