In 2019 my wife and I became debt-free.
We started our debt journey after taking the Dave Ramsey Financial Peace University (FPU) course at a local church in West Palm Beach, Florida in 2016. At the time Angela and I were dating (about to be engaged) and after the first session, we went back to my apartment to write out our doubts to come up with a plan to tackle it together. Our debts looked like this:
Angela: $0
Me: $76,530
I knew I had credit card debt and school loan debt, but when I wrote it all out and saw that number my heart just sank. I honestly believed she was going to dump me. That’s a lot to ask her to take on and while it’s true that “love don’t cost a thing” it seemed at that moment it kinda had A LOT of costs for her. So after tears, reassurances, and a commitment to finish the class together “we” started our debt-free journey.
Rethink Debt
Before I took the course I had a couple of toxic approaches to debt that I did not even realize.
First, I thought it was okay to add more to it because I worked hard for the money I earned. I had earned this trip, this electronic device, this vacation. I realized “I earned this” was one of my main motivating factors for increasing and ignoring my debt. Casting aside that thought TOOK A LONG TIME.
Second, Psalm 37:21 states that the wicked borrow and do not repay. With my student loans, I often took the approach of delaying more than re-paying. I viewed my student loans as “good debt” because the interest allowed me to get tax breaks every year. But it never occurred to me that even after refinancing my loan the tax break was less than the amount added to the principal every year. It wasn’t good debt (if that even exists) because I was going in the wrong direction.
Third, after I got married it was no longer my debt but our debt. This was very hard for me to accept because I occurred the debt, not my wife. But she insisted I change my thinking on this because we were a team on this. We combined our checking and savings accounts. We did the budget together. Our checks were going to hit all of this together. It was no longer mine but ours. And it was because of changing that mindset that we accomplished the seemingly impossible.
The Grind
So how did we get out of debt? I’m glad you asked!
First, we started the 7 Baby Steps outlined in the FPU class (see the image below or here for more details). We got to through step 1 fairly quickly so we began step 2.
Second, we looked at how we could renegotiate our debt. I had four credit cards in my name at the time so we tackled the lowest balanced one first for our debt snowball. I called the credit card companies and found out that if I put a freeze on the cards (see more here on that process) 2 out of the 4 would agree to lower the interest rate I’d accrue every month. That amounted to over 15% on each. It wasn’t that long before we cleared then cut up the first card and then took used that amount to start hitting the second card and so on from there. Within a year we had paid off all credit card debt.
Third, a family member told us about First Republic Bank and their student loan refinancing program. The bank was in our city (one of the prereqs of applying) so I immediately looked into the program. At that time we didn’t qualify because our student loan amount was not enough so I moved to other banks to look into it. A month later I heard back from the bank that they had changed the program and we now qualified. We dropped our interest rate down to around 2% from 6.5%. And this was what my wife calls a “God-incident” because we were planning on moving the following month and if we had we would not qualify for this program since the bank was not in our city. We saw this type of “favor” throughout our debt journey.
Finally, we included our family. What I mean by this is that we told our parents and the rest of our family the basics of what we were doing, what our goals were, and let them know this might mean we can’t do things we’d normally do because we were committed to getting our debt erased. Our family not only embraced it but actively helped us in the process. Almost 2 years into getting out of debt we were down to $48,000 (remaining school loan) when my father and mother-in-law offered for us to oversee my wife’s grandmother’s house. We would pay utilities and be in charge of fixing up the place but we could stay rent-free. We jumped on that opportunity immediately and the rest is history. Getting family or friends involved opens the opportunity for blessings and favor to occur. You would be surprised how much you don’t have because you don’t ask.
Seriously, Get Out Of Debt
As we wind down this absolutely crazy year, I dare you to make the commitment to start getting out of debt in 2022. Seriously, do it.
Covid, inflation, and politicians have shown us how unreliable things are around us so the best thing one can do is be in a place where you can IGNORE all of that, within reasons of course, by not owing anything to any of them. The relief of this passage is real:
“The rich rule over the poor, and the borrower is slave to the lender.” Proverbs 22:7
Make 2022 the year you’re not a slave anymore.