Calling Dave Ramsey for their "We're DEBT FREE!!!" scream!
This is the second part of Katie’s story, you can read Part 1 over here. Today Katie shares a few tips on just how they managed to accomplish such a feat. Mr. Frugal and I are also compiling a list of the extreme measures we’ve taken as a family (and are currently taking) to be debt free. We’ll be sharing at least one per week until they run out. You can read more about the cash only envelope system over here and you can download FREE Debt Snowball and Avalanche Plans Worksheet over here.
Here is the rest of Katie’s story…
We paid $99 four days later to enroll in Dave’s online Financial Peace University. Trust me, that $99 HURT. Dave doesn’t accept credit cards, so that $99 was REAL money.
On December 8, 2011, just two days shy of exactly 28 months, we sent off our final payment to pay of my husband’s 13-year old student loan.
How did we do it?
I wish I could tell you it was easy. It wasn’t. It took hard work. It took even more time away from our family. It took prioritizing. It took patience. It took perseverance. It took tears. It took sweat. It took self-control. It took realizing that stuff was *just* stuff. It took humility. It took asking for help. It took receiving that help. It took letting go of control. It took letting God take control.
Though I can hardly sum up what emotions I felt as we went through the process, I have been able to share what I’ve learned with people struggling to let go, like we were.
1. Write Down Your Budget Every Month.
I’m a list junkie. So, when it came to writing down a list of all of our income and spending, I got a little giddy. Some might see it as a chore, but I’m telling you… writing down where our money was to go before we sent out payments gave us a sense of peace that seemed to seep into other facets of our lives. I knew I had $200 for groceries. I knew our bills were paid. I knew I’d have money to put gas in the car. No more wondering if this was the charge that put us over the edge into the red. When I saw our hard-earned money being sent out on paper first, it took away that high blood-pressure inducing anxiety that Quicken brought on. Plus, by writing it all down, we found money! On average, we sent $1800/month to our debt. We were taken care of. Everything would be a-ok.
2. Cash doesn’t bounce, nor does it accrue interest!
Dave Ramsey devotees will know about his Envelope System, that has you writing down every penny spent on paper envelopes, which eventually need replacing, whether you’ve written in the allotted spots, or the envelopes have torn. Just because Dave helps folks out of debt doesn’t mean he’s not a marketing genius!
The best $1 I’ve spent in the past 2 years was at Target on my Envelope System. It’s a plastic coupon organizer! It’s bright, so easy to find. It’s small, so it fits in my purse or diaper bag. It’s durable, so I’m still using the same one I bought 2 years ago. I love it so much, when friends ask me to do financial counseling for them, I give them one (I keep a small supply on hand, just in case there is a need for an envelope system. No, really! I do!).
I don’t write down every little thing I spend money on, because I know when the cash in the envelopes run out, there is no more to put in! My sections include Blow Money ($50/month), Food ($200/ 2xs a month), House ($100/month), and Kids Activities ($20/month). If I lose the system, I’ve got our $1000 Emergency Fund to cover, what would definitely be considered an emergency. But really, how often do you lose your wallet? And I’d much rather lose a finite amount of cash than credit cards (of which we have none) with thousands of dollars available.
3. Stop trying to keep up with The Jones’ and start sharing with them!
This is a biggie. So many people are concerned with how other perceive them, that they spend their lives running after a goal that will never be reached. That constant race is what landed us $77k in debt! So, instead of shelling out money for things like clothes for my kids (even at the Goodwill, that adds up!), I ALWAYS ask friends first. We’ve been so blessed that the first time I spent money on clothes for my kids in as long as I can remember was for Christmas shoes!
We cloth diaper, so instead of buying a whole pack of disposable diapers for a plane ride to Colorado when I would only need 3-4 diapers, I asked on Facebook and had 4 disposable diapers in my hand by the end of the night.
I’ve asked for and received baby bottles, winter gear, closet organizers, bouncy chairs, an Exersaucer, free babysitting and so much more, just by asking! The trick to this is to be just as generous. I used to hoard things, thinking I might need them at some point for some reason. But knowing I can keep my garage a little cleaner and help a friend out? I’m all over it!
4. Trust in something besides yourself.
This is a tough one., but the most important, in my opinion. It’s that whole “letting go” thing that really hangs folks up. I can’t tell you how many times I had to verbally remind myself to “trust the program” when it came to sending out that big ol’ debt payment, or pillaging the very meager amount we had saved for our daughter’s college ($1100 saved in 3 years) to fund our Baby Emergency Fund.
I knew in my heart that we were on this journey until the end, and that learning to trust something, or someone, besides myself was going to be a BIG part of that journey. There would be no fundamental change in our lives until we were able to do just that.
And what did I find out? That trust, in my spouse, in my abilities, and in God brought a peace more powerful and overwhelming than my stubbornness.
After all, it’s my stubbornness that got me $77,232.88 in debt in 5 years.
And it’s my trust that got me out.
About Katie
Katie moves the hands behind the blog My Daily Bread Crumbs, where she blogs about faith, finances, and food. She’s been blessed with a similarly driven and very supportive husband of 7 years, three inspiring children, and two wacky dogs. She spends her days managing her household, refereeing kid squabbles, and working on her imperfectness. You can also find her on Facebook and Twitter (@MyDailyCrumbs).
Vickie McCauley Watson via Facebook January 19, 2012 at 12:49 pm
Love this!
Kristy Wilson via Facebook January 19, 2012 at 3:02 pm
Thanks for sharing!
Danielle Jones via Facebook January 20, 2012 at 4:09 am
This story is really getting me motivated to take this debt bull by the horns this year!! Thanks for sharing!!
B January 20, 2012 at 6:20 am
While this is incredible and motivating and I’m truely happy for them, I can’t get over the fact that they had 1800 extra a month to throw towards their debt. What do you do if that’s all you have a month to live on? OR even less? Of course this is impossible for much of us. I”m sorry, I know this is a downer but really, they are are very blessed for him to have such a great paying job. And to be allowed overtime.
Would like to hear from someone who did this and earned a normal wage.
But, Julia, I do love this blog, and I really appriciate you putting this out there. Like i said, it is still motivating. And it does make me want to check out Dave Ramsey again.
Julia January 20, 2012 at 1:50 pm
I hear you loud and clear B, thank you for sharing honestly. This has inspired a post from my own experience grappling with this very topic, so please stay tuned…
Katie January 20, 2012 at 3:05 pm
Thanks for reading my story. It’s true, we are incredibly blessed to have the ability to snag overtime. We counted our lucky stars many many times that our “second job” was built in to the first one!
There are many many ways to earn more money each month: slinging pizzas, watching other people’s kids, newspaper delivery…
It’s not so much about how much we made (though I know that’s a big part of it), but it’s about how we CHANGED. It could have taken us 5 years to pay that amount off, but the fundamental need to change how you look at money (how you spend it and how you prioritize it) that will carry you through the worst of it.
I know it’s not easy, and I know there are situations out there FAR worse than mine. But there is also hope. You have to start there. And the rest? well, Dave doesn’t call it Baby Steps for nothin’!
Hang in there…
Fozzie Fam January 20, 2012 at 3:41 pm
Hi B! This is possible for any and every person. Doesn’t matter how much you make and if your payments are current. Go to daveramsey.com and listen to pod casts. Inspirational 100%. I am blessed to be able to stay home and we made dramatic moves like selling new cars and had to pay off $100k in loans in order for it to be ok. We sold everything that we could. We have 18 more months to go to be debt free, the process has been long because my hubby has no interest in reading dr’s book or listening to him. But I have read the main parts of TMMO and it has inspired him enough to live by the envelope system. We now have a budget and live by it every month. Just definetly check him out I suggest reading TMMO (Total Money Makeover). This is where I got the basis of our debt payoff goals and also the site whatsthecost.com is great for seeing your timeline and how much you should pay ea month to be debt free. Anyone can do it, my mom is working on it and doesnt work (their retired). Any income can become debt free
Mrs. S January 20, 2012 at 11:57 pm
I have to disagree with the statement that “any income can become debt free”…I think Dave Ramsey has a great system but you have to at least be close to break-even point each month for it to work. My husband was laid off in 2010, and there’s a lot to our story that I won’t bore you with- but basically over the course of the next year, we survived on very very little, blew through ALL our savings, and even though he now has a new job and we own our own small business as well, you could say he is “under-employed” and we are still running at about a $1500 DEFICIT many months. (His full time job pays only a small base salary plus commissions- which have been few and far between, unfortunately.) I’d love to write it all down and see that there’s enough for all the bills to be paid…but because our income is so incredibly unpredictable, I can’t guarantee it month to month. I’m more worried about breaking even than being debt free right now. Someday, I hope Dave’s system will work for me- but we’re just trying to survive right now, and if not for the generosity and support of friends, family and our church, I don’t know what we would do!
Jessie Redding January 22, 2012 at 1:50 pm
I’m with you B. This story is wonderful but my family lives on less than $1800/month. I take home less than that, hubby is disabled and I am a full time student. My tuition is $33K per semester, there are 3 semesters per year for me and I do not even make $30K in a year. I can change habits all I want but I cannot make money appear. Still an inspiring story with some great ideas to try out!!
Linda Goodman via Facebook January 20, 2012 at 2:28 pm
Was looking for the third part; isn’t that today?
The Frugal Find via Facebook January 20, 2012 at 2:38 pm
It was a 2 part story, but you might enjoy this… http://thefrugalfind.com/debt-free-in-52-a-new-tff-weekly-series/
Jennifer January 22, 2012 at 11:08 pm
I agree with B and the others. I have agoraphobia so i am not able to work outside of the house, let alone go anywhere without my husband or one or both of my parents or my sister. (I have applied for disability but have been denied 4 times). I do work online writing articles and make about $300 a month.
My husband works about 12 hours a day at a job that pays $14 an hour. He gets paid weekly and his checks are normally about $650 a week so added with my income that’s about 2800-3000/month
Our rent is $1225, we got a good deal on internet, phone and cable $125/m0nth, 150 every two months for PUD, WSG- 75/month, food about $350-400/month since I started couponing, and the big one…cigarettes (with my anxiety it is almost impossible for me to quit, even just thinking about it puts me into a severe panic attack because that’s what i use to calm me down, but I am working on it) both of us smoking a pack a day comes out to almost $500 a month. Since I have anxiety and agoraphobia we don’t go out to dinner and we don’t go out to movies or anything extravagant, no vacations, etc. Gas for my husband to get to and from work and then the occasional fast food and stuff for the kiddos makes us make almost exactly what we’re spending each month.
We’ve been late on our rent for the last 5 months in a row so we’ve also accrued $175 late fees for each of those months (we’ve been able to pay all but last month’s late fees off so far). It’s the 22nd and we still haven’t paid our rent for January because of Christmas and both of our daughter’s birthdays all in the same 2 weeks.
When we get our $4000 tax return we have to give $3300 to our landlord for rent this month, late fees and next month’s rent, and then the rest goes to our past due PUD bill and my parents because they loaned us $2000 the last time we were in the process of being evicted. After that I hope that we’ll be able to stay more on top of the bills, but it seems as though it will always be tight.
My husband’s boss has decided that instead of a raise this time he is going to pay for health insurance for me so hopefully if that does happen i will be able to start seeing a therapist for my anxiety and agoraphobia (i haven’t had health insurance for over 5 years) and then maybe I’ll be able to work!