We’ve read books, articles, and countless amounts of Pinterest blogs all on the subject of debt. We wanted to know how others were doing it, and why they chose their method.
This is not a “how to” blog of how you need to eliminate debt. If you want that guidance, go read a book called “The Total Money Makeover” by Dave Ramsey. Through reading most of the Pinterest blogs on debt, there were always questions unanswered. We always wished that people would be more transparent with the smaller details so we could really feel relatable, and that is what we’re going to do here.
When we got married in December of 2015 and combined finances, Derek and I were $8500 in debt. For an average household, I believe the debt is $130,000, $15,000 of that being credit card debt. Even with the debt being “that low”, that was still $8500 we didn’t have and if we paid the minimums each month, it would take 56 months to pay off, which seemed like forever.
A few reasons why the debt was that low:
1. Sarah did not attend college. No loans. No debt.
2. Derek enlisted in the military at 18. 6 years later he did attend college for a semester using the GI bill. No debt.
3. Derek paid off his car in cash a few years prior to meeting Sarah
4. Sarah had always owned older, beat up cars that were handed down to her by her dad
5. Sarah (23) didn’t get a credit card until she was 20 years old, and didn’t use it until she moved to Florida, as an emergency for essentials.
6. Derek (29) never got into the habit of using a credit card unless it was an emergency
7. Sarah and Derek don’t currently own a home
8. Sarah’s car is currently being leased and won’t be financed for another year and a half
Where did the $8500 in debt come from?
The accumulation of the $8500 was all credit card debt. The purchases were all emergencies and necessities. You know how we’ve all accumulated things over the years and don’t even realize that they all cost money? Coffee maker, plates, forks, laundry detergent, hamper, pillows, sheets, etc? This is what I mean by necessities. Derek spent a good chunk of time in the military and just didn’t own much, and I had lost most of what I owned in a forest fire 4 years back and when we met I owned a twin size bed, a lamp from Walmart, and my clothes all fit in a laundry hamper. We were starting from complete scratch.
A new year of priorities:
At the beginning of 2016, Derek and I were sitting down at Barnes and Noble writing a priority list for 2016 of where our extra money would be going that year. Here were the categories:
2. Trainings (Personal development/Business)
We had a really difficult time prioritizing. Initially we decided that we’d focus on travel and savings. Did we end up sticking to a plan of what took priority? Not even close. This entire first year of marriage turned into being faced with too many options, too many roads to walk down, too many decisions to make, and we wouldn’t have changed any of it. We just said screw it to the list, improvised, and anytime we were faced with a fork in the road but could only choose one path, which was every time, we’d sit down, thoroughly discuss it, pray on it and wait, and then make a decision when we felt clarity, and stick with it.
So if debt was on the bottom of the priority list, how did we eliminate it in our first year of marriage?
Halfway through the year, even though the debt was not even close to a priority and we were just paying the minimums, it started weighing down on us. At that point we started placing more money into the debt. We paid off my card first, by taking out money from savings, and then we started on Derek’s by using most of the money that we were making from our new business. We also ended up selling our Disney stocks, threw that into the debt, leaving us with $4000 left to pay down.
The truth is we could have gotten rid of all the debt way sooner than we did, because we always had more in savings than we had in debt. We even talked about it multiple times, but every time we just weren’t willing to do it, because that money in savings was for our 6 month emergency fund. Then one night in August, we were sitting in our living room talking because we wanted Derek to go to a training that was an investment into our business, but the amount of money it cost was the amount we really needed to put into paying off the credit card. That was the last straw for us.
We wanted to be making instant decisions that would be investments into our future without having to be held back by payments we needed to be making to our past.
The next day we paid off the rest of the debt with the rest of our savings.
What really pushed us over the edge to eliminate the debt was this: We realized that when we thought about having no savings, we felt……uneasy. When we thought about having debt we felt burdened and completely weighed down. When we thought about why we felt that way, we came to this conclusion, for us anyways. Debt is something we accumulated. We made choices. Savings is there as a cushion for when life takes its unexpected turns. We can’t control the unexpected. But we do know that anytime things have gone upside down, God was there to provide, and always will be. In hindsight, the answer was simple. The debt needed to go, so we could lift the burden off of our backs.
So what do we think you should do if you also have debt?
- We think you should get rid of your debt as soon as you possibly can so that you can start putting that money into your future, not your past. However, we think you should figure out what ASAP looks like for you. (Example: Paying off debt quickly requires a lot of sacrifice from other areas of your life. I personally have felt sacrifice and discomfort for the first quarter of my life, so for me, I needed a little break from sacrifice. I needed to prioritize that trip to Canada with my husband, and stand on top of that snow covered mountain and get a taste of what we were working so hard towards for our future. For us, paying the debt off first, above everything else, wasn’t the most compelling priority at the time. Building up the quality in our life was. Figure that out for yourself.)
- We think you should read the books, read the blogs, find guidance, make a plan, and go after that plan (YOUR plan, not someone else’s). The Total Money Makeover would be our top suggestion for a gameplan.
“Plans change, decisions don’t”.
I didn’t say complete that plan, I said go after that plan. Things were all over the place this year for Derek and I. Plans got changed every two seconds, but none of our decisions ever changed. We know where we’re going, what we want, and we have plans of how to get those things, and the job always gets done exactly how we said it would, it just usually doesn’t ever look the way we had “planned” it to.
We’re going to leave you with this. All in all, we go to bed at night with contentment, and I believe it’s because at the end of the day, Derek and I design our lives, we design plans that work for us, and we go with our guts. If the debt took 3 more years to pay off, but it took 3 more years because we were doing it the way that was authentic and right for us, we’d still go to bed content. That’s the whole point. In life there are definitely things that are black and white and blatantly right or wrong, no questions asked, and then there are things in life that are right for you and wrong for me, or right for me and wrong for you. Pay off your debt, but do it in a way that works for you.
We can’t promise that we will never get into debt again. 2017 is going to be a very focused year for us on building up two separate businesses. We’re doing all that we can to only use extra money that we already have to invest back into those businesses, but sometimes we overlap. But that’s a post for next year!