It’s been three months since we’ve really put some muscle behind getting debt free. A few weeks ago, I announced that we’re becoming debt free and shared with you some of the songs that help keep me motivated. Since then, we’ve made a lot of progress! Here are some of the most exciting parts & some of the big learning points of those few months:
Milestone: We Are Credit Card Free!
In early April, we paid off our last credit card! Yippee! These credit cards (a total of SIX ACCOUNTS between the two of us…Yikes!) were some of the smaller debts in our debt snowball, so they were paid off first. We are no longer in debt to credit cards and are so excited to not be relying on those credit cards for emergencies. It is ten times more liberating than I thought it would be to tell people that we don’t use credit cards. Just the other day at work, I had to request a credit card number to order some advertising. The office manager jokingly told me that I would have to use my own credit cards. I smiled and replied, “But Ellen — I don’t have credit cards anymore!”
Roadblock: We Had to Tap Into Our Emergency Fund
It makes sense that not long after we decide that we’re becoming debt free with no reliance on credit cards as safety nets that Murphy’s Law starts raining on us. Within 10 days time, we had broken the garage door (glass, panel, operating system…it was totaled) and also got into a minor vehicle incident in which we backed into a cement planter box (in Hawaii, no less). Hello, Murphy.
What I learned
The Emergency Fund does more than just pay for your human errors. Yes, we all make these human errors. And I’m really happy that we had the money already set aside to pay for this Roadblock. More than just the cash flow aspect though, it is a marriage saver! We avoided what could’ve been a nasty fight in our marriage. I can only imagine the blame game for that $600 garage door replacement. Knowing that we had the money set aside made it a lot easier to forgive each other (including ourselves) and avoid what could have been a really stressful moment. The Emergency Fund helped two tense moments in 10 days! It has since been replenished to it’s original order.
Milestone: Getting Below $38k
When I graduated from college, my student loan lingered somewhere around $38k. When I started making payments on my student loans, I did it without passion or head knowledge and my balance still hung around $38k…for months. During those first six months of paying it off, I couldn’t get the balance below $38k. My payments weren’t targeted, I was only making the minimum payment for a ten year payoff, and the interest on those suckers was growing rapidly. When I started my debt snowball, I wasn’t any closer to dipping below that mark either because I had to take care of our $6k in credit card debt first. I felt like I wasn’t making any progress with my student loans!
After I tackled the credit card debt, my next mental hurdle would be to finally have a balance under $38k. After a few payments, I was FINALLY under that $38k mark! I moved the needle! The balance was fragile though, because the interest could push me right back where I was (and it did, momentarily). I have gotten underneath that $38k mark twice now and I have been running away from it ever since! The further I get, the happier I am to be away from that number. I see the number 38,000 as some kind of evil guard, holding me hostage from achieving my goals. Don’t you want to run away from him, too?
Motivation Moment: Meeting Dave Ramsey & Rachel Cruze
If you have noticed the use of the terms ‘Debt Snowball’, ‘Emergency Fund’, or the giant photo of me with Dave Ramsey, you might have guessed that we are following Dave Ramsey’s Seven Baby Steps. Not to a T exactly, but we are using his plan as a general guideline for becoming debt free, building wealth, and giving away that wealth.
On May 5th, he and his daughter, Rachel Cruze, were in Los Angeles promoting the book that they recently co-wrote, Smart Money Smart Kids. Being only an hour from LA, I zipped on down there to attend the event. It was really exciting to meet them, shake their hands, and get my book signed by them. It’s not like we’re BFFs now, but it really brought a human element into everything. They are real people who have done this plan, not just radio stars. Dave Ramsey & Rachel Cruze also gave away $2,000 in a raffle. I didn’t win, but you can’t win if you don’t try.
Dave holding up $2,000 cash…woo-hoo I hope that little girl pulls my name out of the bucket!
So, those are our big moments of the last three months. I’m excited to continue to reach more milestones as we pay off our debts until we finally can scream that we’re debt free.
Are you becoming debt free? What milestones have you reached?
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