This past week Mike wrapped up the second Financial Peace University class he's had the privilege of leading. As I was sitting there in the last class, listening to everyone comment on what the classes had taught them, I had a chance to reflect on where we are and how very far we've come in regard to personal finance.
Mike and I were married right out of college. We moved to Nashville right away so that I could complete a one-year internship at Vanderbilt I needed to complete my degree. He didn't have any kind of job lined up, and I was looking at another 6+ months before I would be bringing any income into the picture. Thankfully it didn't take Mike long to find something, and when that first real paycheck was deposited into our bank account we felt like we were all grown up. And being all grown up meant that it was time to accumulate some stuff.
We lived in a small apartment in a nice part of Nashville. Cha-ching. When my car refused to pass the Tennessee emissions standards we traded it in for a brand new Honda Civic. Cha-ching. When Mike's car lease that his parents had set up for him was up, we bought a brand new Honda Accord. Cha-ching. I finished my degree and started working full-time. We bought more stuff. We moved into a bigger apartment.
Three years into our marriage, between student loans, credit cards and car payments we found ourselves over $100,000 in debt. It was around this time that we first heard of Dave Ramsey and Financial Peace University. It sounded like crazy talk (debt free living? saving 15% of your income? paying off your mortgage or paying cash for a house?), but we knew that finding a way to live on less than we made would change our lives for the better. We were tired of working so hard, but never having any extra. We were tired of arguing about the money and where it went. We couldn't imagine living the rest of our lives in that manner.
It took us a long time to fully embrace the sacrifices you have to make to go from living beyond your means to attacking our debt with full-on intensity. Old habits die hard, and we are a stubborn couple. But as I reflected on what it took to get us where we are today, I was filled with admiration for Mike and the sacrifices he's made to change our family forever:
He gave up his brand new Accord and bought an '88 Accord. And from that point on, except for a brief period when Sunbelt gave him a pickup truck, he's driven old, crappy cars. When the Accord was totaled (he hit a deer in our neighborhood in Nashville and the side-view mirror fell off – that's how crappy that car was. No side-view mirror = total loss), he bought an '81 diesel Mercedes. When we moved to Indy, he used to park it on the street instead of our driveway because it would leak oil. I once had a friend pick me up for a girls' night out and she said, "I bet you hate it that your neighbor parks his piece of junk right there in front of your house all the time." I didn't have the heart to tell her it was our piece of junk, paid for in cash. And now that the truck has been taken away? We're a one-car family.
When Mike lost his job shortly after Elena was born, he didn't spend weeks looking for a job that would look good on his resume or provide an improvement in status or income. Three nights after he lost that job he drove himself down to the Steak-n-Shake around the corner and applied to be a server. He worked there for 6 months, eventually becoming a manger, before he found a job at Sunbelt. He worked nights and weekends. He came home bone-tired and reeking of grease. He was a college graduate waiting tables at Steak-n-Shake, and he never once complained. He's always worked hard, no matter what he was doing, to do his best and provide for his family.
As a family, we've made other choices to bring us closer to living debt free. We pay cash for cars, even if it means we drive old cars. I've been driving a '96 Honda Odyssey for 5 years now. It has nearly 200,000 miles on it and we've never had a major problem with it. We've purchased homes that were well below the price range a lender would qualify us for. If we can't pay cash for it, we don't buy it. We've kept budgets where every dollar has a place on paper. When the money is out in one category, you stop spending or take it from a different category.
I'm not going to lie and tell you it was big fun and that it all felt worth it while we were in the midst of trying to scrimp every nickel to pay down our debt. It pretty much sucked. Everyone was having more fun than us, and more often than not, sitting down together to piece together the next month's budget involved a lot of yelling and tears and whining.
It was all worth it, though, in June of 2006 when we became debt-free except for our home. It was worth it when we could sit down and do the budget or talk about a big expense coming up and not end up fighting, because we had learned how to communicate about money together as a team. It was worth it when an opportunity came up to help a young couple who wanted to adopt, but couldn't afford the legal fees. It was worth it when Mike came home last December without a job, and we weren't scared – because we were prepared. It's worth it now, when Mike and I are both doing exactly what we want to be doing right now. He's giving his dream of being a professional poker player a shot, and I get to stay home with my kids during this most amazing time of their lives.
I write this for a couple of reasons. For one, I'm so proud of Mike for leading our family down this path. He annoyed me for so long with "Dave says this, Dave says that," and I'm so thankful for it. Dave is annoying at times, but he's usually right. I'm also proud that Mike has chosen to give his time in teaching Financial Peace University so that other families can live freely as well. In the fall he'll be teaching another 13 -week session for the Fishers Police Department.
I also write this because there are many of you who probably don't know our story. When you look around, it can seem like everyone else always has their act together. I think it's helpful to know that people make mistakes, that their lives can be messy, but that things can always get better.
I also think it's helpful to know that fixing messy things, like a crap-load of debt, can take a long time. There were no giant promotions, no big inheritances. Just patience and commitment.
If you're debt-free, or on your way, as well, I'd love it if you would share a bit of your story in the comments. If not, I encourage you to check out Dave Ramsey's books or consider signing up for Financial Peace University.