Once we finished listening we were ignited with a new desire to become debt free. If Dave does nothing else well (and he does do other things well, no worries), he makes you HATE debt. We decided against replacing my car with a new one and instead spent a couple thousand dollars getting it back into great shape so we could hold onto it for a couple more years. We made a list of all of our debts and prioritized paying them off by either amount or interest rate (note: this is where we went a bit rouge because Dave's plan was different than ours, but the same principle was present).
Our list went like this:
-Department of Education
-My car
-Nelnet (student loans)
-Private student loan
-Rental house/our soon-to-be home's mortgage
You'll notice that we are quite fortunate (and different than most people Dave lectures) that we had no credit card debt. We took care of that years ago (OK, fine. Complete disclosure: I was the one with credit card debt when we got married. Jackson introduced the 51/50 rule- more on that later- and we worked together to dig ourselves out of the hole I dug by spending like I actually had money when I was in college. I learned my lesson. I promise.) and have been diligent about never carrying a balance since. (Yes, that did mean sacrificing and not getting immediate gratification which is not always fun. It was a lot more fun than not being able to sleep at night because we were living above our means, though.)
The 51/50 rule is simple (in theory): If something costs $51 and you only have $50, you cannot afford it. In practice...well, it wasn't always that easy. I stuck with it, though, and we're better for it. (I still maintain that I'm a recovering spender. When I'm shopping with someone else's money-which doesn't happen nearly as much as I'd like since my last name isn't Trump-I'm known for having expensive taste.)
Anyway, I cannot recall when we really started following Dave's plan, but it was early this calendar year. Since then we've paid off my Department of Education loans, my car and my Nelnet loans. It has been so incredible to be free from those creditors. I now drive my car with a new found fondness because she is alllllll mine.
Speaking of cars, Jackson got a new one. His Jeep was terrible on gas and he never wanted to drive it because of that so he traded it in for something newer and cheaper. I know, I know, Dave would be really proud of him.
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| Jackson's new ride: a 2010 Sebring |
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| Even though it is leather, MacKenzie approved of the purchase. Whew! ;) |
Let me confess that we never intended to pay off my student loans in lump sums or own our cars free and clear. We subscribed to the "affordable monthly payment" philosophy that Dave teaches against. I can honestly tell you that I thought, "oh, we only have to pay $XXX a month on these for 5/10 years? That's doable." It never crossed my mind that paying these things off early made any sense because the monthly payment was so easy to make. Oops! :) Dave teaches that just because you can afford the PAYMENTS on something, does not mean you can AFFORD it. Wow. Let that sink in a bit. It rocked our world and was just the kick in the pants that we needed.
Now, before you all start thinking what I would if I were a reader, "yeah, I could pay stuff off too if I lived with my mother-in-law," let me agree with you. Yes, you probably could. Do you remember when I talked about sacrificing? Yes, being married and living with your in-laws isn't exactly the stuff that dreams are made of, but when you want to accomplish something you have to be willing to work for it. We were quite fortunate that Susie opened her home up to us for as long (as she's the one sharing her house which is a much bigger sacrifice than us losing a bit of privacy) as she has throughout our marriage.
Also, please recall that this wasn't careless spending debt. We paid every single dollar charged from the University of Denver for my Masters of Taxation degree. I did not qualify for any scholarships or grants from the University (Not one. Not one single one. Do I sound bitter? Hmm. Maybe that's because I still am.). We did the math before I applied and figured out that my earning potential with the degree would pay the $45,000+ in tuition back in a couple of years. We were right; the difference in my wages "paid for school" after only 1.5 years. (I put "paid for school" in quotation marks since we didn't actually use that money to pay off student loans immediately as shown above.) Dave would certainly caution anyone seeking higher education to do the same kind of analysis to make sure that going back to school makes financial sense.
Our "budget meetings" occur at the beginning of each month and are not always fun. Sometimes we cannot travel in a month because we need to allocate those funds elsewhere. I have to find room in the budget to get my haircut/colored every 12-15 weeks (there are just some parts of my life that need extra attention and my hair is one of them-ha!). I know those things do not sound like big sacrifices but compared to how most people go rouge with their finances, it is.
There is our plan. I know this is off topic from my normal blogs, but if Dave can inspire two financial professionals who think they've got everything all figured out he can surely help their friends, too. :) Once we're debt-free (minus the mortgage) next May or June, we'll start saving up money to finally take our "early retirement world tour" that we've been dreaming about for so long. I cannot wait!
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| That was a big post with a lot of financial crap in it so I thought I'd end it on a high note with an adorable photo of MacKenzie. HA! |
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