Today we made our final snowball payment of nearly $2700 to Bank of America, and after 50 months, we’re debt-free! This journey started back in June of 2010 with close to $109K in debt, which shackled our family, a lot of uncertainty, and the need to make a change. We have had our share of bumps in the road along the way, temporary job loss for my wife, Murphy visited us more than once, and the task of cutting lifestyle for over four years. We stayed motivated each and every day by focusing on the end goal of being debt free and thinking of what our family’s life would be like when we have a surplus of income each month. That one goal carried us to this very day.
We involved our children in the discussion from day one, letting them know that there would be changes. That the “no’s” we were often saying along the way were being said for the promises of future yes’s. The no's were because of mom and dad’s past mistakes with money, and we want our children to learn from them so that they will not repeat these mistakes when they start their financial lives. Looking back over the 50 months, we survived. No matter what was thrown at us, we were able to deal with it. We learn to adjust as we went. If you are starting on your debt repayment journey, I’m here to tell you it can be done. If there is anything I’d like to change about the last four years is I wish I would have started this ten years ago.
We have shifted gears quickly, and our discussions have changed from debt payments to building wealth. We have many decisions ahead of us, now having over $2k extra income per month. We already have a fully funded our emergency fund, and now are increasing our retirement savings and starting college funds for our three children. It’s an exciting time for us because, for the first time in a long time, we are on the positive side of our income and can genuinely make a difference in our lives going forward.
Luckily for us, we ran out of credit in the summer of 2010, or we may have continued on a destructive spending path digging further into debt. We were trying to plan a family vacation, and I realized we were out of money, or should I say available credit. We were living paycheck to paycheck at that time and had very little available cash. I looked to our credit cards and loans to fund our vacation that year and quickly realized we had maxed our five accounts. I tried to increase our credit lines, but was turned down as our debt to income ratio was too high. At that moment, we had hit our rock bottom. We had nowhere to go, and we could not borrow our way out of this problem any longer and continue to manage our monthly minimum payments.
I began to seek information about debt, and I figured there had to be some get out of debt quickly trick I had been overlooking for years. Well, I came across two resources. A blog call Punch Debt in the Face and a guy named Dave Ramsey. These two resources led to a new way of thinking for me and onto several other resources. Ramsey’s “A Total Money Makeover” book was the first financial book I read. I brought all this new-found knowledge to my wife, the debt snowball, cutting lifestyle, etc. and after seeing we didn’t have many options, we jumped in. I worked with my local credit union and joined a debt management program (DMP) they were able to negotiate with our creditor to reduce our interest rates. This ensured more of our debt snowball money was going toward principal rather than interest. I wanted to gain the quickest momentum, so that’s why we went with a DMP, I know some have had success negotiating reduced interest rates directly with their creditors. Our initial payment was $1800 a month, and we increased to a maximum of $2300. Our average was $2100 over the 50 months. From that day on, we stayed the course.
Would we do it again?
I encourage anyone with any amount of debt to take a look at it and ask yourself why are you carrying it? We would retake the leap to become debt free in a second, so much, so we wish we had done it years early. Being debt-free, even for a short period, has given us peace of mind. We have a lot less stress in our lives, and we don’t fear changes or unexpected events because we have a plan. Our family of five is on track, we openly discuss money, and it has led to better overall communication as a family. It feels so good to be headed in the right direction. What are you waiting for?
We will be celebrating this accomplishment as a family. We will be heading out to a nice dinner at an upscale restaurant. Yes, it will be paid for in cash!
Listen to our Debt-Free Scream with Dave Ramsey.
Our one year update.
Our year two update.
Brian is a dad, husband, and an IT professional by trade. A Personal Finance Blogger since 2013 who, with his family, has successfully paid off over $100K worth of consumer debt. Now that Brian is debt-free, his mission is to help his three children prepare for their financial lives and educate others to achieved financial success. He blogs at Debt Discipline.