Twelve years ago, pre-kids and as new homeowners, hubs and I took a finance class at our church to help us take control of our money and embrace good stewardship of what we had been given. As recent homeowners, we wanted to learn as much as we could and set some habits early in marriage as we enjoyed two incomes, travel, and the flexibility to eat out and support local farms and small businesses. We thought we were on a pretty good track. We were very naive.
Fast forward through the next 5 years and we had weathered the 2008 crash, had our first baby, transitioned to one income, lost money selling our first house, bought our second house, followed by seemingly never-ending home and car repairs, had two more babies, added plenty of raising children expenses, experienced job loss twice and we were struggling. We tried to cut costs as much as we knew how - no landline, no cable, no gym membership, a minimal grocery budget, and yet just felt like we couldn’t get over the hump. It was 1 step forward and 4 steps backward, for years.
Finally, with my student loan debt still hanging over our head, medical debt and more, enough was enough and we knew we had to figure this out. In December 2018 we paid off our 2nd car and we joined the Dave Ramsey bandwagon at the recommendation of a friend. While I had followed him on social media, we hadn’t completed his course, so a friend lent us the Financial Peace DVDs and gave us a month to watch them (accountability!). In January 2019, we diligently listened, discussed, and did the homework - TOGETHER, because we needed to be on the same page - followed by quickly saving up our $1000 emergency savings, Baby Step #1.
And then, the minivan transmission died, a costly repair that was super discouraging as we were “trying to do the right thing” with our money. But what we realized was that having that $1,000 emergency fund helped us pay for the repairs much more quickly than we ever had been able to in the past. Simultaneously, my business was beginning to grow with all 3 kids in school 5 days a week. The slight increase in income could be applied to our goals, especially since we had spent 7+ years learning, very messily, to live on one income. Realizing that setbacks wouldn’t ever stop - there would be home maintenance, repairs, medical expenses, and more - we needed to move ahead ruthlessly to reach our goal of being exceedingly generous.
In 2019 in order to work towards our initial goals of paying off all consumer (credit car, car repairs) + medical debt, we needed to get really clear on our goals (write them down), our spending (write them down) and we also began a shopping ban. We aimed to temporarily stop buying all clothes, shoes, home decor, kitchen items, art supplies, and books. We started using cash envelopes for discretionary spending like dining out, date nights, and gift giving. We experienced setbacks, but also saw enough forward progress which encouraged us to keep going. We even had hopes of planning a trip for my 40th birthday, but we knew we wanted and needed to cash flow a discretionary trip. Just over a year later I’m amazed at what we accomplished in 12 months. We DID pay off all the consumer and medical debt, saved for a trip to Paris (timing TBD thanks to the global pandemic), upped my monthly student loan payments and cash flowed celebrations, holidays and entertainment all year, plus saved up a month’s worth of living expenses.
The Dave Ramsey snowball method gave us a clear road map for where to put our payments once we finished with each debt. We snowballed it into the next, so we were able to reach our student loan debt payoff nearly 2 years early this past July, and then focus on Baby Step #3, to save up 6 months of savings. We continued to snowball our extra money and any of my income into savings, as well as begin to maintain our home in the way that is necessary.
We have a plan for larger purchases on the horizon like a new to us car, braces for at least 2 kids and some home updates that will help our space work better for us into our kids’ teenage years. It feels surprising, yet empowering. We can’t know what expenses lie around the corner, as shown by the current state of the Covid-19 world, but we can live more simply to reach our goals.
Minimalism also has unexpectedly played a role in this journey. Less clutter helps me focus more on people and presence, my priority as a wife, mother, daughter, friend. But I was surprised about how minimalism could contribute to our bottom line. Selling a number of pieces of furniture, clothing, home decor and more helped us put literally thousands of dollars towards our financial goals just in the last 2 years. Minimalism has also helped us be more intentional about our purchases and what we think we “need”.
Now we can look forward to more mindful spending habits, with a longer term goal of supporting local businesses, as well as giving generously. We can say no to adding more debt, get creative, go on free excursions with our family like a hike in the mountains or free date at a local museum, and have breakfast for dinner again. And this #debtfree journey is all very connected with our overall goal to simplify, making room to see the joy, and living more sustainably. It is all connected.
Aside from the tactics mentioned above, a few game changers throughout the process:
Meal plan, meal plan, meal plan
Budget in monthly fun money - each to spend as we please - on a coffee, art supplies, a book, girls night out, happy hour, etc. This helped us not feel depressed and deprived (which we are far from), or be resentful of one another’s spending.
Go on a spending freeze - 30 day challenges are motivating and a great way to kick-off savings. Apply the money you save to your debt or emergency fund.
Use the opportunity to teach the kids about money. Set boundaries for what you expect THEM to pay for - treats at the pool snack bar, art supplies at the dollar store, souvenirs vacation, additional towards gifts for their friends that are over the set family budget. We have also had some great conversations about how we want to set-up our kids for success in their adult life by asking them to pay for certain things without taking on debt. And practicing waiting to purchase something.
Rewards - we knew that once we paid off our consumer debt, and had an emergency savings, we wanted to cash flow some travel. After we built our travel fund as a reward, and then tackled the student loan.
We simplified our gift giving, focusing on experiences and handmade gifts.
Minimize shopping - this is easier if you don’t really enjoy shopping, but just staying away from stores that are a temptation (I’m talking to you Target Dollar Spot) makes a difference over time. Making a list and eliminating trips for “just one item” helped curb the appetite for impulse spending. Consider removing shopping apps from your phone, too.
Tell people what you’re doing - Filling in our families and friends helped them help us stay accountable, and also set expectations for what we could and and could not do (i.e. taking walks with friends instead of going out to eat to spend time together)