Our Journey to Becoming Debt Free
Guys. Debt is so real. And scary. But certain kinds of debt are also kind of somewhat necessary. Credit scores are your passport to financing larger purchases (i.e. car, house, etc.) and you cant have a credit score without taking on some form of debt, whether that is *smart* credit card usage, bills, student loans, or previous car or house loans. Today I want to talk about our debt journey, and the steps we are taking to be free of it.I was very fortunate in that my parents budgeted since I was born for me to go to college. I graduated with about $5k of student loans. Derek was fortunate to receive half of a VA loan, so that left him with close to $30k of student loans. After I graduated, I had a sort of early-life crisis, and took one of those gimmicky courses from a real estate company. I did it with good intentions (as we all do), and with the idea of making flipping houses my career. Well, little did I know, you need solid credit in order to finance buying a house no matter how cheap it is, and I couldn't get financing to even begin to use the training I had paid for because I had about 0 credit. Lesson learned. I tried to get some money back from the company I took the course from, and they did give me a little, but that still put me another $3k in the hole. (Believe me, I know how stupid of a decision that was, and I kick myself every day BUT. Now I know how to flip houses, and I really enjoyed learning all of it. I have all the tools, should I decided to do something of the sort later on in life.)I worked my booty off paying down my loans and was very nearly paid off after about a year, using the Snowball Method (Dave Ramsey's debt payoff method). This was only possible because I was living with my parents, and had ZERO expenses. I did not buy myself anything, and I was working 1 full time job and 2 side-gigs. I saved every single penny I earned and put it towards those credit cards and my student loan. Fast forward just a little bit, and Derek and I get engaged. Cue money related panic attacks on the reg. I know how expensive weddings are, and I was sooo not about that life. Mom and Dad said they would foot the bill, and cue guilt related panic attacks on the reg. That was a very not fun time for me, and I will never be able to express the depths of my gratitude for my parents taking that burden off my shoulders, and for all the support they gave me in the planning process. Derek's parents helped out so much too, and so did everyone who was involved. It really takes a village, guys. Read about our wedding here!Anyways, since we are insane, we decided to add to our debt by going on our honeymoon. I do not regret that one tiny bit. It was an amazing experience, and such a fun way to start off our marriage. So. That was probably around another $2,500 on my trusty old Everyday Blue Amex. Lolz. I really wish I had started with one of those cards with sky miles but this one had no annual fees and a super long 0% APR period so at the time, it was great. Well, a little while after getting married, we made the move to Atlanta, Georgia for D's new job. I also happened to get a job whilst house hunting, which narrowed our house search radius immensely. (I have a 25 mile limit of where I can live and still work where I work.) So the house we bought was more than we wanted to spend. Then we bought a car. (Don't ask.) Ah, the joys of real life. But really, I feel grateful to have been able to do all these things. I know we have been fortunate with the gifts we have been given. Now, I just want to get rid of some debt.If I could do it all over again, the only things I would change are taking that real estate course- it was fun, but it added a lot of unnecessary money related stress to my new graduate life,- and buying the car. If we had waited 5 years to buy the car, we could have been making those "car payments" towards Derek's student loans, and have those paid off in the 5 years it would have taken us to pay off the car. Then we could have just transitioned those payments to an actual car and would have known we would be okay with having a large, unnecessary payment like that going out each month plus have no more student loans.After that *brief* history lesson, here are my methods for managing/paying down the debt we have accumulated over the past few years, and a few tips thrown in about how to avoid doing what we did.
- Always. ALWAYS. Pay more on your balances if you can. Never pay the minimum. You end up paying so much more money in the long run when you only pay the minimum.
- Be smart about big purchases and don't rush anything. Thinking about a new car? Try putting a car payment size deposit into your savings account for 6-9 months. If you can handle that with no issues, and you actually neeeed a new car, go for it! If it makes things tight, or limits your ability to do other fun things in life, maybe figure out if you can choose a cheaper car, or just wait a little while longer. (This is also great, because all that money you are putting into savings can be used as a downpayment, which makes your payments smaller anyways.)
- Either put your debt payments on auto draft, or check them religiously. Do not. I repeat: DO. NOT. Miss payments. Late fees will eat you up, and your growing baby credit score will shrivel in the blink of an eye.
- Remember, the faster you can get out of debt, the more money you will have to be able to spend on fun things. Instead of that morning Starbucks, put $5 towards your debt payment. Those extra dollars will add up over time. Sell some belongings you no longer have use for. Maybe offer to babysit, or clean houses. We look at previous purchases each month, and add the amount we spend on unnecessary things to our next months debt payment, and then try to limit those unnecessary purchases.
We will have my Amex and the last of my student loan paid off before Christmas. Then we will be putting everything that we were putting towards those, plus some, towards D's student loan. Paying down debt is not easy. Nor is it fun. The fun comes after it's all gone, and you can spend that money on things you actually want to spend it on! I'd love to hear any tips you guys have for paying of debt!Thanks for reading!Love, Jess