Our Debt-Free Story

Our Debt-Free Story: Part 3 – WE’RE DEBT FREE!!!

September 2, 2014

This is Part 3 of a 3-part series. Be sure to read about Our “We’ve Had It!” Moment and Our Secret Weapon.

We left off in part two when we were knee-deep in debt but with gazelle intensity and a laser focus to pay it all off ASAP. We even shocked ourselves and beat our “debt-free date” by nearly five months!!

How did we do that?

Let me tell you…

So there we were, Spring 2012, with between $15,000-$18,000 of student loan debt left to go when we got the tax return funds and threw it towards the loan. The numbers fell significantly that month and momentum started rolling like crazy.

At this point, we sort of snapped and went scorched earth. We also found out we would likely be moving in two months time, so we started thinking about all the things we could purge from our household and turn into quick cash to pay towards our loans.

Sometime in April, I gathered up items from our house in the living room and began listing them on Craigslist left and right.

Bicycles. Nintendo. Lamps. Throw pillows. An HDTV Television. A desk we dug out of a dumpster. A chair we got for free.

If it wasn’t nailed down, it was on the “discuss to sell” list. In a two week window, we had people at our town house nightly, one after another, purchasing items from our living room garage sale. 🙂

We ended up with a couple thousand dollars from our sales…but still had to live in the place for a few weeks before moving. Yup, it was rather uncomfortable sleeping on a blow up mattress, having no lamps, furniture, or Nintendo to play with. But we were brimming with happiness and joy at seeing more progress on the student loans. It became like a game to sacrifice more and more so we could see the debt fall quicker…so we happily played board games under a light bulb on a string in the closet.

With this continued surge of momentum, we saw the debt fall below the $10,000 mark in early May 2012!!

To keep the gazelle-like intensity up, we decided to sell my car and drop down to a one car family. It sounds harder than it was, since we actually work together. The times we actually needed two cars was far and few between. This got us some extra cash to throw at the debt and lowered our car insurance bills and gas costs.

To top it all off, we had unusual circumstances that summer. We moved out of our apartment in May but didn’t find a place in Denver to live straight away so we put all our belongings in a storage unit. We traveled that summer working on our fundraising and staying with family. Upon moving to Colorado, a family invited us to stay with them while we searched for housing. With those circumstances, we didn’t have any rent and minimal food expenses from June through August, which was a MASSIVE help in our debt snowball.

In late July, we saw the numbers really plummeting and we were just ITCHING to get it all paid off the next month. We received a few special donations in larger lump sums which gave us the extra cash flow to pay the loans off earlier than we ever anticipated. We kept living on a bare bones budget and scraping money our of thin air, hoping we could have an August debt-free date.

On August 15, 2012 we had finally scrounged up enough to sink our last loan and become 100% debt-free!!!!

Wahoooo!! 🙂

To celebrate, we made doughnuts and started forming a plan for the next baby step, the fully-funded emergency fund! A few months later, we traveled to Nashville and did our Debt-Free Scream on the Dave Ramsey Show. Someday we will tell our “post-debt-free story” and the unique challanges and freedoms that come with each baby step.

Until then, here’s wishing financial peace for everyone reading this! You can enter our Financial Peace University Giveaway to jump start your journey!

Money, Our Debt-Free Story

Our Debt-Free Story: Part 2 – Our Secret Weapon

September 1, 2014

This is Part 2 of a 3-part series. Be sure to read about Our “We’ve Had It!” Moment.

Welcome back!

At the end of our Debt-Free Story Part One, we left you hanging with us having our “I’VE HAD IT!” moment.

We were officially sick and tired of being sick and tired. We didn’t want to see hundreds of dollars being shipped off to Sallie Mae on a monthly basis. We were inspired to kick her to the curb using Dave Ramsey’s baby steps.

There we were, fuming with excitement, so what did we do next?

The budget.

We had our very first “Teixeira Budget Committee Meeting” on December 30th, 2011 to plan our January budget.It was quite simple back then. We grabbed a pencil, paper, and some envelopes for cash. (vital to all beginner budgeters…since when cash is gone it’s gone and it’s a built it “stop” to spending)

Looking back, it was actually hilarious since we fumbled our way through varying categories and were bad at estimating the cost of things. I think we budgeted $50 for groceries for the month. Yea…that needed adjusting! 🙂

Despite being bad at budgeting from the first go, we had tremendous amounts of zeal and passion for it. We were finally a team. We were on the same page. Nothing could stop us from getting that very first baby step done – $1,000 in a mini emergency fund.

We found a way to shuffle the budget around to compensate for our under-funding certain categories and over-funding others and by the end of January we had baby step one completed! We were on track to paying off our student loans within one year’s time.

We then turned our gaze towards that pile of debt. As the months crept by, we not only got better at creating a budget but also sticking to the budget! We found that the more realistic we were about our budget and stuck mostly with cash, we were having great success not over-spending or feeling guilty for the spending we did do. By cutting discretionary spending, it allowed us to begin throwing more lumps of mula towards our loans.

We cut our lifestyle. HARD. We wanted to literally live like no one else…so later we could give and live like no one else.

Here’s what I mean by cutting our lifestyle based on a typical monthly budget back then:

Blow money: $0
Entertainment: $5 (a couple red box dvd’s)
Restaurants: $0
Vacation: $0
Groceries $120
Gas: $50
Clothing: $0
Date Night: $5 (an ice cream cone to share)
Birthday gifts: $0
Vacation: $0

Obviously we had some fixed expenses like rent and healthcare but every category relating to our lifestyle was bare bones. It actually was barely enough. Sometimes we rode bikes to work when we were almost out of gas money. Or we would make pb&j sandwiches for days on end with baby carrots and celery on the side when we wanted to stretch the grocery funds. Or instead of buying a new mattress, we slept on a (clean!!) donated mattress from someone’s old RV.

Did we need to do this?

No.

We were squeezing thousands of dollars from our budget every month. We could have decided to be a little softer on ourselves. Seen more movies. Gone out to eat. Taken a road trip. Bought whatever we wanted at the grocery store.

But at what cost? Months and possibly years longer to get out of debt.

We wanted it done NOW. Our desire to become debt free was so intense we literally were willing to sacrifice everything but necessities to meet that goal. We would rather suffer a short but intense time of delaying gratification than several years of lukewarm spending/paying debt.

In March, we got tax refund and combined it to the funds we’d scraped up our of that month’s budget for an extra large payment towards the student loans. That is when we started to really feel momentum pulling us. Dave calls it the “debt snowball” since it starts small and over time gets larger and larger with more momentum.

We were officially weird and gazelle-intense. Friends and family thought we were taking things just a little too far….and that is exactly where we wanted to be! 🙂

The debt started falling rapidly and with every dollar thrown at it, our confidence and excitement grew. We quickly went from first-time fumbling budgeters to budget pros with a goal no one could stop us from reaching!

Stay tuned for next time as we talk about how we were able to beat our initial goal of a one-year debt payoff by nearly five months! And jump over to win a FREE Financial Peace University class membership!

Money, Our Debt-Free Story

Our Debt-Free Story: Part 1 – “We’ve Had It!”

August 29, 2014

This is Part 1 of a 3-part series. Be sure to read the whole story!

Since we are running a Financial Peace Giveaway, it only seemed right that we formally share the story of how we became debt free.

This will be a three-part series and this post is the first installment. We hope to offer encouragement in sharing our experiences and perhaps a few laughs along the way.

So, let’s take a trip down memory lane back to yesteryear….

In a Delorean.

Since we’ve all not-so-secretly wished we could travel in one.

The story begins on warm summer’s eve when a guy with long hair walked up and asked me to get ice cream later that night. I said, “sure.” He then high-fived me and ran away.

That guy was Jonathan and we’ve been inseparable ever since that first ice cream cone.

Our first conversations about money began that Fall. We both declared we had some students loans and had them on auto payments…student loans we likely never needed to take if we had both saved and worked through college. Whoops. Not a very deep or informative conversation but it got the ball rolling.

In late Spring…Holy Thursday to be exact, we got engaged and that is when the real shackles of debt began to rear their ugly heads. Now we had a wedding to plan with varying expenses and a honeymoon to pay for. Naturally we began to talk more details about what sort of financial means and baggage we were carrying at the time.

We were sitting in my car when the bomb dropped.

Between the two of us we had $24,500 in debt!!!

Here’s the breakdown:

Amanda: $8,000 student loans

Jonathan: $13,000 student loans + $3,500 on a credit card

What’s weird is I didn’t freak out about the $21,000 in student loans but I FREAKED about Jonathan’s credit card debt. Something about credit cards has always scared me and I just cringe at the thought of paying 17.235% interest or whatever they are. Gross.

At that point, I had some savings I was holding onto. Why was I sitting on student loan debt with savings in the bank? Don’t ask. I really have no idea. Upon arriving back at my house, we got out of the car and I logged into my bank and transferred Jonathan the funds to pay off the credit card immediately.

Later on I learned Dave Ramsey says I shouldn’t have done that until we were hitched. Whoops.

It was paid. I felt instantly better.

Throughout our engagement we both began to read Dave Ramsey’s Total Money Makeover. It rocked our world. All the testimonies from individuals and families who have worked Dave’s plan and obtained financial freedom were inspiring. We started listening to the radio show and with every “debt-free scream” that aired, I would start to cry. We felt the weight and burden of debt and knew we wanted it gone as soon as possible.

But.

We had that thing called a wedding to plan.

We wanted to apply all of Dave’s principles right away but we were waiting to merge bank accounts until after the wedding and there were too many urgent tasks in the way that kept preventing us from starting to budget on our own.

We let the principles take a back seat and knew that after the wedding, there was no turning back.

We were going to do this.

We were going to kick Sallie Mae to the curb and never look back.

We were going to be debt-free and that is all there was too it.

We were finally “mad” about our debt.

And Dave Ramsey always says the first step to getting our of debt is saying, “I’VE HAD IT!” and being sick and tired of being sick and tired. We had arrived at that point.

In Part 2, we will talk you through how we got started working the baby steps as a married couple.

See you next time! Until then, jump over to our FPU Giveaway post to enter for a chance to win one of three FPU memberships!