Tuesday, July 1, 2014

Revisited: Our Get Out of Debt Story & Update [A Novel]

Though I am not a professional blogger sometimes I like doing a post on a particular topic. I actually was thinking about doing this post around April Fools day, not sure why.  But then April was so amazingly busy, that I never did get around to it.  And then I got "behind" on my blog.  Now that I am feeling somewhat caught-up I feel like I can write this post. It's been on my mind for a while, and really if you know me, I guess it always will be! I wanted to revisit our get-out-of-debt story(ies) and share more details.  Enjoy the read!

In October of 2009 we paid off our student loans and became debt free.  I just found my original post and I didn't write a whole lot about it!  Check out the post here. And if you scroll down to the bottom of the page and click on older posts, we decorated sugar cookies for Halloween.  The kids are so cute and little!!!

One day in Memphis, while Lee was in optometry school, I went shopping with my friend and neighbor Ashley.  On our way back home she had her radio tuned to some financial talk show.  I thought the guy was a little weird, but I also agreed with his message and was interested in what he said. Even from a young age I was aware of money and wanted to be wise with it.  I tuned in to his show now and then.  I was surprised by his ranting.  I was surprised that he paid tithing and had the same morals standards as I. I was surprised how this show and a book of his that I read changed our financial thinking. Any guesses about this guy?  I am sure you already know as I've posted about him several times--Dave Ramsey, of course!

I am very grateful for my friend listening to that show on the way home. Even before we were out of optometry school we had a plan about how we would pay off our debt because of the information I found out from Dave Ramsey.  Lee and I always wanted to pay off our student loans, but we never had a plan and we never talked about a plan.  We always lived frugally in school.  For example we had dial-up internet, a prepaid cell phone-one phone!, no cable TV, rarely went out to eat, never had memberships to recreational things like a gym or a science museum, only had one vehicle and Lee biked to school a lot, etc. Stuff like that.  So we just both kind of assumed we'd pay off the loans sometime and, yeah.  That was the un-spoken plan!  What a bad plan, ha ha!

I graduated from Brigham Young University with no debt, and Lee could have too but we weren't smart. (We're still learning!)  By the time Lee finished undergrad school one year later in 2004, we had a $5000 debt. Later that year Lee started optometry school and when he graduated in 2008 we had almost $38,000 in total debt.  I can't remember the exact number.  It was $37,500+ something.  I thought I would never forget that number ha ha. Thankfully we were accepted in the Army's Health Profession Scholarship Program (HPSP) during optometry school.  The Army paid for three years of our schooling (we applied twice for a four year, but was turned down) which included tuition, books and a living stipend.  It wasn't quite enough to live off of, but it was close.  I have come to realize that $38,000 isn't a lot of debt when it comes to finishing a four-year graduate school program.  But it was to us! In turn, we were obligated to be active duty for the Army for three years.  It was such a happy day when we found out we received the scholarship! The HPSP literally saved us $100,000 in loans.  More like $120,000 really.

Like I mentioned earlier, before Lee finished optometry school I had read The Total Money Makeover by Dave Ramsey.  I love how he laid out a plan to get out of debt. He teaches people to follow his "baby steps" which you can read about {here}. I love that what he teaches about money is similar to what my church teaches-The Church of Jesus Christ of Latter-day Saints.  I love this {talk} by Elder Robert D. Hales and this {pamplet} from my church-click download to view, and this other {pamphlet} from Elder Marvin J. Ashton-One for the Money-also click on download to view.  Such great material and advice!!!

After school we moved to North Carolina for the summer and lived with my parents.  Lee had a two-month training in Texas and the thought of living somewhere by myself for that time (and paying rent) didn't sound appealing.  Thanks Mom and Dad for letting us stay there!  I provided food and cooked during the week, and paid the internet/cable bill to help out a little and not be too much of a moocher! When Lee's training started in August of 2008 we started saving all of that money, well basically all of it.  The first part of October rolled around and we were headed to our first duty station in Ft. Leonard Wood, Missouri.  We loved it there.  We lived on base and had great neighbors, including several families who were members of our church.

In October we paid off our undergrad debt of $5000.  We opted to move ourselves in the Army, called a DITY move which gave us some extra cash, and we also received money for relocation--money to help set up the household after a move.  That money combined with earned income credit from taxes that year definitely helped out in paying off our loans.

While in the Army our pay went up slightly every year.  The year we got out of debt our take-home pay was basically $1780, every two weeks, or $3560 per month.  In addition to that there was about a $1200 monthly housing stipend that went directly to the housing management company.  We never saw that money, but we paid tithing on it as we felt it was an "increase".  We didn't have to pay taxes on the $1200 though and our healthcare was completely free.  We were only taxed on the $3560-ish that we got, but if you threw in the housing stipend you could say we were making a little over $60,000.  If you want to through in a great health care plan like we had, you could say we made around $75,000 before taxes.

We lived off of about $800-$1000 a month depending on the month.  The food budget ranged anywhere from $280 to $350. Some months we would pay about $2330 towards debt, or $1725 or $1617 or $2150.  (Just looked at the past budget from that year.) During that time our transmission went out and we ended up buying a new one, and we took a huge break from paying debt that December of 2008. I don't think we paid anything on debt that month! The year of 2009 was the time I was in the hospital on bedrest before our fifth child Elden came. Then Elden was in the NICU for two months.  I was two hours from home and Lee would come up once a week to see me. When Elden came home from the hospital we had three kids in diapers. The twins and Elden were in diapers together for about nine months.  Even while paying off debt, life still kept on moving, and flat tires still happened.  (Lee became good at using those self plug patch kits for tires.)

During this time we actually cut up and canceled our credit cards. Right before I went in the hospital with Elden actually. The credit cards were such a safety net for me.  What if an "emergency" happened? One that was bigger than our then $1000 emergency fund? We actually had stopped using our credit cards because of our budget.  It was simpler to look at one bank account, than a bank account and a credit card account.  After listening to Dave Ramsey for awhile, we decided this was something we could do. 

I have to tell you, cutting up the credit cards and canceling them was such a cool feeling.  I felt grown-up and self-reliant.  I also felt like I really had to pay attention to the money since there was no back-up!  If any of you are local or come for a visit (and maybe bored), I have a video that Lee made of me cutting up the credit cards.  It actually made it on Dave Ramsey's evening Fox network show!  A gift pack was sent to me, including a signed copy of his book.  Which I think is pretty cool, ha ha. I wasn't going to mention this, but now I will since I am on the verge of rambling way too much!  I was in Memphis visiting my good friend and she said that one of our mutual friends saw my video clip on Dave's show.  I had no idea that they had accepted my movie!  Sure enough I found my video clip on YouTube.  It's no longer available on there.  Don't shed too many tears.

As we were working our way out of debt it became a game for me.  And I fell in love with budgeting, ha ha.  After being very careful with our money for a year and two days, we were completely debt free!  It was an exciting day.  I still remember going running that day at the local community center.  I was so pleased with all of our hard work!  We felt very blessed to have accomplished this goal.

We had about $13.00 left in our bank account the day we paid off the last loan.  I can't believe it ever got that low!  We don't have overdraft protection.  Now I keep the balance in the bank account much higher. That same weekend we paid off our debt we didn't have a whole lot of exciting food in the house, probably rice and pasta!  I had let my good friend Kristi borrow our laptop or something.  Can't remember.  Well, her parents were in town and knew that I was letting Kristi borrow the "laptop".  On their way out of town, they brought by a pizza and a dessert as a thank-you!  It was so sweet of them, and I don't think Kristi even knew about it.  I felt like it was a fun tithing blessing. I was so appreciative of that kind gesture!  And a day or so after that Lee's parents came to visit and stocked up on groceries for us.  I spent $20 on groceries in November of 2009--that's how well they stocked up our cupboards! Thanks Mom and Dad!

We kind of did things backwards and indulged in some fun things after we paid off the student loans.  We did save a little bit of money right after that (I think we had $2000 in the bank), but the first part of 2010 we bought a van (with cash, literally) and Lee found a nice bike for me at a great price. We also went on a long-dreamed-of trip to Nicaragua where Lee served his mission.

The cash we used to buy our second van.  Yes, we have two mini-vans ha ha.
Feb 12 2010 $8000

After all the fun stuff was out of the way we started saving money again.  I must say, saving for a fully-funded emergency fund was BORING.  It felt like it took forever.  I mean, I was glad to know that the money was there, you know, in case of an emergency.  I had more fun using our money towards debt than I did saving it in a money market. Just wanted to throw that in there. Since we were in the Army we decided to do a three-month emergency fund.  I cannot remember how much it was, but Lee thinks it was about $10,000.  I am sure it was more than $5000.

And when 2011 rolled around we continued to save as we would separate from the military later that year.  Once we knew that we would be opening up our own office I also built up a three month supply of basically everything that couldn't be refrigerated.  From toilet paper to toothpaste to cereal to canned tomatoes.

When we moved to Virginia we started the buying process of Lee's own practice.  We had a three-month free trial with the former doctor, which was great.  It was a great price too.  We bought the records and equipment, not the building.  Lee is still renting today, though in a different building.  I guess we went back into debt again when we signed this agreement to buy the patient records and equipment.  But the agreement was with the doctor only and we never borrowed money from a bank.  We agreed to buy the records and equipment in three years, making a set payment each month.  Well, we actually did it in 3 1/2 months!  Did I mention it was a great deal? 

I have written about it before on the blog, but I felt like we had a really tight budget when we paid off our student loans. Little did I know that it would become even tighter when we moved to Virginia.  We started doing crazy things like putting water in our milk! Our tax records from that year show that we made around $33,000.  A bit tight for a family of seven. A few people advised us on getting a small business loan or taking out a line of credit from a bank.  There was no way we wanted to do that.  We were scared enough with opening our own practice (while living off of savings) that the thought of having to make payments to a bank was basically terrifying.  I also had no desire to buy a house at that time either--which we didn't have the money for anyway. But again, the thought of being locked into a payment with the bank seemed scary! I didn't even know how we would pay for food in the coming months!  We lived off of our savings for a few months and then Lee got a part-time job at a vision center at a Walmart. For the next several months we lived off the money from that job. For some reason paying the previous Dr. seemed less terrifying.  Partly because if we couldn't handle the payments we could just give him back the equipment and patient records and find a job as an associate.

Here is Lee with the last check for the doctor.
Feb 24 2012 Lee (3)

Now it's time for the update part...what is going on currently in 2014.  Last April we bought our first house.  I would have loved buying the house with cash, but we didn't go that route.  We were renting and the rental was being foreclosed.  We really didn't want to move into another rental. Again we felt blessed because with more diligent saving and being careful we were able to put 20% down on our current house. I've mentioned this on the blog before too, but we are working on paying off our house right now.  I made a chart with a bunch of house outlines on it.  Each house represents $1000.  Every time we pay $1000, I color in a house. It's been fun filling in the houses!

When we pay off our house we are taking the kids to Legoland.  My friend recently surprised her kids with a Disney cruise.  I love that idea.  Lee and I will probably surprise our kids with the Legoland trip!  They know we are going to go, but they don't know when. 

One hot topic for Dave Ramsey lately is the common opinion that wealth is evil.  I am sure it's been a hot topic with him for awhile, actually. First I love the truth that he's said many times--everything belongs to God. We are just stewards.  Am I good at always remembering this?  Sadly, no.  I am not sure how to explain this but it's quite freeing to me to know that this money isn't mine.  This house isn't mine.  It all belongs to God.  It's like writing a check for my PTA elementary school.  I don't mind at all writing checks for whatever they need.  Of course we discuss the purchases and make sure that there is enough money to do so.  But if it's for $10,000 or $5, I don't care.  Of course there is the added responsibility that Lee and I need to be wise stewards in everything we've been blessed with, including money. 

I think the freeing-feeling-part comes in to play is when people win with money.  I do not have to feel guilty or be ashamed that Lee's worked hard and studied hard to have a good job.  I do not have to feel guilty that we will own a house well before we're 50 or that we will pay cash for real estate someday or that we will take our family to Europe (in a few years hopefully!).  Money is a-moral.  It is not good or bad. It's what people do with it. People can do good or bad with money.  The love of money is the root of all evil, not money itself.  Basically, I feel very blessed that we will be blessed to own this house soon.  I don't want people to think I am bragging because I am sure it could be seen as that.  And what's cool about it, it's not our house anyway!  It belongs to God. I know he would be pleased if there was no debt on it. And of course everyone is at a different stage financially, just as I am at a different stage spiritually than others.  I'm not better than others either because we can tackle paying off the house right now. 

Our get-out-of-debt journey has been challenging, exciting and life changing.  I guess technically this will be the third time we get out of debt (maybe technically?).  Third time's the charm because I have no intention of ever getting into debt again.  Whatever we buy in the future, even if it's a different house, will be paid for with cash. For some reason getting a mortgage on our home was so incredibly frustrating and stressful.  I am sure it had to do with my money personality, but NEVER AGAIN!  It solidified my resolve once more that I never want to borrow money again!

Wherever you are in your financial journey I hope this post gives you hope and inspiration to tackle those challenges!  I love the phrase from one of our hymns at church: "Sacrifice brings forth the blessings of Heaven."  I've seen that over and over again. With determination, patience and budgeting (of course, ha ha) exciting possibilities open up!  Whether it's paying off a debt, saving cash for a vehicle or setting aside money early for Christmas, you can do it!


Nostrebor said...

Nice post. Thanks for all your hard work and determination, you've literally changed our family tree!

Daniel said...

Thanks for the post!

Unknown said...

Thanks for the post. You guys are so inspiring!