Today is the day! This is the post I have been dreaming about writing since I decided I was going to start a blog! I didn’t want to share this story in detail until we had paid off the very last cent of our personal debts (except for our mortgage). Partly because I didn’t want to jinx it and partly because I didn’t want to share the whole story until it was complete and I could share every detail!
As I shared in our Debt Story Part 1 & Part 2, we made the life-changing decision to start taking this course at the end of January. We began paying off our debt the first week of February and we made our last payment on August 31st!
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I think I’m still a bit in shock that we actually did it!!! It seemed so SO impossible that we would be here today. We worked so very hard the past seven months…we scrimped and saved. Struggled and sacrificed. And it paid off (pun intended)!
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I want to share our methodology with you in the hopes that you can use some of these suggestions to improve your current financial situation. Two main things got us here » Debt-free, except for our mortgage….two things: hard work and blessings on blessings (wait..is that 3)?
Our state of mind when we began this journey was fragile. Stressed out was an understatement. We were blessed, and truly grateful for everything we had but we weren’t being faithful with what we were given, and I believe that is why we couldn’t find any peace; financial or otherwise. Here is how we were able to change our lives by finally breaking the debt cycle:
1 | WE MADE A STRICT BUDGET
We made a tight budget. Like, crazy tight. This totally sucked. It wasn’t easy and it sure as hell wasn’t fun but we did it. And minus some periodic whining, a smidgen of regret and a couple of mistakes we stuck to that tight, sucky budget! It gave us a plan and it kept us on task.
That budget was our roadmap to our goals! And speaking of goals…
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2 | WE SET AGGRESSIVE GOALS
We set some serious goals. Not wimpy goals like “we will pay off all our debt” but goals like “We will pay off our Chase credit card in the amount of $4500.00 by March 31, 2017“.
Your goals need to be very specific. They need to be measurable and you need to spell them out in detail!
I set very aggressive goals. I remember being so pumped after our first class. We went to bed and I couldn’t sleep. I had all these numbers and dates going through my mind so I typed them out in the notes section on my phone.
My husband woke up for a minute (I accidentally on purpose kicked him) and I quickly told him all the goals I had set for us to pay off our debt and save money through Spring of the following year. I had an 18-month plan!
He laughed at me and told me I was crazy! I laughed back at him and told him he would see…
We hit every. single. one. of those goals…early and the final payoff on the exact date we set! But more importantly, I get to remind him every day that I was right (obviously).
3 | WE STOPPED USING CREDIT CARDS
This was tough. Like, really tough.
We used our cards and paid them off each month, and for a long time and this served us well. Unfortunately, it caught up with us and “emergency” after “emergency” happened and before we knew it we were in a big ole hole.
We didn’t realize how much we were spending because we just swiped and signed and didn’t feel the purchases. This left us constantly wondering how our bills were so high when we thought we were barely spending any money.
Instead of just “not using them” we went a step further by cutting them up and closing the accounts. We cut all of our personal credit cards up except for our one main card. Currently, we only use that card for the auto-pays (which we plan to switch to our debit card in the near future) and to pay for our gas, because who the heck has the time to go inside the store to pay?
We used to pay for nearly everything with our credit cards. Changing this one major habit not only made a huge impact on our bottom line but it allowed us to stick to our budget since we had a better handle on our spending!
4 | WE CASHED IN OUR WHOLE LIFE POLICIES
This was a tough decision for me particularly! My Mother was in the insurance industry for 20+ years (not as an agent) and she believed in this product very much. She generously got a policy for me when I was in high school and so when my husband and I got married we figured we should get one for him as well.
Dave Ramsey speaks out very strongly against these types of policies. After taking his Financial Peace University Class, and after much discussion and counseling with both my Mother and our Financial Peace Coordinator, we decided to cancel the policies.
We had adequate Term Insurance already in place and felt confident that this was the best decision for us at this time. Between both of our policies, the cash value amounts refunded to us totaled over $12,000! That was almost 35% of our total debt!
*Please do NOT leave yourself uninsured. If you do not have current term life insurance please do not cancel any insurance! Remember, this blog is not intended as financial advice as I am not an expert financial advisor. We are only sharing OUR personal experiences. What worked for us may not necessarily work for you, please consult with your financial professional*
5 | WE HUSTLED
My husband signed up for overtime and made it a goal to have “something extra” in every pay period. Whether that was a holiday or an overtime shift, he tried to schedule it accordingly so that no paycheck was his base pay.
I requested extra hours at my job, worked to sell some of our extra stuff we no longer needed and started a blog!
6 | WE SIGNED UP FOR VA BENEFITS
I mean, technically this was all my husband since he is the Veteran. I know this won’t be an option for a lot of people but it paid a large chunk of our debt off. This was one of our major blessings through this process. A few years back my husband had filed for VA benefits for some health issues he has related to serving in the Marine Corps.
It was a long process, initially, he was denied then his case sat in appeals for a few years. One day a letter showed up in the mail letting him know 1 out of his 3 claims was approved! While it’s only a small amount of money each month, when your case is finally approved you get paid retroactively to the date you filed.
He received a few thousand dollars in back benefits and we were so grateful! It was such a huge surprise! I truly believe that God kept his claim from being approved until he knew we wouldn’t waste the money.
If you are a Veteran and you have a service-related disability this website can help you see if you are eligible to file a claim for benefits. And we thank you for your service!!
7 | WE USED OUR TAX RETURN
I guess this is kind of a no-brainer. If you receive a refund from your tax return and you have debt it’s a great opportunity to really make a dent in your debt! I hope this will be the last year we get a refund. We’ve always kept it this way because we “needed the money” come tax time.
It feels like you’re getting a bonus, even though you’ve really just given the US Government an interest-free loan for the year. We were always terrified of having to pay in and never knowing how we would come up with the money to do so.
Now we are planning on adjusting our withholding so we [hopefully] come out even next year!
I realize some of these may not be possible for everyone but I wanted to share them in case some people could utilize these options! I encourage you to come up with a plan. You can download my Financial Inventory Worksheet for free and get a good picture of your current financial situation.
Next, create a budget and get to work! As thrilled and grateful as we are to have gotten where we are, there is one thing I regret: that we didn’t start earlier.
Had we begun this journey a year ago where would we be? Five years? What about you? If you start today, right this minute what might your life look like a year from now?
I promise you the missed birthday parties, vacations and nights out with friends are FAR outweighed by the security and peace you will feel once you get your debt paid off because no THING feels as good as being debt-free!
Don’t forget to join my FREE Begin to Budget 5-Day email course to help you get started budgeting! Get on my email list here where I share even more tips and tricks that helped us pay off all of our debt!