Wednesday, December 18, 2013

From $78,000 to $0... We are debt free!!!

our last payment!!

Last week I mentioned that we had another early Christmas present come our way this year. I didn't want to keep you waiting too long so here it is!   WE ARE DEBT FREE!!! We sent off our last check on Sunday and our college is officially paid off!  I can't even begin to tell you how good that feels!  It still seems quite surreal actually!  It's been four and a half years since we started, a couple job changes for Matt, and the addition of Piper to our family but we made it!

When we got married in 09 our total consumer debt (we only had school loans but this would include cars, credit cards, etc.  excluding the mortgage) was $78,000. Thankfully shortly after we tied the knot we were introduced to Dave Ramsey and his Financial Peace University program.  We originally borrowed the CD's of the classes from a friend but when our church offered the class the following year we decided to take it.  Best decision ever!  We both came from families who taught us how to handle money however, this class gave us the tools and an action plan to get us to where we wanted to be.

How did we do it?

#1 reason we are debt free is because we are on a budget.
-After taking Dave's class we put in place a budget and have been using one ever since, this is largely the reason we have been able to pay of $78,000 in 4.5 years.  If we hadn't been keeping track of what was coming in and going out there is no way we would have been able to finish it off this quickly.  (note: this is not a once and done thing, we adjust our budget as needed to suit the different events that happen each month. It takes work but its totally worth it!)

#2 We cut unnecessary expenses.
-We don't have cable, haven't had it since we got married. It was just an added expense we didn't need and we don't miss it.  Well, except for football season, but then we just have an added excuse to hang out with friends!
- We keep eating out to a minimum.  We still do here and there, however this was drastically cut back from what we used to do, and when we do its a part of our budget. Eating out is expensive and it adds up quick! Its one of those things that will bite you in the butt if you don't keep track of it! Believe me, we know!
- We don't go shopping.  Honestly unless we really need a certain piece of clothing, the only time we do shopping is after Christmas when we have money to spend from presents we got, and on our birthdays.  This year is actually the first year that Matt and I are buying Christmas presents for each other since we started this process.  We decided we wouldn't do that until we were out of debt, and save the extra money we would have spent to pay down our debt.
- We haven't taken any huge trips since our honeymoon.  No big anniversary getaways, no huge summer vacations, no trips to Europe or out west.  It has been hard but definitely a part of the journey.  Now that we are debt free we have our 5th anniversary coming up and we might actually do something, especially before baby #2 comes along!

#3 We drive older paid for vehicles
-Matt has been fortunate enough to be able drive a work vehicle which means we only actually own one car. Early on we had a VW passat that I loved but it was getting up in miles and we knew older passat's can cost a lot of money to maintain, so when a great deal came along we bought my Nissan Sentra for cash and put the extra money we made from the sale right toward debt.  My car is not the prettiest thing around and doesn't even have power locks for that matter. But it's cost us basically nothing to run and has been overall a great car.

#4 We had a plan to tackle our debt
-Funny thing, if you don't have a plan nothing will happen. We followed Dave Ramsey debt snowball theory and tackled our smallest debt first and worked toward our largest. It was great to get those small debts paid off quickly and have the sense of victory and added enthusiasm to tackle the big one.  It was slow going, but in the end the tortoise wins the race!

At first our pile of debt seemed insurmountable.  Some months we totally blew our budget and had hardly anything left over to put towards debt, other months we had money seemingly come out of nowhere and were able to pay off large amounts.  Slowly but surely the amount, decreased and decreased.  Its not been an easy road.  Both of us have gotten off track during the process and we've had to remind ourselves of the end goal, and try to muster up some motivation to continue when it seemed nothing was going right, but we kept putting one foot in front of the other and look at where we are now.

If you want to see other posts I did along the way check them out, here and here!

This year it certainly is a MERRY Christmas at our house, with MUCH to be thankful for!  Thanks for those of you who encouraged us along the way, and those of you who contributed to the effort!  We couldn't have done it without you, we are eternally grateful!

If you are on a similar journey I would love to hear about it!  If you have any other questions feel free to ask we are an open book!
-Monica :)


  1. Monica- Firstly- congratulationsI cant help but be inspired by your journey! My fiance and I will be getting married in May, own our home and have no children. Both our vehicles are paid for but we are going to have to buy a new one in the semi-near future. We currently have no budgeting and are getting behind. We probably have around $6,000 in debt which doesnt include my school loans which will need to be paid starting Nov 2014. I just purchased Daves money makeover book and look forward to reading it.

    My questions for you are- what helped keep you on track? How much of your budget is a pleasure budget now? What was your pleasure budget when you were paying off your debt? how much (%) of your budget goes to your emergency fund vs other savings? Advice before we start on our journey? Also, it seems so unrealistic to be debt free with children- what are your thoughts on this?

    Thank you in advance!

    1. Hi Alyssa! Thanks for feeling free to ask questions and congrats on your coming marriage that is so exciting!

      One thing we did a lot throughout the whole process was listen to Dave's radio show on podcast. You can download it from itunes, but it was a huge encouragement and definitely a motivator that helped us stay on track. Every Friday he does debt free stories, where people who have just paid off their debt call in and he asks them a couple questions about their journey. Its so fun to listen to and incredibly encouraging! Also just seeing that debt number go down each month was a big motivator.

      We honestly don't have a category in our budget anymore for pleasure. Originally we had set up a category for my husband and I to each have some spending money each month and then after about 6 months we realized we were just spending it on stuff we didn't need, and it was ultimately just holding us back from our goal, so we took it out. What we have set up now is a little extra breathing room in our grocery budget so we know we can eat out somewhere small once or twice a month if needed. And then we have a blow fund set up in our budget as well. The blow fund is like a safety net for all of our other categories in case we go over a little in one category we have a little bit of a cushion, it also helps when unexpected things come up during the month. The blow fund is also there if we want to spend a little extra we will pull some money out of there, but we only have it set at $250 so there isn't a ton of breathing room. We just have to watch what we are doing. We do have a separate gift category built into our budget that goes for birthdays and such but we don't actually have a specific amount of money set aside for pleasure.

      In Dave's plan the first step is to save $1,000 and put it in an emergency fund, and then from there you start paying off debt and you don't put any more in savings until you are done paying everything off. We followed this advice with the exception of when we were pregnant with our daughter, during my pregnancy we stopped paying down debt as fast and saved up money. Once baby came and we had everything we needed ( honestly we hardly used any of what we saved up, we had a ton of stuff given to us and we borrowed other things) we took our saving back down to $1,000 and paid off a bunch of debt with what we left over. Now we will start building up our emergency fund since we've paid off our debt. Dave goes through all of these steps in the money makeover so you'll get to see his reasoning behind it all.

      Our original goal was to be debt free before we had kids, that obviously didn't happen. If you can do that, I would say definitely go for it, but I certainly wouldn't say you have to be out of debt before kids. Life happens and there is never going to be a perfect time financially or otherwise to have kids. So I would say go with the flow.

      Hopefully that answers your questions, if I missed something please let me know, or if you have any follow up questions I'd be happy to answer more!

  2. Wow Monica!!! That is so great! We did FPU earlier this year. It's really hard to stick with it when there are so many bills! I can't wait for the day all our debt is paid off... :) Happy Holidays!