My Debt-free Journey

What does a debt-free journey look like? Of course, every one is going to be different, just as no two people are the same. However, let me use my debt-free journey as an illustration of what yours might look like.

In the late summer of 2018, stress levels were high in our house. I had been handling the money and doing quite a poor job of it. Chronic overspending and a lack of any budgeting were taking their toll on our finances. And I was doing the best I could to hide it all. Shifting money around from credit card to credit card to take advantage of “0% balance transfers,” making purchases with credit cards to keep the savings account from getting lower: I was playing the shell game with money. And it was killing me. I was completely stressed out and finally hit the end of my rope. I broke down and, in one of the hardest moments of my life, told my wife the entirety of our financial situation. It was a brutal wake up call for the both of us. But it was also the beginning of our debt-free journey.

Looking for help and answers, we ended up finding the Baby Steps that Dave Ramsey put together. It was a plan; it was simple and easy to understand; so, we started. At that point, I knew nothing about Dave Ramsey and his organization, and knew no more about his Baby Steps. However, they seemed to be fairly common sense. And it gave us something to grab onto in our time of extreme uncertainty.

We started by totaling up all our debts. I felt like we were already living paycheck-to-paycheck (because we were). However, like many others, we were living paycheck-to-paycheck because of our own poor spending habits, not due to a lack of income. In fact, we had seen our income increase over the previous several years, but it never seemed to help. Our spending always increased with our income, so the situation never got better. So, when we totaled up our debt and saw over $50,000 between credit cards, car loans, student loans and medical bills, it was staggering. How in the world were we going to tackle $50,000+ when we were already strapped for cash every month?

Those early days were definitely a roller coaster of emotions. Having to come face-to-face with my own failures and admitted how terribly I had handled our family’s money was the low point of my life (at least so far). Finding the Baby Steps was heading back up on the roller coaster. We had a plan we could start to execute on, and it felt great. Then, totaling up our debt brought us right back down. However, I learned two very important lessons then: 1) In order to address the problems in my life, I had to look in the mirror and admit that the problems were my fault. I also needed to figure out where I had gone wrong so I could avoid those mistakes in the future. 2) We had to know and admit our financial situation, no matter how good or bad it was, before we could put together a plan to make it better.

As I stated in How to Budget: Part 1, I believe budgeting is the single most important habit to financial success. For those of us who have built a lifetime of poor financial habits, budgeting is the start of a new beginning. Once we put together our first budget, we realized how much money we had been wasting. That was the point I realized that we were the cause of our paycheck-to-paycheck lifestyle. We had the income; we were just out of control with our spending. Once we put some reasonable limits on our spending categories, the plan started to take shape. I could see the money we would free up to attack our debts, and (more importantly) I could see that getting out debt was possible and that we could do it in a few years.

Getting to that point, I think, was the hardest part of the whole journey. Before that it felt impossible. After, I knew that it was possible, and I could see how it could be done. Don’t get me wrong: The rest of the journey wasn’t easy, but that initial change of mindset was definitely the biggest struggle.

After our first budgets, our plan showed that we would be out of debt in three years. IF we could stick to the plan (our budgets). That’s the challenging part of Baby Step 2: we were in it for (what felt like) a long time, and we had to focus on sticking to our budget plans. We didn’t always, but we did more than we didn’t. In the end, we completed Baby Step 2 in 20 months, much less than the initial 3 year we thought it would take. Once we got going, and started seeing the debts fall off the list as they were paid, we got motivated to do even more. That is very common in debt-free journeys and is part of the reason Dave Ramsey advocates for the use of the Snowball method to pay off debt. Paying off those small debts first gave us the early wins that we needed psychologically to get our journey started.

Now, just over 2 years later, my wife and I are debt-free except our house. We have our fully-funded emergency fund in place ready to handle any unexpected events. We have even saved up money for a down payment so we can move to a different house (our next major goal). We’ve made a $70,000+ financial swing in the space of two years because we faced the reality of our financial situation and determined to change it. That’s not a brag on us (although I’d be lying if I said I wasn’t a little proud of it); it’s proof to any of you out there who may find yourselves where I did two-and-a-half years ago. The future can be much brighter if your willing to make some short term sacrifices.