The reason why we decided to pay off our debt as a means to achieving our life goals is because of one person and one person only, Dave Ramsey. He is one of the most popular finance gurus and people seem to love him or hate him. For us, he was life changing and an introduction into a world of finance personalities and bloggers. If you are looking to pay off debt there is no guru better to listen to. He has inspired thousands and thousands of people to pay off millions of dollars of debt and turn their lives around. There is a lot to learn from him and I wanted to share our experience listening to his show and taking his class Financial Peace University.
THE STORY OF A SAVER AND A SPENDER
Since 2010 there are two critical points in my life that that have helped to shape who I am. The first is meeting my wife, Erin, at coffee hour after church service one Sunday afternoon. In our first interaction, I didn’t say anything to her, but I left the meeting thinking that my life might have just changed and that she could be my future wife. We ended up dating shortly after that, and there was no turning back. During that time as we discussed money, we both disclosed that we had student loans, but it also became apparent that she was much better with her money. She was naturally a saver, and I was a spender. If this was going to work, I would need to make some changes.
The next critical point occurred six months after we started dating when I randomly came across this radio show on personal finance called The Dave Ramsey Show, which I instantly gravitated to. The idea of better money management was something I was seeking even though I didn’t want to enact it as I had plenty of excuses for not making changes. I gravitated to the calls where someone’s problems were seemingly worse than mine. That helped me feel better about the fact that in my mind I couldn’t save any money or pay more on my loans even though I had more than enough income to do so.
People would call in to do these “Debt Free Screams,” and I wrote them off as just being lucky or having it easier than I did. This was incorrect because often they paid off more debt than I had while making less and doing so in a short amount of time but I was dismissive towards them because it would have meant confronting my own reality.
WE HAVE HOW MUCH DEBT?
In June of 2011, we got married, and our finances were merged. Our income level was higher than we’d ever individually experienced so we more than met our monthly obligations but it sure was easy to spend aimlessly. We talked off and on about whether we should buy a house, when to start a family, and if we would both work once we did. There was a lot to sort through, and society sure had its opinions about what to do. All of this seemed to hinge on our debt, though.
Six months into our marriage I received a bonus and a raise at work. I told Erin that I wanted to put it towards debt, so we totaled up our debt and saw that we had over $107,000 of debt to pay off. We didn’t know it was that high but weren’t surprised and decided to tackle our debt before any other major moves. Due to having listened to the Dave Ramsey show I presented the Debt Snowball plan, and Erin was very supportive.
The Debt Snowball method is an approach where you pay off your debts smallest to largest regardless of interest rates. It has been successful for so many people because it factors in human emotion. By getting small wins early on in the process, it keeps you motivated to tackle the next debt while freeing up extra money earlier.
We put together a budget and initially calculated that it would take about five years to pay off our debt. Not bad, huh, considering the amount? Well, once we tightened up our budget we started to do better than anticipated we ended up paying it off in two years and nine months. It instantly felt like we received a raise once we had a focused budget.
During that time our quality of life improved as our goals were more important than the sacrifices we were making and we found happiness with each other that money could not buy. We also realized that we could do anything financially and would be able to take those lessons to save up for an emergency fund and house down payment.
We took Financial Peace University two years into our debt payoff and figured that it would be more of the same from what I heard on the radio. Immediately during the first class, we realized how much more informative the class was than the radio show (which was already helpful). It helped us to focus the remaining few months as we were getting closer to that goal.
OUR DEBT FREE SCREAM
When we completed our goal, we contacted the Dave Ramsey show and were given the opportunity to go to Nashville and do our Debt Free Scream in his studio. What an about face I had made! After being jealous and petty towards past guests, I was now one of them hoping to provide inspiration to those feeling left behind. A LOT can change in a few years. We met him and had him sign our debt thermometer that we used to track our progress and was now completely filled out.
When we recorded the segment it was nerve racking and a bit awkward as I felt like I couldn’t move and loosen up with the headphones and mic attached and the camera on us. The interview flew by extremely quick as moments like those often do. Once we were done they mentioned that on average 8 million people listen to the show. That is insane.
I have no idea whether or not our story was used for inspiration by listeners or if there was someone like me previously annoyed with what we were saying. All I know is that we are average people and there is absolutely no reason why you can’t be debt free and do even better than us. It is not a competition, but more so about finding the drive to push ourselves and confront bad habits and preconceived notions that hold us back from realizing our potential.
Listen, you don’t have to follow Dave Ramsey or if you do you don’t have to agree with him on everything. We do hope you start to realize that your non-mortgage debt is holding you back and it is something that needs to be addressed right away. It is preventing you from growing your wealth and living your values. By paying off our debt early we saved ourselves $40,000 in interest. That is $40,000 that we now have the opportunity to invest and we have less monthly obligations on top of it. That is a huge turnaround and we, just like many others have Dave Ramsey to thank for it.
With that said, the point of this blog isn’t to regurgitate everything Dave Ramsey says. You need to understand and carefully consider any advice you receive and check that with your goals. Our main intention is to help you transform your life by taking charge of your finances and pay off your debt and start saving. Wherever you find your inspiration is fine by us, but please, take control of your money and get passionate about it.