When Brad and I met over 10 years ago, some of our first conversations were about money and personal finance. He introduced me to a national personal finance guru – Dave Ramsey. Dave Ramsey’s big focus is to stop borrowing money, get on a budget, get super intense, pay off all of your debt and then reap the benefits of being debt-free. I was single at the time, about a year and a half out of grad school and into my first ‘big girl’ job. I had been pretty frugal my whole life but lacked direction. I just made sure I didn’t spend as much as I made each month but didn’t have any real plan for the future. Brad was about a year and a half into being a single dad raising two kids full time and waking up to a financial hangover of living above his means during most of his adult life (Brad is 13 years older than me so he was 10+ years into his career). He was sick and tired of working hard every day/week/year with nothing to show for it and wanted to make a change.
One of the things that drew us together when we first started dating was a very similar way of thinking and sharing of similar values. We both were interested in being more intentional with our money and had many conversations and shared things we’d read about personal finance. We decided to both start working toward the goal of becoming debt-free. Early on we read Dave Ramsey’s books and listened to many of his podcasts (he has a radio call-in show where people call in and ask questions about money and life). Dave also offered a program called Financial Peace University, a 13-week (now 9-week) course where you watch an hour long video of him lecturing on various topics (savings, budgeting, get out of debt, relating to money, what types of insurance to buy, saving for retirement, buying a house and the importance of giving). We had always wanted to take the class but my current position at that time had me working a lot of nights and taking the class never matched with our schedule.
Dave Ramsey has a series of Baby Steps that he wants you to follow to get out of debt:
Baby Step 1: Save $1000 in an Emergency Fund
Baby Step 2: Pay off all of your debts except your house
Baby Step 3: Build an Emergency Fund of 3-6 months of your expenses
Baby Step 4: Save 15% of your income for retirement
Baby Step 5: Save for Kid’s College (you choose the amount, if any, you want to contribute)
Baby Step 6: Pay off your house and become completely debt-free
Baby Step 7: Build Wealth and Give
We weren’t married at the time and Dave recommends NOT combing your finances until you are married. So we started worked his plan separately. I didn’t have any debt except my house, so I worked on building an emergency fund and eventually went on to increasing my retirement savings (I had opened a fund with a little bit of money when I was 21 but hadn’t added to it since then because of grad school). Brad cleaned up some credit card debt and paid off his car and then started working on his emergency fund.
We got married in October 2008 and we got to then see the power of what Team Earnest can accomplish when we started working together. While we had encouraged each other along the way while we were dating, working together after we got married was amazing and helped build trust and a sense of togetherness in our relationship like few other experiences have. We were working toward a common goal together. As luck would have it, my job had an unusual schedule that semester and we realized that we could take the FPU course and I wouldn’t have to miss but one or two classes. So we started the class engaged, got married four weeks into it and we were able to focus on changing our financial future armed with knowledge, support and motivation from the class.
Brad also had a large home equity line of credit (HELOC) on his home. Dave Ramsey says if your HELOC is greater than half your annual income then treat it like your mortgage and don’t worry about paying it off until Baby Step 6 when you completely pay off your house. This fit the description for Brad so he was able to skip over it and was working on Baby Step 3. However, when we got married, we combined incomes and all money (something Dave Ramsey highly encourages as do we). Our household income increased and suddenly the HELOC became less than half our annual household income and we actually had to move back to Baby Step 2. It felt like a game of Chutes and Ladders – Get Married, Move back to Baby Step 2. But we knew that we were in this together and it became our debt that we wanted to get rid of together. Fortunately, we had a really good head start. I had sold my house because we got married and had a decent amount of equity. Along with my emergency fund and the emergency fund that Brad had started working on and a well-timed, bigger than normal commission check, we were able to pay it off pretty quickly. After taking FPU, we were approached to become volunteer leaders and apprentice to be small group leaders. However, my work schedule was back to normal and we wouldn’t be able to commit because we would have to miss too many classes.
After we paid off the HELOC, we moved onto Baby Step 3 which is coming up with a pile of cash for our emergency fun. We have to admit, this step was a little boring and very anti-climatic (there wasn’t any ‘debt’ you paid off or last check you wrote) but it was the most important step. It was the building block of starting to really feel financial peace. We were debt-free (except for the house) and had a good size emergency fund to deal with anything that came our way.
We then decided to breathe for a while. You actually do Baby Steps 4, 5 and 6 all at the same time. We increased our retirement savings, started putting some additional money (Brad had already saved up some) toward our kid’s college and started paying an extra $100 or so bucks toward the mortgage. And we loosened the reins on our budget – did some travel, raced more and bought a few things for the house. Then, after about a year and a half (very beginning of 2011), we decided to plunge back into intensity and focus on getting our house paid off. We decided to live off of Brad’s income and everything I earned would go toward the mortgage and paying extra on the house. We got super focused by tightening up our budget, saying no to trips and vacations, majorly cut back on our triathlon and racing schedule (much more local events and not going out of town for races) and just really stopped buying stuff except when we absolutely needed it.
At the same time, I went through several job changes and now my evenings were suddenly available. We were both feeling a pull toward wanting to help others with personal finance as well as we were also looking for a stronger connection to a faith community. As luck would have it, we were at a service at the church, Woodcrest Chapel, where we had been attending off and on for years (and where we initially took FPU) and someone we had met in our FPU small group spoke on stage. We went up to her to say hi and told her we might be interested in getting back into FPU on the volunteer side of things. She got super excited and introduced us to the Ministry Coordinator of FPU at Woodcrest, the person who worked at Woodcrest that was the contact for the class. She got excited also saying they were training FPU leaders that fall for a big initiative of multiple FPU classes the following spring and that she’d be excited to have us on the team. Before we knew it, in about a 15 minute time span after the service and an introduction we almost didn’t even do, we were suddenly joining the FPU leadership team. We looked at each other and thought ‘I guess we are in’. It turned out to be one of the best decisions we ever made and was a turning point in finding a faith community to do life with.
We started to serve in FPU, motivating others to live below their means by sharing our story. Being a small group leader kept us accountable to our goal (hard to have a credit card or not be focused if you were spending every Tuesday night telling others the benefits of not having credit cards and paying for everything in cash). We also found an amazing community with our leadership team for FPU (the volunteer leaders that ran the ministry and led small group discussion). They were super supportive of what we were trying to accomplish and we grew stronger in our faith with them.
Finally after two years of being super focused, on December 18, 2012, we both took time off in the middle of the day to walk into Bank of America and make our final payment on our mortgage. Good-bye debt. We were finally DEBT-FREE!!
Dave Ramsey encourages people to call into this radio show to do a debt-free scream, sharing their story with his listeners to motivate and inspire them and they get to end the call screaming ‘I’m debt-free!’ You can also drive to Nashville and do the call live in his studio. We always knew we wanted to go down and do this in person and were delighted that there were members of our FPU leadership team that wanted to go down there with us and share the experience. Our church, Woodcrest, also wanted to bring a camera-crew down and record the experience to later share with the church. So, we piled in our car with our kids (whom had to endure two years of living on a very tight budget) and headed to Nashville. It was a great experience and one we will remember for the rest of our lives. It was a great way to celebrate that accomplishment and we hope that sticks in our kid’s minds about how important that goal was to us. You can see the video that Woodcrest produced from that trip below.
So what did life look like after becoming debt-free? Our long term goal was always to move and get a house of our own. We saved for about a year and a half to have the money to get the house up to sell-ready and to pay for the move. (We had had some ‘deferred maintenance’ on the home when we were focused on getting it paid off so there was a lot that needed to happen to get it ready to sell). We sold our house last June and closed on a new home shortly after by staying within our budget. We were able to write a check for the new house. We absolutely LOVE our new home and enjoy making it our own. It feels great to not have a mortgage attached to it. We also realized that we didn’t need a lot of money to live on and ended up keeping a very similar lifestyle to what we had when we were super focused and paying off the house. This was our first move toward minimalism and not spending money on stuff. We appreciated investing in relationships and others vs. trying to accumulate the latest and greatest. We did loosen up the reins a little on the things that mattered the most to us though. We love to travel and we have been able to travel internationally each year (a goal of ours). It took removing most of our expenses and living very tightly to realize what was really important to us and what was not. Some things we had stopped spending money on so that we could put more toward the house, we realized that we didn’t miss and never ended up going back. And other things we realized we really did miss and made sure to have room in our budget for them when we did become debt-free.
As well as saving to get the house ready to sell, we also have increased our retirement savings and are now planning for an early retirement. We were able increase our giving, which has truly changed us from the inside. Dave Ramsey talks about being good stewards of the money that you have. That it’s all God’s money and you are ‘managing’ it for him. Because we live below our means and keep to a simple lifestyle and don’t have debt, we are able to give money to things we are passionate about that can make a difference.
About six months after we paid off the house, we were asked to become Ministry Leaders for FPU at our church, meaning we were in charge of the ministry on the volunteer side. It was an honor to be asked and a responsibility that we take with great care. We get to shape the vision of the ministry, serve our participants and help them learn about personal finance and get to spend time with and invest in an incredible FPU leadership team who loves to serve. We’ve grown stronger in our faith and found a community at our church, Woodcrest.
Making the choice to get out of debt and live below our means taught us to be happier people. We realize that we have so much already and that much of what we (and society in general) spends money on is unnecessary. We realized that relationships and spending time with people meant more to us than owning stuff. Not having the pressures of debt has allowed us to make choices in our careers that have allowed us to have jobs that don’t have us working crazy hours. We have time to spend with and invest in others and time to serve in our FPU ministry. It’s even allowed Brad to go to a reduced 4 day per week work schedule. This has led us to true financial peace, knowing that if an emergency happened (job loss or major illness or accident), that we could put all of our energy into finding a new job or fighting the illness/getting better after the accident and that we wouldn’t have to worry about financial stresses.
We highly recommend following Dave Ramsey’s plan and paying off debt. His website has some great resources. If you live in or around Columbia, we’d love to invite you to take the next Financial Peace University class at Woodcrest Chapel (you don’t have to be a member of Woodcrest or even attend any church to attend FPU). Classes are on Tuesday nights from 6:30 to 8:30pm, February 2 through April 12. (Or check out his many hundreds of FPU classes offered around the US). You are never too old or young to take this class and increase your knowledge about personal finance. You’ll also get a great community to provide support and amazing small group leaders that love serving and sharing their knowledge and experience and providing motivation.
Brad and I also love to talk to people about personal finance. Please feel free to leave your name, email and questions in the comment section for us (this will NOT be published online) and we’ll get back to you. We love to talk personal finance with others!
And remember there was nothing special about who we are or what we did. It just took knowledge, discipline and focus over a period of time to help us achieve our goal. We hope you’ll consider adopting some of these principles and starting a path toward financial peace.