HOW WE PAID $18,400 TOWARDS DEBT IN A YEAR
- Jun 2, 2017
- 5 min read
Disclaimer: Although I have been pretty active via social media, I am ashamed to not have posted anything here in almost 2 months. These past two months have taken my wife and I from Memphis to Atlanta, then from Atlanta to Richmond, VA, the location of my new job assignment. We moved twice and drove a Uhaul almost 1000 miles. So, to say we have been busy is an understatement. During this time away, I also realized that a strength of mine is my outgoing personality. After assessing my journey with Christian Principal thus far, I figured reaching my audience through videos would be equally efficient. I am working to add a vlog to this platform instead of only blogging.
Now that we are done with that, let's get to the reason for this post.
Sadly, we added a mountain of debt to our lives from 2012 to 2015. All of the debt accumulated was categorized as consumer debt. Consumer debt is defined as debt which is used to fund consumption/purchases rather than investment. If I remember correctly, it wasn't necessary for us to use credit cards to buy these items most times, we had the money. It was a sense of having our cake and eating it, too. After realizing that we created a mess of $25k in debt above our student loan borrowing, we made the decision to change our lifestyle. We initiated the attack in 2015, however our efforts were unsuccessful. We were continuing to live like debt free people while simultaneously tackling our debt. After months of feeling defeated, my wife and I decided to register for Dave Ramsey's Financial Peace University. This was the turning point we needed and it worked!!!
At that time, I was an avid listener of Dave Ramsey for three years. I used his principles as the foundation of our financial planning and debt elimination mission. Steps 1 and 2 of Dave Ramsey's plan are: 1. Save $1000 dollars towards an emergency fund and 2. Pay off all debt except your home (if you have one). It wasn't until April 2016 that we started to take things serious and attack our debt with a vengeance. We still have a mountain to climb but here is....
HOW WE PAID $18,400 TOWARDS DEBT IN YEAR ONE OF OUR SERIOUS DEBT ELIMINATION JOURNEY!!!
1. Budget
Budgeting was and still is the foundation of our financial life. Every month we did our budget at the BEGINNING of the month and reviewed it weekly as we received our income. Things were not always perfect and we had to make some changes throughout the month, BUT we kept at it. It's such a great feeling to be IN CONTROL of our dollars instead of our dollars controlling us. Having a budget gives us a sense of freedom to know what we can and can't spend. The mission was to ALWAYS be able to answer the question: "Where did our money go?'
2. Sacrifices
We made so many sacrifices to complete this mission. There were many opportunities for us to go on more vacations, buy more clothes, and even buy a new car with this much debt paid off. One of Dave Ramsey's famous quotes is "Live like no one else now, so later you can live like no one else". That quote crossed our mind each time we were on the edge of making impulse financial decisions to help us become wise again.
3. No More Debt
This one is simple as it sounds. We made sure we DID NOT add any additional debt to the current pile of mess that we created. It was really hard to avoid using credit to acquire new things, but we held on to our new, good habits.
4. Side Hustle Profits
During the first year of debt repayment, we decided to apply our primary side business's profits to our debt. In addition, we discovered new opportunities to make money. Every single dollar that came from these opportunities was applied to the debt.
5. Gratefulness
Remaining grateful for our current financial situation was more of a psychological standard. Many times people get discouraged by their situation and challenges. As a result, they decide to quit the mission and be content with the feeling of being smothered by endless minimum debt payments.
"The third element of success is your state: You must replace a default state of pessimism or anger with one of determination, of will, of generosity, of curiosity, of gratitude. The more we can put ourselves in such beautiful states rather than suffering states, the more they become habits of being and we end up making better decisions." -Tony Robbins
6. Tithing/Giving
I saved the best for last: Tithing. Every single financial gain that we experienced, we ensured that a 10% portion was given back to our current church home. We have been so blessed and experienced so much favor that it has become the easiest ever to be a consistent tither. A portion of every income source was set aside to be given back in order to support the church and its mission.
As we face the remaining challenge of eliminating Sallie Mae and other school loans, we now have the confidence to know that we are capable of becoming debt free by 30. We learned a lot this previous year and plan to take those lessons with us to kick Sallie Mae out!! Eliminating this debt was not easy, but we practiced discipline and consistency throughout the journey to made it through. After getting done with each individual debt, we rewarded ourselves to give us a sense of motivation to keep going. For example, when we paid off a $1,500 credit card, we would use that payment next month to buy ourselves something. When we realized how much we paid in debt from April 2016-April 2017, we took a break to celebrate by going on a few trips. Psychologically, if you don't take some time to be grateful and reward yourself at a checkpoint, you will become discouraged and abort the mission. If you are in the same boat as we are, stay focused and kick debt's butt while throwing yourself a little party every now and then.
THE REEDY'S ARE ON MISSION AND NOTHING CAN STOP US!
Proverbs 22:7
"The rich rule over the poor and the borrower is slave to the lender"
(This feeling is certainly true and after this recent journey it feels great to be closer to freeing ourselves from the lender.)
1 Corinthians 10:13
"No temptation has overtaken you that is not common to man. God is faithful, and he will not let you be tempted beyond your ability, but with the temptation he will also provide the way of escape, that you may be able to endure it."
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