Bookending ‘The Year of No’

Today is President’s Day in the United States, and a Federal holiday. It also happens to be the day my family sets aside each year to get our taxes done.

In 2017, the President signed into law the Tax Cuts and Jobs Act. The law’s purpose was to lower the amount of taxes paid by most Americans (hopefully stimulating the economy, creating jobs, etc.). There is plenty of debate elsewhere on whether this legislation is a good or bad thing, I only mention it here because I knew it could have some effect as we worked to pay off our student loans in 2018.

I was eager to get my taxes done today, because I honestly wasn’t sure how it was going to play out. As I read stories like “More Taxpayers Will Owe The IRS In April Because Of Underwithholding, Report Says,” I started to get a little nervous.

Would our work to pay off our student loans feel like a pyrrhic victory? Fortunately, the answer ended up being, “No.”

Our taxes are filed, and not only did we end up paying less taxes throughout 2018, but we are also receiving a refund. This refund will go toward our next goal of going to Disney World in September. I am quite happy with all the hard work from 2018 turned out. It was all worth it.

The filing of our taxes is the final bookend from The Year of No. Although the year ended with some personal setbacks stemming from the unexpected death of my mother, I am happy to report that the efforts of 2018 weren’t further penalized by having to pay additional taxes.

We are still not 100 percent completely debt free because of events toward the end of last year, but we are done with the debt I hated most: student loans. For that, I am very grateful.

An interesting tidbit I gleaned from my discussion with my tax preparer this morning, in addition to other education I learned last year, is that the Tax Cuts and Jobs Acts might actually reward taxpayers more than they realize.

You can potentially lower your tax bill by putting your money in pre-tax savings, such as a 401k, an HSA (if available to you), and college savings plans (if you have dependents who will go to college). This could lower your tax bill by moving you toward (or even into) a lower tax bracket, which would also lower the amount of taxes you end up paying.

Is the new tax law best for the country? That is another debate entirely. But, paying less taxes can be much better for your pocketbook, especially if you’re trying to get out of debt.

I wanted to stress how important I think it is to hire an expert. Our taxes are probably not complex enough to necessitate having to use a professional tax service. However, there are enough changes in our tax law from year to year — let alone when major legislation is passed — that I find great value in having someone who knows much more than me guide me through the finer points. My go-to is Hume’s Tax Service from when we used to live in Lawrence, Kansas, and I don’t plan on stopping using their services just because we moved 50 minutes away.

While I was there, I also took the time to ask how recent tax changes would affect our future plans, such as buying a house, and received some important information that will help us as we move toward that goal.

But first, we’re going to Disney World.

This chapter of my life was called “Getting out from the burden of student loans.” It is finally complete.

A fitting end

After 14 years, roughly 195,000 miles, and a ton of memories, my little blue Toyota Corolla is no  longer part of our household.

Our plan was to replace it in March of 2019, but I was involved in an auto accident in November which caused me to rethink that plan. The accident took off half the bumper, and I’m sure I could have replaced it. But having already gone down the path of sinking money into an old vehicle that wasn’t worth fixing, I wasn’t going to repeat that mistake.

I found a 2010 Toyota Corolla with 84,000 miles on it and it cost half of what my 2003 Toyota Corolla cost when I bought it in November 2004. Yes, it was bought on credit. Despite all the things I’ve written about on this blog and our minor stint 100 percent debt free this year, I have zero negative feelings about that.

Red Toyota Corolla
Out with the old, in with the newer (but certainly not new).

Allow me to explain.

I found a flaw in Dave Ramsey’s system, and it has everything to do with Baby Step 1: Save $1,000 in a starter emergency fund.

The starter emergency fund is just to get you buy while you go crazy about debt and get it paid off. That worked well for us for a long time. But if you live in a place where having dependable cars is a necessity, you won’t be replacing your car for only $1,000 if you have one die. There will be fees associated with taxes, tags, insurance, and in the case of the state where I live, inspections. And what you don’t pay for in dollars, I promise you’ll pay at least as much in time getting your a different car established in your name.

When you get to the end of your debt free journey as we did but have nothing to your name but $1,000 and things start going bad, guess where you end up? That’s right: credit. I’m sure I could make a case against doing what we did. I’m sure we could have been more strict, more intense, more whatever. We even received a financial gift that helped out a lot with our van purchase, but had we not had that gift we would have definitely used credit either way.

That’s not to say I think Ramsey’s plan is a bad one. I think it’s great for a lot of people. My biggest complaint would be that the plan tends to be touted as the only way to financial fitness, and its devotees tend to believe the same way (I was one of them).

I think his plan needs updated. Maybe your starter emergency fund should be a percentage of your monthly income. Maybe while you’re paying off debt (which is typically two years or less according to Ramsey’s experience), you should be saving a little every month rather than putting it all on debt. I don’t know what the answer is, but I’m sure it needs adjusted. I don’t believe Baby Step 1 is correct.

We are no longer following Dave Ramsey’s Baby Steps plan.

That’s not to say I wouldn’t recommend Dave Ramsey and his plan to those looking to go from zero to hero in terms of financial knowledge. I think his plan has many, many good points and has obviously helped many people.

But the plan might not be what is best for your situation, and I think that’s something Ramsey’s plan misses. That is now the path my household is on. We are figuring out our own plan for our situation, and we’ll take it step-by-step.

Yes, I want to be debt free. Yes, I want to financially wise. But I also don’t want to be confined to dogma because someone else is too scared to think outside of the box.

So Dave, it’s been fun. I will still listen, still be a fan, and still recommend you to others. But your plan doesn’t work for us, and we’re going to find a different way.


Knowing when to pause

As this year began, I was filled with an amazing amount of hope for how it would end. Little did I know how different it would end.

Financially, we are at a standstill because life has been put on pause. On Oct 13, 2018, my mother died unexpectedly. I had a good relationship with her. Perhaps not surprisingly, her death has hit me hard.

There have been many financial lessons learned in the past month. As such, I’ve been thinking about writing on the following topics from a financial perspective:

  • Writing a will
  • How much one should spend on burying the dead
  • Life insurance
  • How to let your loved ones know where all the very important papers and logins are
  • Being prepared for a death

But now is not the time to write about such things. My heart is not into writing much. It’s hard enough getting through the day, let alone thinking of writing. Dave Ramsey likes to stress the personal in the phrase “personal finance,” and now is one of those times where I certainly see why he does that.

Left unchecked, I could very easily self-medicate through spending and consumption. Would a new Apple Watch or iPhone bring back a little fun? Would going out and purchasing a “project house” help occupy my mind in my non-work hours? Would replacing my decrepit car ease my pain a little during my daily drives?

The answer to any of those questions may very well be “yes.” However, the risk is very high that the answer could be “no,” or “only temporarily,” and so the only real answer in times of uncertainty and turmoil is “wait.”

The funny thing is, at this moment, I really don’t care about being debt free. It’s very, very low on my list of things I find important for the time being.

Right now, I’m in a period of reflection. There are some key points surrounding my mother’s death that are challenging my thoughts on my own views of personal finance, but I need to allow some time for my views to mature. I will definitely write about them, but now is not the time to do so.

For now, I will round out the year. I will work, I will spend time with my family, I will grieve, and keep repeating all those things. For now, I wait.

A step backwards

Just when I thought I was out … they pull me back in. — Michael Corleone, as played by Al Pacino in The Godfather: Part III

When I started writing this charting of our journey to debt freedom, I decided to be highly transparent through the process. I wanted my writing to be helpful to others who might be on the same journey, even if our circumstances are unique to us. I had hoped that giving a glimpse into our family’s journey, it might helpful to many more.

Sadly, we are no longer debt free. I am sorry. But if you will allow for my side of the story, please keep reading.

In July, I wrote about our decrepit van and the struggle we were having keeping it afloat. It was limping along until August, but then ran into yet another issue that I couldn’t troubleshoot on my own. It wasn’t for a lack of trying. I went to a local salvage yard and bought a part for next to nothing in a last-ditch effort hoping it would fix it, but the effort was in vain.

The van, which we called Rosie, had reached end of life. She wasn’t safe to drive anymore. The blinkers and the horn didn’t work, so getting around in the city without the necessary safety accoutrements didn’t seem to be the right choice since Rosie served as our main daily kid-hauler.

It seemed like we were destined to sink more money into it, but then the unexpected happened. We received a windfall in the form of a financial blessing. The amount was more than enough to cover the cost of a replacement van. We’ve been planning, researching, and saving to replace the van in December, but we weren’t fully funded toward that goal yet. And then this out-of-the-blue windfall happened, and we examined our options.

We could:

  1. Throw more money at the van and hope that the fixes would get us by until later when we could have the full amount to pay for a newer vehicle with cash;
  2. Purchase a somewhat newer, and somewhat similar mileage van that would be completely paid for with the money we received and what we had saved up so far, or;
  3. Purchase a newer, lower-mileage vehicle with everything we wanted but would require a small loan to get us all the way there, coupled with what we had in savings and our newly acquired funds.

My wife and I discussed it, and felt like putting more money into a vehicle that was destined for the scrapyard was a foolish decision. We could have went with the second option, but we believed that would be a temporary stopgap. So, we chose option three.

For most people, option three would be a terrible choice. However, we were in a unique situation where we had most, but not all, of the funds to purchase. The market for used vehicles is always hit or miss, but we knew exactly what we wanted and there happened to be the exact type of van to meet all of our needs and wants available elsewhere in the metro area.

After two test drives, lots of discussion, and some paperwork, the deal was done.

Believe me, it pains me to write this. And yes, all of this was a choice. Whenever someone says, “I had to buy a (insert whatever purchase here),” that statement should almost always be read, “I chose to buy a new (thing).” We chose to go back into debt for this purchase. No matter how small the amount is, it was a choice we made.

This weekend has really made me think hard about the baby steps. If you’re following the plan and you have things like working cars or a home that needs little maintenance, then things are going to work out great. But what happens when you get out of debt and things you’ve held together on a string start falling apart? It takes time to save up enough money for an emergency fund, and then start replacing things. If all goes well, then you’re golden. But if not?

Also, I’ve thought a lot about dogma. Those following the Baby Steps tend to be fairly cultish in adherence to the principles (raises hand). The principles are sound, and wise, but are they 100 percent applicable to all people? When do you step away from a dogmatic approach and ask, “What’s the best to do for us, in our situation, right now?” I’m not saying I have the answers to these questions. I am merely asking them.

This weekend’s van purchase was hopefully one we’ll utilize for another decade. We purchased Rosie in 2009, and it make it until last this year. That’s quite a run for a van that was made in 2000. The new van is a 2012 Toyota Sienna minivan with 107,000 miles on it. It runs and rides like a dream. The blinkers work, the horn works, and it has excellent tires. Even though our last van was a Sienna, they have made great changes in the last 19 years, and our new van has an incredible amount more space for our family of five.

I regret that we were not in a better position to make this an outright purchase, but we didn’t have enough saved yet to make that happen. Perhaps we shouldn’t have put $900 into the old van in July. Maybe my wife and I shouldn’t have taken a vacation to celebrate our 15-year anniversary that same month. It’s possible we could have been more intense in our savings since we paid off our initial debt in June. But that’s not what happened, and now we have to deal with the choices of our actions, past and present.

Most importantly, we had to tell our children of the decision, why we did it, and what this means going forward. It looks like The Year of No is still on. In a few months, we’ll be back to where we were in June; we just had to take a little detour to get there.

Dear reader, I’m sorry if I let you down. Please know I didn’t make this decision flippantly, and weighed heavily all the options we had before us. In the end, we did what we felt was best for us at this time. But I hope you can appreciate my effort to be transparent, even if that means admitting to backpedalling a little for a short time. I value integrity to a great degree, and felt I had to be forthcoming about our decision this Labor Day weekend.

My hope is that in a few months, this won’t feel like such a sting. And in a year, my hope is this won’t even be a blip on the greater story of an American family trying to navigate this country’s financial waters.

Time will reveal if my suspicions are true.

‘The Year Of No’ monthly report: July

Although we became debt free in June, The Year of No is still in effect. However, July became The Month of Yes.

In July, my wife and I celebrated our 15th wedding anniversary. Instead of putting money into savings, we allocated money to taking a mini vacation to someplace we have never been before, the Lake of the Ozarks. We did a staycation for the first few days with the kids, then my parents took our three children while my wife and I got away for a few days all to ourselves.

It was great to be able to take a vacation and not be burdened by “How are we going to pay for this later?” However, the month was not without some share of financial setbacks. We had some van trouble that needed repairs, but fortunately only had to dip into a little bit of savings to pay for it. Plus, we know how to take a cheap vacation. We used Airbnb for our lodging, rented a vehicle at a discount with our Costco membership, and didn’t eat out much. Instead we cooked meals in the kitchenette where we stayed. An anniversary gift that paid for a meal at a nice restaurant also helped (thanks mom and dad).

We’re no further ahead from when we paid off debt in June, but we’re not really behind, either. Now we have a new goal. It’s clear to us that the van is reaching the end of the line for our needs. Although I would love to save up a big, fat emergency fund we will have to instead save to replace the van within the next six months or so. I suppose that while we save, we will still be saving money, so that still sort of counts as a temporary emergency fund. It sucks that we need to replace a vehicle, but that’s the way it goes.

It could be worse; we could have debt left to go. But, we don’t!

Sadly, this means that we’ll have to put off our trip to Disney World. We had hoped we could go sometime in February, but now I have no idea when that will come. That’s not an easy trip to take because of the expense, but this will give me some additional time to research how to take the least expensive trip there to celebrate our debt freedom with the kids. I keep finding resources on how to make that trip less expensive, and I’ll be sure to share my findings when I figure out more in the months to come.

So now, we return to our frugal ways. It’s becoming more clear to be that being out of debt is not the end of the journey, but rather, the beginning.

When cars go bad

This week has been a challenging one for me with regard to our kid hauler.

There’s been a recall notice that I’ve sat on for forever, and since I’m on vacation this week I decided to take advantage of some free time to get it taken care of. Unfortunately, the Toyota dealership didn’t have the part to repair our 2000 Toyota Sienna, but one has been ordered and I’ll have to take the minivan back out for the final repair when the part comes in.

Toyota inspected the vehicle, and found that the alignment was off. They offered to fix it for $119, but I decided to pass. I called around and found a tire place not far from our home who would do it for $89, and decided to go that route. The alignment was successful, but they also found another issue with the CV joints. They are broken and leaking grease underneath. I was able to see the damage myself and confirm that this is something that should be taken care of.

However, I was quoted $500 ($250 per side) to have it fixed, and I decided to hold off. The van is only worth between $1,500 to $2,000, and I couldn’t see spending up to one-third of the vehicle’s worth on repairs when we already planned on replacing the minivan in the first quarter of next year.

I was distraught by the news. Although we have no debt, we don’t have enough saved up for an all-out replacement, or even a minor step up in vehicle. So my options were, as I saw it:

  • Switch vehicles with my wife until we can save up money for a replacement and risk a catastrophic failure, or;
  • Go buy a new (well, used) car using credit

As difficult as it is to think about, I was tempted to go buy a car on credit. I rationalized in my head how we could get an inexpensive enough replacement minivan and have it paid off by the end of the year. We could use the same vigor we applied to getting out of debt by June and then be debt free, again, by December.

But the more I thought about that option, the less comfortable I became. Did we really just bust our butts to get out of debt only to go back in again? How would we feel going back in debt after we’ve done all this grandstanding to get out of it?

So I did what I’ve learned to do in my mature years: I gave it five (proverbial) minutes.

After having student loan debt for so long, I have excellent credit. I could have gone out and bought anything I wanted and had it sitting in the driveway when my wife returned home from taking the kids to a dentist appointment. Instead, I opted to contact three people I consider wise, present the problem to them, also talk to my wife, and then make a decision.

The consensus was, generally:

  • You should consider repairing it
  • You’ll hate going back into debt
  • See what else you can think of

In an moment of clarity, I came up with a third option, and ran it by my wife, Amy. “If we could pay $100 per month for five months for you to drive the kid hauler safely and buy us enough time to save up cash for another minivan by December, would you do it?”

We were already on the same page. “We should fix the van,” she said.

I called the repair place, and asked if they could come down on the price. They knocked $60 off, and I agreed to the deal. We dropped off the van to get fixed, then packed up the family of five into my little Toyota Corolla and went to a local water park to enjoy the afternoon.

I don’t believe in no-win scenarios.

It appears we get to keep our dignity in tact. Granted, I would much rather put that money into a new vehicle. But talking it over with Amy, she jolted me back to my senses. The line where we say “enough” to borrowing money has been drawn, and we’re not backing down from it.

Rosie‘s days with us are numbered, but at least they won’t come with the stain of a car payment. Let’s just hope this plan works out.

Update – July 31, 2018: There ended up being some additional repairs that needed to be done to fully fix the van. With the alignment and CV joint repair, the total repair cost came to almost $800. Although that tweaks the above numbers a little, it didn’t change the outcome. We still believe it was better to spend $800 now, than to go in debt even for a vehicle we don’t plan on keeping much longer.

It still hurt to pay it, though.

Minding the blind spot

Recently I posted an article on social media by a minimalist author I read, Joshua Becker. The article, “All The Things I Want to Say About Money But Never Do,” spoke some tough words about the difference between those who say they want to have a different life but live very differently than the story they tell.

Probably one of the hardest hitting lines of the piece reads like this: “You would have more money for the things you want if you stopped foolishly wasting it on other things.

Woo, boy. Let’s just lay it all out there.

To be clear, Becker wasn’t talking about things like “if you’re poor, stop being poor” or how the ever vilified millennials could afford a house if only they could give up their love for avocado toast. Becker was quite clear — there are people he knows who have said they wanted to do things differently with their lives and finances, yet the lifestyle they choose daily reflect a different pattern.

I have people in my life who are like that also. Over time, I have learned to keep my mouth shut. Well, mostly. I’ve gotten better about it over the years. I have found that no one wants to hear how they’re doing something wrong, especially when they’re not ready to make a real change.

An acquaintance of mine called this viewpoint “disgustingly condescending and unrealistic,” in addition to “extremely elitist and smug.” He then went on to talk about my family’s progress in getting out of debt, and then spent the rest of his time talking about how our progress would be impossible in his current situation. As such, he derided our progress in claiming that the success we had couldn’t be applied to everyone.

I tried to point out that we sacrificed a lot, cutting down expenses to the bone. I tried to explain that I had worked two jobs, and as such put all extra money on our debt. I tried to point out that our income hasn’t always been good, and that there were plenty of times where there was no more money at the end of paying bills for the month.

He didn’t hear what I was saying. No, he didn’t want to hear what I was saying. The hard and simple truth was this: he was brimming with envy, because he wasn’t living our life.

That is a dangerous road to go down, and one that will never lead to happiness or success.

There was something he said that gave me enough pause that I’ve spent weeks thinking about it. He said, “But the amount of money you were able to put toward paying off debt each month is more than some people even bring home in a month. That’s your blind spot.”

He is partially correct. My family’s ability to pay on debt was more than some people bring home every month. But the blind spot isn’t mine, it’s his and everyone like him.

I don’t consider my family rich in the western mindset view of that word (but I would say we are in the global sense). We’ve worked really hard to get to zero, but our total net worth, especially for the age of my wife and I, not very far in the positive column. We may have cut off all the red chain links, but the black chains aren’t linking together, at least, not yet.

But this discussion really isn’t about money. The actual conversation revolves around the idea that you are responsible for your destiny. Money problems are only a symptom of a greater problem that you haven’t yet taken ownership of your life. Even worse, when your thoughts are consumed comparing your life to someone else’s, you end up stuck in a cycle of defeat.

Envy is the seed that plants a tree of spiritual death.

For every 10 people who have asked me about how to make a change in their career or how to pay off their debt, there’s only one or two who actually make an effort to create change. Yes, of course, there are people out there who are burdened with terrible wages, no skills, and difficult life circumstances. Of course! But that in no way means there isn’t a way out for those who have grit.

Change won’t happen overnight. Sometimes, it takes years. Take the story of the woman whose picture of her name badges went viral last year. The picture shows the progression of her work from a fast food worker at KFC, to eventually becoming a registered nurse.

There are people I know who found free programs to teach coding, sacrificed their time to learn some new skills, then found an apprentice job. Taking a pay cut from their previous employment, they are working toward an unknown future but betting on the one thing they feel they have the best investment in: themselves.

Or how about a friend of mine who has spent a long time working in the service industry, and decided that life wasn’t good enough for him? He learned new skills, dove into the work, and just accepted a position where he’ll be doing tech support for a company in Kansas City. He used to be just a guy that served drinks at a local watering hole, but now he’s on a different path. “I’m excited to get out of the bars,” he told me.

If you go to your favorite search engine and type “what the rich don’t understand about the poor,” you’ll find no shortage of articles talking about successful people and their blind spots. But what if you flip that on its head? If you search for “what the poor don’t understand about the rich” you get very different and sparse results. The best answers I could find on that question came from Quora: “What do rich people understand that poor people don’t?”

It seems there’s plenty of blind spots to go around.

Outside of the books necessary for my job growth and my decade plus interest in nutrition and health, the only other topic I’ve read and researched immensely would be personal finance. The one thing all of these texts have in common are a common question that is asked of the reader, either blatantly or with subtlety — what are you doing to improve?

I most like how the philosopher/writer Mark Manson put it: “How do you choose to suffer?” If you want to make change and make progress, it is imperative you learn how much you’re willing to suffer to get what you want. There is no way around it — struggle is necessary for growth and success.

I am positive I could look at just about anyone’s budget and find ways to make cuts. I am certain I could look at someone’s work and lead them on a path toward greater prosperity. Will someone else have the same outcome that we are now enjoying? I certainly hope not. I hope he is more successful. I hope she makes fewer mistakes. I want everyone to be successful, and enjoy a rich, full, happy life. And that, most certainly, will mean different things to different people.

There’s an old saying that says, “You can show someone the door, but you can’t make them go through it.” To those who want to poo poo their life and compare their circumstances to others, there will be no happiness. Those who blame the government, their families, their jobs, or whatever for their current situation will have no peace. Can they truly look themselves in the mirror after yet another year and say, “Nothing has changed because the world hasn’t let me progress?”

On the flipside, there are those who refuse to be complacent. They may be battered, but they are not done fighting. They may have the odds stacked against them, but they are working to find their way to the next level, and the next, and the next.

I don’t have enough time to outline all my failures, nor would I choose to do so. Instead, I’m working to keep getting better at all the things I do. I’m going to persist in looking forward, and I keep stepping away from my past. I don’t find much value in looking backwards.

You have before you two paths, one that leads to self pity, and another that leads to struggle. The obstacle is the way.


How did you do that?

In a previous post, I talked about one of two common questions I’ve been asked since becoming debt free: “What’s next?” This post is about the other common question I’ve heard quite a bit as well: “How did you do that?”

You’ve probably heard or said this question before. It happens a lot when someone loses a lot of weight. We all want to know the magic secret. “How did you lose 20 pounds? I have to know how you did that!”

We’re all looking for the secret to a higher level of success. While I don’t know if what we did is exactly secret (this is a public blog after all), if these words can encourage others to examine how they are doing things then I find it important to share.

  1. Have a plan. I stumbled for years before I found Dave Ramsey’s book “The Total Money Makeover” and decided the plan he outlined made sense. Maybe you don’t think Ramsey’s plan is right for you, and that’s OK. But don’t sit around without getting more knowledge about how you should move forward. Do some reading, investigate, watch some videos, whatever. Knowledge is power, and there’s no reason in a modern society to claim ignorance. Between your local library, videos, blogs, podcasts, and much more, cost shouldn’t be a factor either. There are lots of ways to increase your knowledge for free or cheap, if you’re willing to give up complacency and start searching.
  2. Go all in. We made huge strides when we decided to stop doing things at half effort. We looked for ways to cut expenses. We looked for deals. We increased income. And probably most importantly since I’m married, my wife and I got on the same page. We said no a lot. It was painful to turn down going out to eat, buying that extra self indulgence, or rewarding ourselves because we “deserve it.” Going all in requires a lot of intensity, but focused intensity is how you win.
  3. Have a monthly budget. I’m not sure if people are good or bad about this, but there’s no way I could live my life without a budget anymore. At one point in my life that wasn’t the case. I was so horrible. I spent money and kept checking my bank account to make sure I didn’t go over. That worked pretty well until it didn’t. I certainly didn’t have a plan to save or pay off any debt. I spent and spent and hoped everything would turn out OK. Now, we have a monthly budget (made in a spreadsheet) that allows us to tell our money how we’re going to spend it. We adjust as needed, but no more do we spend without a plan. There are many resources available to help you get started making a budget, so don’t make any excuses not to do it. Speaking of that …
  4. Stop making excuses. I was the king of making excuses. There was always some reason we weren’t making better progress. Only after I took a hard look at myself and my family’s situation, and was honest about why things were as they were that I came to realize we could do more. As a species, we are incredibly efficient at feeling sorry for ourselves. When you’ve finally reached you’re “I’ve had enough!” moment, you can reach into the pit of your stomach, purge the excuses, and get to doing the work of making a real change.
  5. Put off buying all that stuff you probably don’t need anyway. Do you really need a new car, or would a repair and contentment or a used car do fine for now? Are those name brand shoes a necessity, or can you get by with some “el cheapos” until later? Why are you still going out to eat for $10 to $15 a pop when you could easily bring a lunch for $2 a meal? If you delay your desires for a little while, then you can reap the rewards in the near future. The time goes by quicker than you might think. Resist the urge to indiscriminately spend now, and then go get yourself some nicer things later when you can use money instead of credit.
  6. Work hard, but also work smart. I was totally willing to work any kind of extra job to accelerate our debt payoff process, and had the support from my spouse to do it. I looked around and came across some side income that utilized the same skills from my profession, which happened to pay a lot better than being a janitor or a casino security guard (two jobs I seriously considered). The side job also allowed me to work from home, so I didn’t have to be away from my family for hours on end. Cutting costs will only take you so far, but bringing in additional income will catapult your efforts to the next level. It was hard work and stressful to keep things in balance at times, but it was so worth it.
  7. Ignore everybody. You might come have people in your life who won’t understand what you’re doing or why you’re doing it. From my experience, there are plenty of people who are willing to tell you how you’re doing it wrong and why your efforts aren’t that special. Ignore them; ignore everybody. The number of people I have found who are actively working to pay off debt and improve their financial future is very low. Fortunately, we were also surrounded by people who were encouraging us. But really, you have to ignore them, too. If you get too comfortable with your progress you may be tempted to back off your intensity. Don’t back off. Ignore the haters, say thank you to your supporters, and push really hard to the end.
  8. Have a big “why.” My family was a big motivator, for sure. I want to bring my children up with sound financial principles so they grow up and hopefully avoid some of the mistakes their mother and I have made. In addition, I was angry. Our student loan was our last debt, and I hate how the student loan system is set up. When students enter higher education, they are allowed to borrow huge sums of money. Regardless if you fall on financial hardship, like say the global economy almost collapsing, you’re indebted for life. Government-backed student loans are not bankrupt-able. I made that an excuse for a long time until I decided to funnel anger into energy for getting out of debt. We’re no longer a slave to that system of control, and I hope I can teach my children to stay free as well.

There is probably more to it, but that’s a lot of the main points. What’s keeping you from paying off your debt? If I can do this, then you can do this. It certainly won’t be easy, but I doubt you’ll regret it.

And as Ramsey says, “If you pay off your debt and hate it, you can always go get you some more.”

Next steps

Since becoming debt free, I’ve had two questions come up regularly by people I know and readers of this site. One of the questions I’ll address in another post, but this post is about the other question I’ve heard a lot: “Now that you’ve paid off your debt, what will you do next?”

My family is following Dave Ramsey‘s baby steps plan for our finances. In Baby Step 1, cultists followers save $1,000 — and only $1,000 — as a type of baby emergency fund to take care of problems that could arise while working the way out of debt. I have found that this step is often the most misunderstood of all the steps.

Yes, $1,000 isn’t enough to cover a major emergency. If something goes wrong that means you have to get pretty creative in figuring out how you can overcome the obstacle without going deeper in debt if possible. This is a difficult feat, and I’ll be the first to admit that for some major emergencies, you might end up with an expense that cost more than $1,000. But our experience has proven that most of life’s emergencies can be covered with $1,000 or less. In those cases, you use your baby emergency fund, press pause on paying more on the debt, and then rebuild the $1,000 as quickly as possible.

This baby emergency fund is not supposed to make you feel comfortable. In fact, it’s quite the opposite. It serves as a kind of cushion between you and minor emergencies, while also making you feel the pressure to quickly get out of debt so you can move on to a more robust emergency fund. I’ll cover that in a minute.

In Baby Step 2, you are supposed to go kind of insane. You buckle down, get really serious about paying off the debt, and then list all your debts from smallest to largest regardless of the interest rate on each debt. So, if you had $5,000 in credit cards, a $400 line of credit at the furniture store, student loans of $40,000, and a car loan of $10,000 the debt payoff would look like this:

  1. Line of credit: $400
  2. Credit cards: $5,000
  3. Car loan: $10,000
  4. Student loans: $40,000

This method is called the debt snowball, because once you pay the smallest loan with everything you have and then make the minimum payments on the rest. Once a debt is gone, you take what you were paying on that debt, and then apply it and any other money to the next debt. You keep going up the list until everything is paid.

I know what you’re thinking: it doesn’t make mathematical sense to disregard the interest rates and do it that way. However, the psychological wins you get from the debt snowball gaining momentum helps to keep you moving forward. And as Ramsey likes to say, “If we were doing math we wouldn’t be in this mess to begin with.”

So now that we’re here, what do we do now? Now we’re on to Baby Step 3.

In this step, we save three to six months of expenses — a real, actual, grown up emergency fund.

Whether you decide on three months or six months is more of a personal choice. Do you have a steady job that you feel has a reasonable expectation of being there for awhile? Do you have a household where both spouses work? In those cases, you might be fine with three months of expenses. Is your job volatile? Are you working on a contract basis or self employed? Then you might want to shoot for six months of expenses. It’s really up to you.

The great thing is that once all your debt is paid off, your monthly expenses will go down quite a bit. You end up needing less to sustain you in a Big Hairy Emergency. That’s where we are. We’re now in Baby Step 3, moving forward with socking money away for a potential emergency, which I promise you will come eventually.

I can’t think of a time in my adult life when we have had an actual emergency fund. Sadly, I can think of plenty of times where we have needed one, which ended up being handled with adding more debt rather than taking on extra jobs or working with service providers to get a payment plan figured out.

After we made our final debt payment, I was thrilled. However, since then I’ve felt a little lost. The process was such a huge part of our lives for awhile and now it’s … over. It sounds strange, but it’s almost like losing an old friend (even if it was one that I didn’t really like).

So now the challenge is this: we need to keep our intensity up. Now is not the time to start spending like crazy people. We’re still in The Year of No, but instead of our money going to some other bank, it’s now coming back to us. The danger is the possibility of lost intensity, but we will keep pressing on to our next goal.

Getting out of debt isn’t the end. In fact, it’s only the beginning.

We’re debt free

Free at last, free at last. Thank God almighty we are free at last. – Martin Luther King, Jr.

On Friday, June 15, 2018, my family officially became debt free.

We have no credit card debt.

We have no student loan debt.

We have no car debt.

We have no debt on appliances, electronics, or any other item.

And even though it’s not debt, we don’t even have any outstanding medical bills.

We’re currently renting, so we don’t even have a mortgage.

After almost 15 years of marriage, my wife, Amy, and I have finally returned to zero.

It’s been an amazing day. It started off with a nice morning walk, just me and my headphones. By the time I returned, the kids were already getting ready for the day. I grabbed Amy and said, “I need you to do something.” I logged in to the student loan providers website, set everything up, and said, “I want you to make the last payment.”

Amy pays the final debt
Amy makes the last payment on the remaining debt — the student loans.

She pressed the submit button, and closed the window. I am man enough to admit, I cried. Then, she cried. We hugged each other. She said, “You did it, babe.” I corrected her, “No, we did it.”

The wait began.

I had my favorite drink — Sugar Free Rockstar (which I like to call “cold coffee”) — and had the kids work on a sign that read “We’re Debt Free.” They colored in the letters with enthusiasm. They have been part of this process, and my family tree has been changed. They will grow up being taught to stay away from consumer debt, how to build savings, and learn how to give.

Amy had an activity planned with our kids, but my son was sick today so he stayed home with me while she took our two daughters to have some fun. The Boy and I hung out at the house. I chose to the take the day off today, because I wanted to be off for this special occasion. I cleaned and did a little house organization. I ordered my youngest daughter’s birthday gifts with the money we had budgeted. There’s no more credit card purchases here; everything is paid in full. I did anything to keep me busy while we waited for the official word from the student loan provider that the money had been processed.

My plan for today included meeting a dear friend of mine, David, to have a celebratory lunch. Since my son was sick, he agreed to bring lunch with him to my house and we enjoyed our meal at our kid-abused, paid for kitchen table. I had Chinese food, and savored every bite.

Food tastes better when you aren’t making payments on it.

My son wanted to play outside before going to the doctor, so we did. I relished my time with him. We went to the doctor; he’s fine and just needs to work a little virus out. He’s not contagious, so we are a “go” for celebrating more later tonight.

And then, more waiting. As has been the custom for this process this year, I knew the student loan provider wouldn’t have anything definitive until after 6 p.m. I checked anyway. “Processing,” it read. The wheels were in motion. I admit, I was nervous. “What if it doesn’t go through today? What if there’s some problem?” The borrower is truly slave to the lender.

We cut so much out of our budget this year. I took on a second job, utilizing the skills from my main job to aggressively accelerate our debt payoff. Amy helped run defense with the children, and kept the household functioning at somewhat normal levels. She was excellent with the budget when grocery shopping, finding things for the kids to do on the cheap, finding clothing, and so much more. For several months, I was doing 50+ hour weeks. It was so hard when we were going through it, but today it feels like a distant memory.

More waiting. And then, at 6 p.m., I checked again. The moment had finally arrived. The balance was shown as $0.00.

Our progress has been measured visually with a debt chain that has hung in our front room since January, the start of The Year of No. Each link represented $1,000 of debt, and we started the year with around $20,000 left to go.

I cut the next to last link in the chain, then had Amy cut the final one. It read, “Debt Free.”

Amy cuts last debt chain link
Amy cuts the last link in the debt chain.

Today was all about Amy. The last of the debt was hers, and today we fulfilled a goal I had made when we became engaged. I wanted us to be totally free, and now we have broken the chains of debt. When we started The Year of No, my deep-in-my-heart goal was to be out of debt by our anniversary. We beat that goal by one month. Our anniversary is July 26.

We have celebrated little milestones along this journey with something cheap and fun, and today was no different. We packed up the kids in our 18-year-old, paid-for, hanging-on-by-a-thread minivan and headed to a local frozen yogurt shop for a calorie-laden “dinner.” There no place for healthy food choices today; we celebrated our freedom with decadence, paid for with a debit card.

Debt free froyo
Celebrating being debt free with a family outing for froyo.

Froyo tastes better when it’s not attached to an annual percentage rate.

Today is day zero. Tomorrow is the first day of our debt-free life. I am beyond grateful to the many people who have helped on this journey, and have provided encouragement. I have even loved the haters, because nothing drives me more than “You can’t do that.”

We have followed Dave Ramsey’s plan as outlined in his book, “The Total Money Makeover.” I am here to say that we are proof: it’s a simple plan that works. I love it when a plan comes together. You can either wallow in your misery, or get angry and take action. I pray you chose the latter.

Our official debt payoff since starting the plan in full is $34,076 of debt paid off in 21 months.

Someone recently told me, “I wish I could be like you.”

You can.