The ghost of debt past

The Kansas City skyline, circa June 2005, atop the building where I first called Dave Ramsey.

Come with me on a journey back in time.

In August 2005, I called into “The Dave Ramsey Show.” I was the last caller of the hour. I was 30 years old, Amy and I had been married for just over two years, we were renting, had two incomes, and no kids.

We had almost $68,200 in debt, and our combined income was $62,000.

In some ways, we realized that was a lot of debt compared to our income. Just think about it: all of our combined debt totalled more than we made in a year by more than $6,000. After taxes and the interest on that debt, the mountain seemed insurmountable.

We had read Dave’s book, “The Total Money Makeover,” and things started to make sense. We were just starting to learn how to budget, and taking the baby steps (no pun intended) in getting our financial house in order.

I was feeling overwhelmed. How in the world were we going to pay off all this debt? I decided to give Dave a call, and see if he had any motivation. Dave is really good at psychology, if your mind is open enough to hear, and not just listen.

This is a recording of that call.

As you can tell, I was quite nervous talking to him. Dave can be a little intimidating. To some, it’s off-putting. He told me what I needed to hear. Unfortunately, I was only listening to what he had to say.

Here are some key takeaways from talking to Dave 12 years ago:

  • I thought we were “going hardcore on the budget.” The reality is we weren’t, or I would have known exactly how much we were putting on debt each month.
  • I used my wife as an excuse to not work an extra job to pay down the debt. This was yet another time where Amy and I weren’t on the same page about attacking this.
  • “(Dave): I don’t want to go eight years in this.” Oh Dave, I’m so sorry. It’s 12 years later and we’re still not done.
  • Dave said we should increase our intensity, and increase our momentum to speed up getting out of debt. Oops.
  • Dave said I should focus on making my web design interest into something more profitable. I did a little, but I didn’t go all in like I could have.
  • “If you move into a house you buy, with a $58,000 student loan, Murphy will be your guest in the spare bedroom. It’s a Murphy magnet, buying a house with a big pile of debt. ‘Cause everything that can go wrong will the first year, and then you’ll find yourself in a mess.” He was batting 1,000 on that one.

I dug up this clip when we were getting ready to sell our house in 2016. Then, it hit me. It was more than a decade later, and we hadn’t made any progress. We violated everything he warned out.

He was right about everything.

Fast-forward to July 2016. Our house now sold, we moved back into a rental. I was starting a job on Aug. 1 that had regular pay, benefits, and a decent income. I told Amy about digging up the clip, and we agreed that it was time to stop messing around. We had used having kids as an excuse. We bought a house that ate all of our money, but now we were done living there. I hadn’t worked an extra job aside from a little web development here and there since 2004. It was time to get serious; really serious.

In September 2016, we went through Financial Peace University. Then, we started throwing large amounts at our debt, more than we ever had before. But, we were still holding back a little.

In December of 2017, I started playing around with our budget. I began dreaming again. I began to have hope. I could see that if we cut a bunch of things, if we really doubled down on this, we could be debt free in 2018.

I showed Amy. She understood it would be hard, but she bought in.

This is why I’m a little bit nuts right now. I’m on fire to take care of this once and for all. I’m done messing around. We have pussyfooted around this debt for so long, it’s like it has become another family member.

But now, things are different. The extras in our life, they’re gone. I’m starting a side job in a few weeks. Our fridge is a shrine of empowerment, filled with artifacts to keep us going. On the side of the fridge is our debt payoff spreadsheet, my contract with Amy, and a bit of a spiritual promise, which I’ll write about in a future post.

And of course, we have the Debt Chain for the kids.

We are not trying to get out of debt. We are getting out of debt. I believe that we will win.

And, we will.

How to save $500 per month

If you are looking to cut your monthly expenses, we have discovered a tried and true method for holding onto your money each month.

It sounds radical, but we don’t have car payments. In fact, we haven’t had one since 2010.

Admittedly, we never had car payment of $500 a month. But according to this article in 2017, that was the average car payment in America last year.

It seems funny to me how nuts people are about cars. We have this idea built up in our head about what is needed vs. what is wanted, and those get confused a lot. At the base, a car (a term I’m using interchangeably as “all automobiles”), has one main purpose: to get from Point A to Point B, then back.

Safety is a concern for many people, but that can get taken too far, too. Let your mind fantasize every worst-case scenario, and you’ll quickly find yourself paying for way more car than you need.

Let me introduce you to my car, a 2003 Toyota Corolla.

Ain’t she a beaut?

Would you look at her? She’s got failing paint, pits in the hood, and the shocks are starting to wear out. When I go over bumps I hear a gentle knock. But this little car has been very good. We purchased this car in 2004. It had around 25,000 miles then, and now it has more than 214,000 miles. I researched the crap out of cars before settling on this one. I think it’s been in the shop only twice for minor repairs since 2004.

I don’t remember exactly when we paid it off, but it was sometime around when my oldest daughter was born in 2006, so let’s say 2007.

She’s not a pretty as she used to be. The paint has really started to wear in the last few years. My youngest daughter says the car’s “skin is peeling” just like a sunburn.

Oh, OK, fine. She’s a piece of crap. But she’s a paid, reliable piece of crap. She just happens to be aesthetically challenged.

The beloved kid hauler, a 2000 Toyota Sienna.

Our other vehicle is even more precious. I found this one in 2009. The kids have called her “Rosie” for years (I really don’t know why). When I found Rosie, she was a one-owner car with around 69,000 miles on her. She’s around 150,000 now. Rosie was unique because her miles were relatively low for her age, and when I found her, I just had to make her part of our lives.

Because she’s older, she has had a few more maintenance issues here and there. Thankfully, none of them have been major; just little annoyances that require keeping up on. But she’s perfectly safe enough. We’ve had many good memories with her. She has plenty wrong with her still, but nothing to hold us back from our everyday adventures. Rosie has been paid off since 2010.

It’s not to say that we don’t want updated, nicer vehicles. We certainly do. But all of this is to plant the seed that perhaps your money could be better spent not wrapped up in car payments for years on end.

We rented this sweet ride last summer. It was hard to give it back.

So since this is about a debt snowball journey around Dave Ramsey’s plan, what does Dave say (besides buy with cash not using debt)?

Dave recommends the total of all the things you own that has a motor in it should not exceed half of your annual income. Our cars total about $2,500, so we’re doing great by that rule.

We will update our vehicles after we’re done with this step. Given my short commute these days, I have considered just getting a paint job and driving my car until the wheels literally fall off.

But for now, we’ll stick with what we have. We will stick to the plan, curb our desires, and with each month we’ll kill this debt for good.

And then, we will upgrade the kid hauler — with cash.

How to know when you’re ready to buy a house

Picture of house
Home is where the wallet is.

Don’t do what we did.

I have mixed feelings about home ownership. For one, I believe it is good to own a home, and more importantly, to own it free and clear with no mortgage. As you get older and head toward retirement, having a mortgage is the last thing you need. It’s best to have a home that is totally paid off, with the only fees due are taxes, insurance, and maintenance.

It’s great to have a place to call “home.” It’s yours. You can do with it what you want. Everybody knows, “that’s where the Grubers live.” Homeownership means you have bought a stake in the community. You’re all in.

Unfortunately, our first experience in homeownership wasn’t the greatest. Here’s why.

In 2009, things were getting cramped in the little duplex we were renting. Our second daughter was born in June of that year, and we were getting “the itch” to move up in space and to finally put down some sort of roots.

In 2010, we purchased a house. The payment was just a little more than our rent, and we knew we could “afford” it. With five percent down and an FHA loan, we were off to the races.

It felt good to not be “throwing our money away” on rent anymore. Now our money was going to an asset. Woo hoo! The house wasn’t anything special — it was a two-bedroom, one-and-a-half bath townhouse with a basement and a one-car garage. But it was ours, we had a yard for the kids to play in, and we looked at it as our starter home.

Things were just fine the first year. Oh sure, we had to replace the microwave and the dishwasher, but they were old and needed to go anyway. We put in these beautiful, hardwood floors that I loved (Amy didn’t), which I knew would help the resale value when we were ready to move on.

Our mistake was twofold. One, we shouldn’t have bought a home with other debt. We had credit cards, a van payment, and student loans. But hey, we could “afford” it. Everything was going to be OK, right? Second, we didn’t have a good emergency fund, which meant that when crisis would strike, it would end up going on the credit card.

And crisis did strike.

In early 2011, a tree root from the neighbor’s tree broke through our sewer line. In 2013, a pinhole-sized leak from the water line that went to the ice maker on the refrigerator sprung while we were gone, causing damage to the hardwood flooring. The flooring was a total loss. Of course, there was painting to be done to the exterior, because two really hot summers absolutely destroyed the paint. That led to having to replace some siding, because without a good paint job the rains that eventually came did a number on the siding leading to the front door of our home. I even replaced the storm door on the front because it sucked.

Did I mention the heavy snow? We had two winters where the snowfall was around 12 inches or more. The snow piled up outside our window, which eventually led to wood rot that needed to be replaced. Wear and tear completely destroyed the backyard and killed all the grass, so we opted to put in sod to fix it completely. The window well drain wasn’t working properly, so we had to have another drain installed. Before we sold, I ended up having to put in yet another dishwasher, because we went through many loads a day. My wife ran a preschool out of our home for several years, and all the cleaning of the plates and cups for the kiddos simply wore out the first one I put in. We put in new sliding glass doors. I replaced the flooring in the kitchen and in both bathrooms. My dad even helped me put in a new countertop in the kitchen.

Homeownership is endless maintenance.

When we sold our house the inspector commented that the house was in really great shape, and complimented us on the excellent maintenance we had done over the six years we owned the house. That was great news.

The bad news came as a final parting gift. The buyers of our house did a sewer cam inspection as part of their overall inspection. Although the house came back with high marks, the sewer cam revealed — a total surprise to us — that the sewer had broken again. The aforementioned extreme heat and extreme moisture finally contracted and expanded enough to break the line for a second time.

I’m happy for the buyers of our home, because they got something that was well-kept. But did we ever pay a price to get it there. By my estimate, there’s no way we didn’t put an additional $10,000 in the house based on estimates and repairs.

I can only wonder where we’d be today if that money went toward debt instead of a house we no longer own.

Dave Ramsey has these guidelines for buying a home, and we violated most of them. Homeownership was one of the most stressful things I’ve ever done.

There were some pros to come out of the experience. I learned a lot about home maintenance. I learned to be pretty handy with tools, and got to the point where I felt like I could fix just about anything that came up. Had I to do it over again, I think I could have replaced the sewer line by myself (but I’d really rather not).

Thankfully, for now I don’t have to think about it.

After we sold our home in 2016, we moved to a new city. We did what many people who, after becoming homeowners can’t find it in their heart to do: we went back to renting. In fact, a year and a half later, we’re still renting while we finish the last of our debt.

Because of it, I don’t have a care in the world. Our rental isn’t much. It’s a three-bedroom, one-and-a-half bath townhouse with a basement and a one-car garage. It is sufficient for our needs. When something goes wrong, I call the landlord. Coincidentally, I’ve had to call him once for a minor issue. Other than that, it’s been maintenance free.

It’s funny how that works. All the places we rented were fairly free of problems, but own a house before you’re truly ready and Murphy will take up residence.

So, how do you know when you’re ready to buy a house? If you’re in debt, don’t. If you’re out of debt, get a good down payment and have an extra emergency fund, then buy the house.

I no longer think of a home as an investment, at least not a good financial one. That doesn’t mean I don’t want to own a house again. I do, even with all the maintenance and trouble we went through, I do. I know there will be the same issues with any home you buy. It’s only a matter of time.

But when we do it the next time, we’ll have a good down payment. We’ll have a solid emergency fund in the bank. And we’ll buy something we plan on sticking in a lot longer.

Until then, we are just fine right where we are.

Why I don’t follow most people’s opinions about money

When you start talking openly about personal finance, it opens the floodgates to others who want to share opinions about money.

I am totally OK with this. I like to hear the viewpoints of others, even if I disagree with them.

One of the more common pieces of advice goes something like this:

As long as my investment are making more than my debt, I’m not in a hurry to pay off my debt.

I have had this said to me many, many, many times.

This is a solid mathematical argument. Say I have $10,000 in investments, which makes 10 percent per year. That percent of return is not an unrealistic amount, and it would bring me an additional $1,000 in interest which would continue to compound. That’s pretty good! If I had purchased a car for $15,000 at 5 percent interest, that means it cost me an additional $750 per year. So, $1,000 minus $750 equals $250 extra per year, and I haven’t done anything different. If I were to sink even more into my investments, the difference between my investments and my debt grows even larger.

That is a sweet deal; a really sweet deal. Following this formula, it makes clear mathematical sense to put even more into investments and let the debt get paid off over time through regular payments.

Here’s why we’re not doing that.

In mid-2011, my wife and I were at a breaking point. The relationship was not healthy. Earlier in the year, a tree root had broken through the sewer line of our home costing a few thousand dollars to repair. My wife’s business had only been open about a year at that point, and the income was coming in, but wasn’t steady and was barely enough. We fought all the time about money, or the lack of it to cover the expense of owning a home, coupled with the debt payments we had.

It wasn’t a happy time. We were in real danger of our marriage falling apart.

We sought marriage counseling. We worked through it. We talked, we listened, we traversed rough waters with a third party that helped us see through the struggles we were going through to a possibility of a better future together.

In those discussions, we talked about how I would often bring up my wife’s desire to stay home more with our children. She didn’t want to return to full-time work because she didn’t want to see the early years of our children’s lives pass by while she went off to work somewhere. It wasn’t in her heart to let someone else raise our children; she wanted to be there for all the good things.

I only saw what we were missing out on. If she was working full-time, we could have more money! There would be more money for all these material things and we could pay more on debt, too! I couldn’t understand why she didn’t see that.

Through our discussions, I came to realize that she valued being with our children more than all this other stuff. As she would put it, “I won’t get this time back.”

I realized that I was wrong. I agreed that I wouldn’t pressure her to find work again. We would find a way to make it work together. To make myself accountable, I put it in writing.

My contract with Amy. I thought the “witness” (my oldest daughter, Ember, who could barely write) was a nice touch.

Amy was right. Those days with our children are gone in a moment, and that wasn’t as important as a stupid house.

I haven’t pressured her to return to work full-time since.

In time, her business grew. Although she was working part-time, she was able to do it from our home running a preschool in our house. She had her time with our children, and bring in some extra income. My income improved, too. A little more than a year after our counseling sessions, I took a new job with better pay that ended up being a fantastic experience and career builder.

So when I hear about this formula about how debt isn’t such a big deal, I think of how much we’ve went through to get here. Debt, risk, financial obligations — they nearly destroyed us. What return on investment is worth that? Is it seven percent? How about a 10 percent return? Fifteen?

The answer for us is zero. As in, there is zero amount of a gain that justifies staying in debt, because the emotional and relationship cost is simply too great.

And as Dave Ramsey likes to say, “If we were good at math we wouldn’t be in debt in the first place.”

So to all the naysayers, go ahead and do your thing. Enjoy your returns. You have my blessing. But for us, it’s not worth it.

The Year Of No

No image

We have declared 2018 as “The Year Of No.”

In September 2016, we started paying more — much more — than we had ever done before on our debt. We were taking Financial Peace University, and had a little bit of money left over from the sale of our home. Now renting, my wife and I decided to put all of the proceeds from the sale of the house toward the debt. It was dynamite to a logjam, and it really got the debt snowball rolling.

We made great progress. Most of 2017 we threw huge chunks of money at our debt. But during the summer, I got an idea in my head that we should take a family vacation. We had paid down 25 percent of the debt, and I felt like we could celebrate and be OK. We hadn’t taken a “real” vacation with all our of family since the youngest was born, and I didn’t want to let another year slip away without an experience like that. So we packed up on a five-state road trip and had ourselves a little adventure.

This put the debt snowball on hold a little bit. I came back from the vacation with mixed feelings. On one hand, we slowed down our progress, but I was really glad we did it. I enjoyed spending time with my family, and seeing new sights. Although I hate commuting, I do love a good road trip.

Toward the end of 2017, looking at at progress for the year despite the road trip, I started doing a little math on the possibilities for 2018. Things were good at work and I had received a bump in pay. I started analyzing things we could cut — things we left in our budget during the 2017 year — that could add even more to The Cause.

I got to work. We do our monthly budget in a spreadsheet, so I put our expenses in the document and started cutting away. I am a master of coming up with budgets. My wife hates to make a budget, but she can stretch money like nobody’s business. I must be forthcoming: I’m really good at making a budget, but not very good at sticking to them.

This is the really important part: I need a team. I need my wife to partner with me. I need my kids to understand what I want to do. I can’t do this alone.

One evening, I sat my wife down to show her what I had discovered: “I think we can pay off our debt in 2018, but it will require some sacrifice,” I said. I showed her my spreadsheet. I showed some numbers. I told her I can’t do this without her.

“OK, let’s do it,” she said.

On New Year’s Eve, we went out to eat for what might be our final time for awhile. Date nights that cost money? Gone. Going out to eat with the family? Gone. An occasional event with the kids where extra purchases could be made? Gone. We’re watching every penny, cutting every corner, and putting the rest on this final debt.

We’re only a week into it, and it’s a lot of daily mindfulness of all the little places we might be tempted to spend, or not find the best deal for what we need. I think this will be a good experience for us. We’re going to beat this thing, this year. We’re going to win.

It’s taken me a long time to learn this, but the adage is true: You can wander into it, but you cannot wander out of debt. You have to hate it. You must give it your all. It be must become the enemy.

We are finally at war. We are saying say “no” until it hurts.

And then, when all this is over, we’ll be able to say “yes.”

Amy and Eric Gruber
December 31, 2017: My wife, Amy, and I on our last date night before starting “The Year Of No.”


From the beginning …

My first, post-college car (with debt, of course) was a Dodge Stratus. It wasn’t cool, but it did allow me to exclaim I drive a Dodge Stratus!.

It seems like this journey started such a long time ago.

In a way, the journey began the moment I became an adult, and grew legs as I entered the working world. I graduated from college in December 1999 with a little bit of student loan debt, credit card debt, and the debt on a car I had recently purchased.

On only those three debts alone, I have stories to tell. Those stories will come.

After college, I moved to Lawrence, Kansas for work in February 2000. I barely scraped by on my salary, although in retrospect it was probably plenty had I known what I was doing with money. But I wasn’t good with it and I lived paycheck to paycheck. Those stories will come as well.

After a few years, I got married. She also had student loan debt. She was marginally better with money than I was. We had career changes, purchased new-to-us vehicles, had children, and even bought a house. I have plenty of stories about those events as well.

In July 2016 after years of commuting long distances for work, we made a move. Instead of working 50 minutes from home, the drive was 15 minutes. We sold our house, went back to renting, and decided that it was the time to get serious about paying off our debt once and for all.

One of the first things I did after we moved was find a Financial Peace University class for my wife and I to take. We didn’t know anyone when we moved to Kansas City, Missouri, and I figured a class could help us in two very important ways. For one, it would give us some adult interaction in a new city (they offered free childcare, after all). And most important, I hoped it would help get my wife solidly on board to put all our effort into finally, totally, becoming debt free.

It worked.

And so, I’ve started this as a journal of where we have come, and where we are going. We have had many hard lessons to learn, and I’m going to get them out in the open right here. It’s my hope that these writing might help someone else out there going on the same journey, while being cathartic for me in the process.

Thank you for coming along this journey with us. It’s time to get started.