At this point in our journey out of debt, my husband and I had paid off a couple of smaller debts and were pressing forward on the larger ones.  We came to realize that “pressing forward” often meant one step forward, two steps back, but we were determined to finish the job.

We had many reasons for wanting to get out of debt, but one of the greatest was my desire to be a Stay-at-Home Mom.  We needed both our incomes to make all our monthly payments, and that meant I had to keep working.  We had a great babysitter for Bub, but that wasn’t the same as being home with him myself.

On top of that, we wanted another child, but the thought of leaving a new baby with the babysitter was very. . .upsetting.  If we could pay off our debts, we could get by on my husband’s salary and my part-time job teaching online classes–and I would get to stay home with the kids.  That was an extremely powerful motivator.

I wanted another baby in the worst way. Bub wanted a baby brother in the worst way.  I can’t tell you how hard it was to hear him pray for God to send him a brother, knowing that one wouldn’t be coming any time soon.  All because of our STUPID DEBT!  I started to get mad at the bills (in a good way).  I saw them as thornbushes standing between me and my second child, and I wanted to hack them away as fast as possible.

So we kept hacking away.  Another bill paid off.  Then another.  Now the car payment was the only debt left. Unfortunately, it was also the largest.  But we kept on hacking.

What we really needed was a better tool to hack with. More on that next time.

Note: This is Part 4 of my “Get Out of Debt” Journey series. You can find the other posts in the series here.

My husband and I had finally gotten serious about getting out of debt and had been slowly making progress for several months. Although we faced the usual difficulties that come with living and breathing, we soon discovered that the biggest obstacle was ourselves. Our own enthusiasm and motivation were starting to fade, and we were getting a little sloppy about sticking to our budget. We needed a support system to keep us on track.

At the time, I was participating in an online forum that focused on credit cards and consumer debt. The folks on that message board gave me another set of accountability partners, in addition to our classmates in Financial Peace University (FPU). Having a support group is extremely important to anyone pursuing a long-term goal, whether it’s weight loss, getting out of debt, or getting a college education. The great thing about the online forum was that many of the posters were further along in the process than I was, so I got to seem them do a “victory dance” when they finally paid off that last bill. It was very motivating.

Sometimes I had to post messages to my online friends to psych myself up. Here is one post of mine from 2004 to show you what I mean:

“Before now, we’ve been making extra payments willy-nilly, then slacking off every time something came up. Problem is, something’s always gonna come up. But starting now, we’re getting lean and mean.

No more eating out every time we get tired. We’re putting $100 a month in an envelope for “blow money.” When it’s gone, no more fun and games until next month.

The Dodge Neon needs a new air conditioner. It will have to wait. I only drive five miles to work, and I can stand to be hot for ten minutes. Fixing it will be our reward once the other car is paid off.

The Ford Taurus could use some dent repair and a new paint job. Tough. It can wait until the credit card debt is all paid off.

No more using the Emergency Fund for non-emergencies. I have about $200 in my Paypal account that we can use for Christmas. Any other non-budget items will have to be negotiated at a family conference. According to the snowball calculator, we can be debt free (except the house) in about 18 months. Yippee! Now for the hard part–DOING IT!”

We had a couple of smaller bills that we were able to pay off within a few months. It felt so good that I took one “Paid in Full” receipt and hung it on the refrigerator for several weeks. It made me smile every time I looked at it.

But I also had a much bigger motivator to keep me going.  I’ll tell you about it next time.

Note: This is Part 3 of my “Get Out of Debt” Journey series. You can find the other posts in the series here.

At this point, we had our starter emergency fund ($1000) in place and were ready to tackle Baby Step #2 in our Dave Ramsey-style Total Money Makeover. We had figured out a budget that more or less worked for us, and were excited to have finally made some progress.

In FPU class, Chet and I learned about the Debt Snowball process. The idea is this: Make a list of all debts except the mortgage, smallest to largest. Throw as much money as possible at the smallest debt until it’s paid off, making only minimum payments on the others. Once the smallest debt is paid off, take the money you had been spending on that payment (plus any other money you can find) and attack the second debt. Repeat until all debts are paid off.

The idea is very simple, but very effective. It was extremely liberating to have a step-by-step plan to focus our energies, instead of spreading it out over several different goals. It helps you stay motivated and not get overwhelmed by a dozen different financial goals you “should” be pursuing. Instead of a dozen, we had ONE goal–one bill to pay off. All our extra time and money went toward that ONE tiny goal. When it was done, we moved on to the next one.

The process was simple in theory, but difficult in practice. For example, the air conditioner gave out in my car. Do we shell out $450 to replace it so I can be comfortable on my ten-minute commute to work, or leave it alone until we get some bills paid off?

We lived in a new house with no automatic garage door openers. Do we buy some, or keep paying off debt, grit our teeth and keep manually opening the doors for a while? In the past, I’d have been looking for low interest loans online, or charging up the credit cards. But this time I was determined things would be different.

When I came home from work tired and didn’t feel like cooking, should I dip into the debt snowball money for a nice restaurant meal, or just suck it up and cook something?

People often criticize Dave Ramsey for advising people to pay off smaller bills first instead of bills with the highest interest rate.  It doesn’t make sense until you follow a family through the process.  We need to feel those little wins, especially in the beginning.

The fact is, getting out of debt was a tough slog for over a year. We were working extra jobs and selling stuff, but not getting to “enjoy” the money. It all went to paying off bills, or at least that was the plan. Sometimes we messed up. Sometimes we gave in and blew money that had been budgeted for something else.

But we got back on the wagon and kept trying. I tried to find ways to get excited again when the initial “rush” started to face away. More about that next time.

To quickly recap Part 1, my family was $25,000 in debt with no savings, and seriously stressed out. Chet and I had enrolled in Financial Peace University, and were excited about the prospect of becoming debt free. 

Our first class got us even more motivated. We met others who were in similar circumstances . . . some a little better, some a little worse. Our instructors had recently completed the class themselves. They explained that the concepts had greatly improved their lives and hoped the same would happen for us.  Then we watched the first video. Dave Ramsey gave an overview of the program, and we learned that our class would consist of seven Baby Steps. Step One was to get $1000 in the bank for a starter emergency fund.

Dave told us we needed to  put $1000 aside within one month. At the time, I thought he was crazy. We could barely pay all our bills, so how could we come up with another thousand bucks within a month? Then Dave told us how to do it. Sell a bunch of old stuff. Work extra hours or take a second job. Cut expenses. Or preferably all of the above.

So we did just that. We had some college textbooks lying around that we sold on Half.com. I took a second job teaching for the University of Phoenix. Chet taught summer school. We got on a written budget and cut back on expenses like eating out. I started clipping coupons and stockpiling groceries when they went on sale.

Within a month, we had scraped up $1000. We were proud to report to our classmates that we had completed Baby Step One. Now we could get serious about attacking the debt. Or so we thought.

To help fill in the some of these little-known gaps, I’m starting a series of posts about how my family actually did it. So without further ado, here is the first installment.

Part 1: How we started

The year was 2004. At the beginning of our journey out of debt, my family consisted of me, my husband Chet, and our three-year-old son “Bub.” We had approximately $25,000 in credit card, cash loans and car debt, and we weren’t happy about it. At the time, Chet and I were both working outside the home, and we were living paycheck to paycheck. We were extremely lucky not to face any serious emergencies at that time, because we had less than $500 in savings.

We weren’t poor. We had good jobs and a 2000 square foot house, but we had a negative net worth anyway. In other words, we were broke.

Credit card minimum payments and car payments ate up about $600 per month of our take home pay. By the time we paid our house payment, utilities, food, and insurance, we had little if anything left over (or so we thought. . .more about that later). Nothing to save for emergencies. Nothing to invest for retirement. No college fund for Bub.

Our paycheck-to-paycheck lifestyle also created an extreme amount of stress. We fought about stupid things like how much to spend on clothing (because we had no money set aside for that, DUH!), whether we could afford to eat out or not, and how much to spend on gifts for family members. An unexpected car repair or a flat tire felt like a bomb exploding and blowing our fragile situation to smithereens. Paying the copay for Bub’s ear tube surgery was a major ordeal that took months to pay off. Our lives might have looked happy on the outside, but the stress we felt was huge.

I began reading The Total Money Makeover by Dave Ramsey and found that many of the ideas made sense. Debt is not a tool, I learned; it’s an unfortunate circumstance that should be avoided. Some of the advice seemed rather shocking at the time. I don’t need to have a car payment? Life insurance is not a good investment? Credit Cards are not a great way to earn airline miles? Fascinating stuff.

Then our church started offering Financial Peace University, a course and support group developed by Dave Ramsey’s organization. Since we approved of Dave’s basic principles already, we figured it was worth trying out. We might learn some interesting tidbits and make new friends. . .and maybe even reduce our debt a bit.

When we arrived at our first class, we thought we were pretty serious about getting financially fit. Turns out, we had no idea what “serious” really meant.

Stay tuned!