Are you struggling with your finances? Perhaps you are just beginning your paying off debt journey, but struggling with staying motivated. Just three very short years ago, we were in a similar situation. We worked too hard not to have anything to show for it. We were sick and tired of debt payments and wasting THOUSANDS of dollars in interest. Every. Single. Year.
This month marks our third anniversary of beginning our debt freedom journey. Most days, I cannot remember what life (or finances) were like before we started managing our finances and applying Dave Ramsey’s principles. Most days it feels like we have always been on a written budget.
There have been some unbelievable great moments in our journey, such as the moment we hit the “SUBMIT” button to my very last student loan payment, to taking advantage of traveling Europe without worrying about finances, and the several occasions when we have been able to bless others with our giving.
Of course there have been a few not so great times when we had to dip into our emergency fund on several occasions, or when we were sick and tired of budget friendly meals. Some times we just wanted to throw in the towel and give up on our debt freedom goal. But we did not, we kept pushing forward and I am AMAZED at where our finances sit today.
Benefits Beyond Financial
The unexpected thing about this journey is the dramatic difference in our marriage and happiness. This journey has improved our communication in our marriage, which has eliminated all most disagreements. It has helped us define our priorities and dreams. Through living a frugal lifestyle, we have learned how little it takes for us to be completely content. It turns out we are a lot happier with less “stuff” and a simpler lifestyle.
***I have a few extremely supportive friends and family members who read Budget Loving Military Wife, so I was slightly hesitant to share actual numbers with you. However, I discussed it with my husband and we decided sharing actual numbers may provide hope or inspiration to someone. That was enough in itself to ease our minds.
We began our debt free journey at the ages of 27 and 29 years old and were a two-income household earning a gross income of approximately $95,000. We had a couple months of a $50,000 income during the moving process, when I had quit my job but my husband’s overseas pay had not kicked in yet. Today, we live on a single gross income of approximately $72,000.
How and where we spend money has dramatically changed over the past three years. There were some growing pains the first few months but as the time passed it became easier. We now make informed decisions of where we spend, rather than wondering where it all went at the end of the month.
Our two categories that we were notorious for over indulging before we had a budget, were eating at restaurants and the here and there mindless spending. Three years ago, in an average month we would spend $400-$600 at restaurants. Now our average is $50/month.
In December 2011 we had $14,000 in savings. We had a house purchase and a wedding in 2011 so our savings was just beginning to recover at this point. This would have been equivalent to about a 3-month emergency fund.
Today, our savings is $25,000. This includes our emergency fund and our sinking funds for things such as car repairs and vacations. Fortunately, we have our spending under control and know how to stretch a dollar, so this is easily a 6-9 month emergency fund. We nearly DOUBLED our savings in three years!
Dave Ramsey’s plan is notorious for eliminating debt, so I bet you are thinking we got rid of some serious debt. I hope we do not disappoint!
Three years ago we had $171,500 of DEBT!!! Oh MY, it is still hard to believe we had this much: $48,000 of that debt was consumer debt ($10,000 for 2 cars & $38,000 student loans), leaving $123,500 in mortgage debt!
We paid off the first $48,000 in SEVEN MONTHS!!! YEAH, we killed it! Check out Our Story to find out how we paid it off so fast.
Today, three years later, we now have $59,700 left on our mortgage. We have PAID OFF $111,800 in THREE YEARS!!! Averaging over $37,000 EACH YEAR! That is AMAZING, I even have a hard time believing it! It is crazy how a little bit of focus and determination can pay off in a BIG WAY!
I have to come clean. We did NOT follow Dave Ramsey’s recommendation to STOP investing in retirement plans while paying off consumer debt. We continued to invest $500/month while paying off consumer debt. The Reason: We knew it was not going to make a huge impact in our Consumer Debt Free Date. Plus, my 401K had a guaranteed 7% employer contribution, if I contributed anything to my 401K. We could not leave FREE money on the table!
Three years ago, our retirement accounts totaled $32,500. We only increased our retirement saving after our consumer debt was gone and we had a 3-6 month emergency fund. So for the last 2 years we have been investing just slightly over 15% of our gross income into retirement accounts.
Our retirement accounts now total $105,000!!! We have more than TRIPLED our retirement accounts! How crazy is that?
Many people gauge how they are doing financially based on their net worth. Three years ago, our net worth was approximately $79,500. Today, our net worth sits around $246,000!!! Our net worth has more than TRIPLED!
Perhaps now that you have seen how dramatically our numbers have changed you may understand why I am so passionate about personal finance. It is amazing how a little bit of knowledge, a lot of focus and dedication and many sacrifices can change someone’s financial future so dramatically.
Was it difficult? Absolutely!
Is it fun to tell yourself “no” to most of your “wants?” No!
Is it easy to live on a rice and beans budget? Of course not!
Is it worth it? OF COURSE! My only regret is not starting sooner!
If you haven’t started your financial journey, I beg you to pick up Dave Ramsey’s book “The Total Money Makeover” from the library! Do the hard work NOW so as Dave Ramsey states “you can live like no one else” later.
This experience has been a life changer. Not only has it made my husband and me into future millionaires. But our marriage has changed for the better. Our hearts have changed, they are not so run down by financial stresses and they are a lot more selfless to allow us to be happy givers.
Do You Not Believe YOU Could have Similar Dramatic Changes in Your Finances?
Are you telling yourself: “our incomes are not that high,” “we have three children,” “our mortgage/rent is just too high,” or “we live paycheck to paycheck and do not have an extra dollar to put towards debt.”
You will be amazed. Once you start managing your money and being accountable for every dollar spent, you will find wiggle room. You may have to sell a couple of things around the house on craigslist to get the jump start you need. YOU CAN DO THIS! Where there is a will, there is a way!
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