Our journey as a one-then-two-income family of five to debt freedom and financial peace started almost two years ago. We had just relocated to a new area about a year prior (November 2016) for Ashton’s new job as an aircraft mechanic. The new job paid less by about a $2 per hour, and the cost of living in the new area was more than our previous location. (Though, he has since received two promotions with two pay raises!) I was a homemaker at the time.
Money was tight. While researching ways to decrease expenses, I re-discovered Dave Ramsey’s Money Makeover Challenge, which consists of seven baby steps to financial freedom:
- Save $1,000 to start an emergency fund.
- Pay off all debt using the debt snowball method.
- Three to six months of expenses in emergency fund. 3b. Save for a down payment on a house.
- Invest 15% of income into Roth IRAs and pre-tax retirement plans.
- Start college funding for children.
- Pay off mortgage early.
- Build wealth and give!
In May 2017, I started using Dave Ramsey’s Every Dollar app to budget, though I didn’t actually start his plan until November 2017 when I calculated our debt for our Debt Snowball and discovered that we owed $12,504.80 total between six debts. (If you’d like to read more details about our Money Makeover Challenge, I posted reports almost every month. Start here with my first Money Makeover Challenge post.)
In November 2018, I started my job as an aircraft mechanic-in-training at my husband’s workplace. By April 2019, we finally had baby step one saved and have continued saving. By the last week of August 2019, we finally completed baby step two and became officially debt free!
There were setbacks and we made mistakes throughout this process:
- My husband and I struggled to come to an agreement financially. I wanted to commit to this plan; he did not. I did struggle at first to communicate how important this was to me and why I wanted to do it. I tried my best when I was solo. Thankfully, we’ve finally come to a compromise.
- At first, I attempted to complete baby steps one and two simultaneously over the course of a year. In hindsight, we would’ve had the starter emergency fund saved within only three to four months if we were patient enough to do it Dave’s way – with gazelle intensity – and not add as much debt in the process, thereby becoming debt free quicker. Dave always says that “you win at what you focus on.” So true.
- We had expensive vehicle repair maintenance multiple times. I know Dave would’ve told us to either wait until we were debt free, since we do have two vehicles, or maybe to pause the debt snowball to save for the repairs.
- We kept adding credit card debt. I eliminated mine in August 2018; Ashton still has one for his shoe resell hobby that we now pay off every month, if there’s a balance. I hope to start a hobby fund for him soon so that maybe he’s more willing to get rid of his stupid credit card, too.
- We didn’t stop 401(k) contribution due to the two 401(k) loans that we owed.
- I paid our final debt, which was the last 401(k) loan, off at the end of August. I didn’t tell my husband about it until about two weeks later, because I knew he wouldn’t agree or allow me. He was upset at first, and rightfully so, but he is now seeing the “proof in the pudding.”
Total, we paid $20,338.32 of debt over the course of 21 months. Setback after setback, we persevered. We’re debt free now and have already moved onto baby step three! I am looking forward to the blessed future God has in store for us now that we’re both more intentional with our finances!