Why debt-free? Why not?

So, as I mentioned in my last post, I’m going to make sure that I write about all of the things that are important to me here.  So, since I think it is extremely relevant right now, I’m going to start with why and how I got out of debt.  Before you quit reading because you think you can’t do this or you don’t have to, just remember this: I did it and so have thousands of others.  I’m not saying that it’s easy, but usually things that are worth doing are things that take work (like having kids . . . tell me that doesn’t take a lot of work).

Here’s my disclaimer: I didn’t make this stuff up.  I follow the Dave Ramsey plan.  I’d encourage you to visit this website if you would like to be debt-free like me.

I already posted some of what God has to say about having debt here, so I want to use this post to tell you about why my husband and I decided that debt was dumb.

First, a little background on my relationship with money.  I grew up not really having a lot of money, but not really knowing that that wasn’t normal.  We didn’t get new school clothes, we got hand-me-downs from our cousins.  The truth is, we thought getting those big garbage bags full of “new” clothes was great.  I remember it very clearly.  They weren’t new, but they were new to us, and that was all that mattered.  Birthdays were kept small affairs.  Christmas, however, was a toy bonanza, but we never got the newest name-brand toys and clothes and we didn’t realize that we were supposed to even want them.  Anything new was good enough for us.

The one thing, though, about not having a lot of money is that we never learned how to manage our money.  I didn’t get an allowance, so I didn’t really learn the value of earning it or saving or buying things with money that I earned.  I don’t really know what our debt picture looked like when I was young because we didn’t talk about it.  I do know that, once I started working, I spent every penny that I earned.  When college came around, I spent all the money that I earned, then I got a few credit cards to pay for the stuff I wanted on top of that.  Luckily I never accrued more than $2000 in credit card debt, so it wasn’t hard to pay it off when the time came.

I was pretty smart (even if I was an under-achiever), so I got a decent amount of scholarship money to go to college, and with my economic situation, I also got a good amount of grant money, too.  I didn’t have a college fund, though, so I had to take out loans to pay the rest.  And there was more than scholarships and grants could cover because I decided to go to a private school.  So, by the time I graduated, I had about $20,000 in student loan debt (approximately one year of tuition) and $2000 in credit card debt.

And that’s basically where I was when I met my husband.  He had fewer student loans because his parents had saved for his college, but he did have some (and took some for grad school).  He paid his credit card balance every month, so he was good there.  We, together, paid off my credit card debt before we got married, because he wanted to start with a clean slate, so the only debt we ever had was our student loan debt (which, if I remember correctly, was around $38,000 total).  After that, we basically didn’t use our credit cards, except for large purchases, and we would pay the bill in full each month.

We talked a lot in the beginning about how it would be nice if I could stay home when we started having kids, but that was going to be years down the road, so it wasn’t a big deal.  We also talked about how being in debt kept us tied to a place or kept us from doing whatever God wanted us to do.

Then, when I got my first job and my husband was still in grad school, we decided that it would be a wise financial move to buy a house instead of renting from somebody else (I know now that buying a house is not a financial benefit in about 99% of all cases, because it costs a lot more to buy than rent).  We (on my $10 per hour salary and my husband’s graduate assistant pay) were approved for a $180,000 loan.  Luckily we weren’t that stupid and didn’t buy more house than we could afford.  We actually ended up with a mortgage payment that was only about $50 more per month than what we were paying for rent, so it was a good move financially.  After that, we decided about two months later to buy a new $22,000 car with only our old car as a down-payment, so there went our mortgage payment savings.

We were doing fine and had a little in the bank, so it was no big deal that we were paying student loans and making a car payment.  In fact, we had a small windfall and paid off the car before we had to pay too much in interest, so we were doing pretty well.  We were spending ridiculous amounts of money on trips and gifts for our family.  We ate out as much as we wanted (but we liked to cook, so we didn’t eat out every night).  We did some home improvement projects and generally had a good time.

Then I decided to go back to school (because one degree wasn’t enough for me).  By that time my hubby had a real job and we were doing just fine (even paying a little extra on our mortgage each month).  We decided, though, that we weren’t going to take out loans to do it, so I quit working and went back to school and we spent what was in our savings on tuition.  We tightened our belts a little bit, but not that much, and did just fine.  I got a part time job to help out.  Then, one-and-a-half years into my two-and-a-half year program, I decided that I didn’t actually like the field that I was pursuing and wanted to just get out of debt and start a family.

So, there we were, again, with two full-time jobs and hardly any debt.  We were still making extra payments on the mortgage, but the student loan debt was just kind of sitting there getting the minimum payments.  When I quit school, though, we decided that we were going to take the Financial Peace University class that our church was offering.  Our friends had taken it and we thought it seemed like a good idea.  Little did we know, it would change our lives.

We stopped eating out all the time.  We passed up our yearly trip back to the Midwest to visit family (because my family is in Michigan and his is in Indiana).  We told our families that we would only be buying Christmas gifts for our parents and nieces and nephews.  We sold a bunch of stuff (including a piano and a bunch of textbooks).  When the next January rolled around, I decided I wanted to get even more serious about paying off our debt, so I got a second full-time job.  I only managed to do both jobs full-time for about two months, but we put a huge dent in our debt during that time.

So, in a span of 13 months, we were debt-free and only had about $50,000 left on our mortgage.  Then, we decided to have a baby, and we haven’t looked back.  Our kids have college funds.  We have retirement funds.  We still have a completely reasonable mortgage (we would have paid off our mortgage by now, but we moved when we started a church plant (now our church) in a nearby community so that we could be a part of that community).

So, there it is.  We didn’t start out doing it because it’s what God says to do, but now we know that the reason it works is because the plan we follow is in line with what the Bible says about handling money.  We have more freedom now to give, to do what we want to do, and to follow wherever God leads us.

Look for another post coming up that talks about how we did it, and how you can, too.


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