We’re Debt Free!

Today we made are final snowball payment of nearly $2700 to Bank of America and after 50 months we’re debt free! This journey started back in June of 2010 with close to $109K in debt shackled our family, a lot of uncertainty, and the need to make a change. We have had our share of bumps in the road along the way, temporary job loss for my wife, Murphy visited us more the once, and the task of cutting lifestyle for over four years. We stayed motivated each and everyday by focusing on the end goal of being debt free and thinking of what our family’s life would be like when we have a surplus of income each month. That one goal carried us to this very day.

We involved our children in the discussion from day one, letting them know that there would be changes. That the “no’s” we were often saying along the way were being said for the promises of future yes’s. The no’s were because of mom and dad’s past mistakes with money, and we want our children to learn from them so that they will not repeat these mistakes when they start their financial lives. Looking back over the 50 months, we survived. No matter what was thrown at us we were able to deal with it. We learn to adjust as we went. If you are just starting out on your debt repayment journey I’m here to tell you it can be done. If there is anything I’d like to change about the last 4 years is I wish I would have started this 10 years ago.

We have shifted gears quickly, our discussion have changed from debt payments to building wealth. We have many decision ahead of us, now having over $2k extra income per month. We have already have a fully funded our emergency fund, and now are increasing our retirement savings and starting college funds for our three children. It’s an exciting time for us because for the first time in a long time we are on the positive side of our income and can truly make a difference in our lives going forward.

debt free
How we got Started

Luckily for us we ran out of credit in the summer of 2010 or we may have continued on a destructive spending path digging further into debt. We were trying to plan a family vacation and I realized we were out of money or should I say available credit. We were living paycheck to paycheck at that time and have very little available cash. I looking to our credit cards and loans to fund our vacation that year and quickly realized we had maxed our 5 accounts. I tried to increase our credit lines, but was turned down as our debt to income ratio was too high. In that moment we had hit our rock bottom. We had nowhere to go, we could not borrow our way out of this problem any longer and continue to manage our monthly minimum payments.

I began to seek information about debt, I figured there had to be some get out of debt quickly trick I had been overlooking for years. Well I came across two resources. A blog call Punch Debt in the Face and a guy named Dave Ramsey. These two resources led to a new way of thinking for me, and onto a number of other resources. Ramsey’s “A Total Money Makeover” book was the first financial book I read. I brought all this new-found knowledge to my wife, the debt snowball, cutting lifestyle etc and after seeing we didn’t really have many options we jumped in. I worked with my local credit union and join a debt management program (DMP) they were able to negotiate with our creditor to reduce our interest rates. This ensured more of our debt snowball money was going toward principle rather than interest. I wanted to gain the quickest momentum so that’s why we went with a DMP, I know some have had success negotiating reduced interest rates directly with their creditors. Our initial payment was $1800 a month and we increased to a maximum of $2300. Our average was $2100 over the 50 months. From that day on we stayed the course.

Would we do it again?

I encourage anyone with any amount of debt to take a look at it and ask yourself why are you carrying it? We would take the leap again to become debt free in a second, so much so we wish we had done it years early. Being debt free even for a short period of time has given us peace of mind. We have a lot less stress in our lives, we don’t fear changes or unexpected events because we have a plan. Our family of five in on track, we openly discuss money and it has led to better overall communication as a family. It feels so good to be headed in the right direction. What are you waiting for?

We will be celebrating this accomplishment as a family. We will be heading out to a nice dinner at an upscale restaurant. Yes it will be paid for in cash!

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FinCon Fiesta!

It’s a party! Well at least a virtual party for those of us not attending FinCon 2014 in person. Debt Debs has graciously decided to host the Frugal FinCon Fiesta! A blog hop party to coincide with the actual 3-day event in New Orleans. The hope is to get a conversation started among us not attenders with bloggers and non-bloggers. So please click the link below and join our Fiesta! Or drop me a random question in the comment section below and I’ll gladly answer. You can tweet about our little party by using #FrugalFinConFiesta too! So let the Fiesta begin!


Plutus Awards

During this weekend event the Fifth Annual Plutus Awards will be handed out. I’m truly honored to be nominated in the “Best-Kept Secret Persona finance Blog” category. I’m amazing that a blog that I started just over a year ago, to help keep my family accountable as we climb our way out of debt, to hopefully help someone out there in a similar situation as us, and maybe make a little side hustle money along the way blogging, has now reached the high of being included in such great company with so many other great bloggers. It’s truly a great community with us great people. I hope I can experience the next conference in person. Best of luck to all nominees this weekend!

Up Next

It’s an exciting time in our household. We are just weeks away from being debt free. Once complete we will shift our focus from debt repayment to building wealth. There are a lot of decisions to be made. I classify this as exciting because they level of interest by the entire family is at an all-time high. Everyone is excited that we will begin a new chapter and living in debt will be behind us. I’ve enroll in two continuing education courses at my local community college one on investing and finance to help springboard our next phase. My wife and I are communicating about our finances all the time, talking next steps, investing, college saving, etc. We are taking the challenge of debt freedom head on and it feels good!

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Net Worth Update: August

Welcome to our August net worth update. I’m a bit late, but with good reason we have some major things going on in our financial lives. I mentioned in my Murphy post back in February that my wife was in a car accident back in 2012. She was injured, out of work for a year and required surgery. She is doing much better now and had returned to work. During that time we have had to deal with no fault and a lot of out-of-pocket costs. With all of that said we hired a lawyer and perused a lawsuit. This was the first time we were ever involved in anything like this, but given the extent of her injuries I can tell you in my opinion it was warranted. The whole process was difficult, tons of paperwork, a lengthy deposition, the defense attorney asking to take a photo of my wife’s scar from the surgery. She never expected this and made her very upset. Luckily she never had to go to trial and was able to settle out of court. The settlement will change things a bit for us. Here’s how the month broke down:

net worth

Net Worth Details

Cash (+$49,450.00): Thanks to the settlement we have a solid month emergency fund now in place. This gives us tremendous piece of mind.

401K (+$2,298.00): A nice tick up in August. Currently contributions to retirement are still on hold this will be changing very soon.

Pension (+$524.00): This is interest income. The pension contributions are now over. Once I have the ability to roll this somewhere else I will.

Autos (-$333.00): Our 11-year-old van and 13-year-old car are fading fast. I would expect the cars to continue to slow depreciate. We expect to upgrade soon.

Home ($0.00): Still an estimate, as home prices are still fluctuating in my area. I’ll be very happy if we sold for $350K. We don’t have any plans on going anywhere soon.

Mortgages ($-265.00): Slow and steady. I hate being underwater, but we have higher priorities right now.

Consumer Debt ($-4,818): This is an area of consistency for the last 50 months. We doubled up a bit in August based on a surplus in our snowball account. Let’s the sprint to the finish line begin!

We have a lot happening in our financial lives. We are trying not to make too many changes or decisions all at once. We have worked hard to get to this place and now having additional money come into the mix we don’t want to rush into anything to quickly and screw it up. Getting the e-fund in place was important, we are able to leap-frog some of the baby steps outlined by Dave Ramsey. Debt free is next for us. We are so close I just want it to be gone already.

What’s your take on car accident lawsuits? How are we doing? How does your net worth compare?

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The Versatile Blogger Award

I have had an amazing few weeks. First I was nominated for a Liebster Award by May @ Messy Money, second a Plutus Award in the “Best Kept Secret Personal Finance Blog” Category and now Mel @ brokeGirlrich had nominated me for the for a Versatile Blogger Award. Sweet!
versatile blogger award

What the heck is a Versatile Blogger Award?

Well until I was nominated I had no idea what the award was myself, basically the Versatile Blogger Award is an award that gets passed from blogger to blogger. It’s a good way to get to know one another a little better once nominated you need to post 7 things that others don’t know about you and nominated a few others for the award. So here goes.

7 things you don’t know about me

I posted 20 random things about me post back in July, so I need to dig deep for seven more.

1. I love animals. At one time growing up I took care of 4 dogs and 3 cats.

2. I had a BlogSpot blog call “Until Debt Do Us Part” before Debt Discipline and I had any idea who Gail Vaz Oxlade was.

3. Spiderman is my favorite superhero and Batman a close second. They ruled my youth until a little thing called Star Wars came along.

4. I have lived in New York all my life, except for a single year. After college I could not land a full time job. I move to Florida to live with my Parents. After 1 year almost to the date I return to New York to start my career.

5. In my 20’s I preformed stand up comedy 5 or 6 times, My first time was done on a darn.

6. I have won over $1000 playing blackjack.

7. I once had to video tape a deposition of Axl Rose of Guns & Roses.

So there’s my seven. Now on to my nominations, I nominate the follow bloggers for the Versatile Blogger Award:

May @ Messy Money
Tre @ House of Tre
Renaud @ DebtFreeGen-Y
Spunky Banker @ The Spunky Banker

I can’t wait to hear their 7 things.

Posted in Personal Finance | Tagged | 12 Comments