How We Started Our Journey to Financial Freedom

For the past 9 months Rick and I have been working hard at paying off our student loan debt and learning to live within our means. We’ve come a long way, and I want to share a little more about how we got started.

2 copy.jpgOur adventure began with Rick graduating from law school in December 2014. He had a fancy new juris doctor degree and about $140,000 in student loan debt.

Rick wasn’t in a big hurry to pay off this debt because he had planned to go the  –  work for the state, pay the monthly minimum and the rest will be forgiven in 10 years –  route. Starting out, his payments didn’t even cover the interest.

Side note: Not all lawyers make a lot of money starting out. But, oh, that would have been nice.

A little over a year ago, Rick started thinking about leaving the public sector, so the 10-year loan forgiveness deal would no longer stand. We started thinking about different approaches to pay off the student loans.

Soon after we got married in 2017, we decided to pay off a private loan with a high interest rate. That seemed like a logical starting point. Unsure of what to do next, we kept throwing some of our money at the loans and saving some money as well. We brought our debt down to about $100,000 toward the beginning of 2018, but we still didn’t really have a clear strategy.

Enter Dave Ramsey. I had listened to Dave’s talks as part of a wellness incentive program a few years ago, and I decided to check out his book, The Total Money Makeover, from the library.

rawpixel-602154-unsplash.jpgThis book gave us direction regarding budgeting and cutting expenses. We tracked our expenses for a bit, and in April 2018 we started our very first budget! We learned how to spend less, set aside an emergency fund (quite a bit more than the $1000 Dave recommends), and we decided on a set amount for a monthly loan payment.

Our student loan debt total was just under $100,000 that April. Our current total is $51,642.60. That’s about $48,000 paid in 9 months. Not too shabby!

We’ve had some recent changes in our life (new city, new jobs, new salaries, new expenses), and we have adjusted our budget accordingly. If we stay on pace with our projected average monthly loan payment, we’ll be debt-free by April 2020.

These are some things that have helped us so far:

Cutting Expenses:
We thought a lot about our wants vs. our needs and made some lifestyle modifications. Some of the expenses we cut included: Netflix, a gym membership, eating out, vacations, grocery bill, clothes, and other extra purchases.

Ways we made extra money:

1. We decluttered and sold some things we no longer use such as clothes, décor, books, CDs and DVDs.

2. I give plasma at least four times each month.

3. I use cashback apps and ebates.

Ways we stay motivated:img_20190109_102931995

1. Debt thermometer. I drew a thermometer and labeled the bottom of it with our total amount of debt. I put a big “0” at the top of the thermometer and dashes with amounts every $10-15,000 or so. We keep track of our progress by coloring in the thermometer a little bit when we make a loan payment. It’s super easy to make your own- clearly, you don’t have to be an artist. Or you can find plenty of free printables online.

2. This blog. I’m held accountable by my blog posts, especially the Top 10 Thrifty Wins each month. It’s a good review of our progress, and I think of how the next month can be even better.

3. Reading helpful books and blogs—The Total Money Makeover, Cut Your Grocery Bill in Half, The Power of Positive Thinking, And Then We Saved.

If you’re looking to pay off debt, save up for a house or a fun vacation, or if you just want to get a better grasp on your finances, I suggest beginning by tracking your expenses and creating a budget. See how we created our first budget to help you get started.

**This post contains affiliate links. You won’t pay any extra for making a purchase through these links, and I may earn some money to keep this blog going. I only link to products I support or use personally.

 

Advertisements

Staying Motivated While Paying Off Debt

It’s been almost 6 months since my husband and I read Dave Ramsey’s The Total Money Makeover and started paying off our student loan debt with gazelle-like intensity.

It’s been a bumpy climb, but I’m proud of how far we’ve come. We’ve created a budget, cut back on expenses, and found ways to make some extra cash. There were a few things we didn’t account for: extra car maintenance, main grocery store temporarily closing, extra travel, raises. I don’t know how we managed it, but we are currently on track with becoming debt free by March 2020.

We’ve had some big wins and tough struggles. Sometimes I wanted to throw in the towel and say, “So what if it takes us an extra few months, I want to have/buy/do this.” Sometimes it’s hard to stay motivated.

So far, we’ve been doing a good job of staying on track, and I’d like to share what’s been keeping us going.20180115_131803 (1)

1. Allowing some room for entertainment in our budget. We try to find cheap or free things to do such as biking, hiking, reading, watching movies, spending time with family, etc. Some things do cost money, and we make sure to set aside some money each month for these kinds of activities. If we had no “fun money”, we’d probably have given up long ago.

2. Planning what we’re going to do once we pay off our debt. We don’t have specific plans of things we’re looking forward to doing once we are debt-free, but we have some ideas. Some big things we’d like to do include taking a trip and saving up for a house. We look at pictures of our dream house online, and we constantly talk about what kind of vacation we’ll take.
cold-1293305_1280
3. Creating a debt thermometer. I drew one of those goal thermometers and labeled it with certain money amounts. We fill in a little more as we make each monthly loan payment. We try to look at this as how far we’ve come instead of how much further we have to go.

4. Setting up mini rewards. In March, I decided to do a 6-month clothes buying fast. The fast will end in September, I will allow myself a shopping trip to get some essentials. I’ll limit how much I spend so I don’t go all-out, but it will definitely be a special day. Rick and I are also planning a small trip once we reach a certain mark on our debt-free goal thermometer. We have a few fairly inexpensive extended weekend trip options in mind.

5. Telling people about what we’re doing and the progress we’re making. We tell close friends, family, and my blogging community about our goals, struggles and dreams. It’s great to have the support and accountability of those who care.

6. Reading financial books/blogs or goal-setting books. Hearing other people’s success stories inspire me to keep at my goals. Here are a few that I found to be helpful:
Cut Your Grocery Bill in Half with America’s Cheapest Family by Steve & Annette Economides. This one helped me find strategies to cut down our monthly grocery bill by about $100.
Better Than Before by Gretchen Rubin. I learned a lot about my tendencies and how to better manage not only my spending habits, but also my sleep, exercise and work habits.
-And Then We Saved. Anna did a year-long, intense spending fast. She saved $24,000 in 15 months!

7. Praying. Talking stuff out with God and asking for guidance is always helpful! Not just with the big stuff, but with the little day-to-day decisions. It’s helpful in finding the balance and keeping things in perspective.

What do you do to stay motivated to achieve your financial goals?

**This post contains affiliate links. You won’t pay any extra for making a purchase through these links, and I may earn some money to keep this blog going. I only link to products I support or use personally.

Living Within Our Means

I mentioned in a previous post that my husband and I are working on paying off student loans with the help of Dave Ramsey’s 7 Baby Steps. As prescribed in Dave’s steps, it is important for Rick and me to live within our means. We have dreams of becoming debt-free, having a family, owning a home, traveling and giving generously to important causes. We recognize we can’t do all of these things now, and in order to partake in some of them, we need to pay down our debt by making sacrifices. I’ve previously discussed the changes we’re making including making a structured budget and cutting back on extras.

In Dave’s book, The Total Money Makeover, he explains how finances are 20% smarts and 80% behavior. As a health coach, I know a little about behavior change, and it requires thought and intention. I’ve started thinking about my purchases before I make them. I ask myself how this item will benefit me. Is it a want or a need? How will it improve my life? I’ve been taking a lot of things out of my shopping cart.

To stay positive and to keep me motivated, I try to look at how these sacrifices will benefit us. I keep reminding myself of the goal and why we’re making these sacrifices. It’s going to feel great when we make our final loan payment. When we can start looking for a house or take that trip to Australia. As with weight loss, it’s always exciting to get to the next landmark, the next 10 lbs. We remind ourselves of our progress every time we make a large payment toward our loans or when the first number changes.

Another thing that has helped me to change my mindset regarding the sacrifices we’re making is being grateful for what we have. Rick and I both have good jobs, a loving family and friends, and we have a great relationship with each other. We might not be taking big vacations for awhile, but that doesn’t mean we can’t create great memories. Just spending time together and with the wonderful people in our life is awesome. We have opportunities to enjoy free music, go dancing, read books, play games, go hiking, have meaningful conversations, all costing little to no money. We don’t need expensive clothes to impress anyone, and we can properly nourish our bodies without eating expensively. We focus on being grateful for what we already have, not the things society tells us we need to buy.

**This post contains affiliate links. You won’t pay any extra for making a purchase through these links and I may earn some money to keep this blog going. I only link to products I support or use personally.

Starting Our Money Makeover

These days, student loans seem to be the norm for almost anyone who went to college, and my husband and I are no exception. We’re about 1/3 of the way through paying off our hefty sum, and we would really like to move things along more quickly.

With that said, we needed to figure out some ways to save more money. Some of the things we already do to save money include shopping at Aldi and Goodwill, limiting eat-outs, cutting back on Christmas gifts, and shopping the sales. I thought we were doing a pretty good job, and we must have been doing something right in order to have gotten through 1/3 of the loans, right?

Right. But we can do better.

I checked out Dave Ramsey’s The Total Money Makeover from the library, and since reading through his 7 Baby Steps, Rick and I have come up with a plan to pay off the rest of these pesky loans.

So far, we’ve:
-Sold stocks (Rick LOVES stocks).
-Changed the amount we set aside for retirement.
-Gotten rid of our gym membership.
-Cut out Netflix.
-Created a detailed budget.

I think the budget is going to be the most helpful. We’ve taken a look at how we’ve spent our money over the past month and saw where improvements could be made. We’ve created what we think is a realistic budget for next month, and we are determined to stick to it.

Dave talks about staying focused and getting rid of debt with gazelle-like intensity. When a cheetah is chasing a gazelle, the gazelle needs to out-smart the super fast cheetah and run for its life. (Dave explains it better in the book.) Rick and I are going to aim to be gazelle-intense for awhile and stick to our budget until these loans are gone.

A few other things we’re going to look into to help us tackle these loans:
-Better car insurance deals
-Ways to cut back on grocery expenses
-Paying with cash
-Donating plasma

I would highly recommend reading The Total Money Makeover or any one of Dave Ramsey’s books if you are stressed about your finances. He makes excellent financial points and his program has helped millions. Click here to find more information on his website.

**This post contains affiliate links. You won’t pay any extra for making a purchase through these links and I may earn some money to keep this blog going. I only link to products I support or use personally.