Flashback to October 2018: It was 3 months since moving out of a house with roommates, where I spent the last 3 years after graduating college. I made the decision to move in with my grandparents. I was going to live with them rent free for “a few months” while I saved a down payment for a house. One night a book caught my eye on the shelf. It was Dave Ramsey’s “The Total Money Makeover”
I was familiar with Dave Ramsey from the financial principles class I took my senior year of high school. The only problem was, I didn’t follow these principles. I wasn’t overly irresponsible with my finances. I’ve never been a big spender. Dave always says “you can easily wander into debt, but you can’t wander out”. At this point I had accrued ~$44,000 of know debt. I realized this was my responsibility and I had to get my finances in order. I was never going to be able to build wealth long term, let alone save money for a house, if i was constantly giving my income to my various payments.
If you’re not familiar with Dave Ramsey, he is famous for the 7 Baby Steps for financial freedom, which were outlined in The Total Money Makeover. Baby Step 1 is save $1,000 as an emergency fund. Baby Step 2 is clear all debt as fast as possible by taking all assets in non retirement accounts and using it all for the debt. This also includes stopping all investments, including any contributions to 401k to maximize income. This is otherwise known as The Debt Snowball
My debt was comprised of the following:
- Student Loans: $29,000: My $29,000 in student loans were made of a number of smaller loans ranging from $2,000-$4,000. During college, I only took out one private loan from Sallie Mae, totaling $10,000. Given this plus the federal grants from financial aid, this grew to $28,000 by the time I graduated
- Auto loans: $10,000
- Medical Debt: $5,000
The Baby Steps say attack smallest to largest based on balance due. This differs from the mathematical concept of paying off the highest interest rate first. This may not make mathematical sense but it works as you are paying so heavily on the debt, that the accrued interest in this time span will be insignificant. Plus, if we are factoring math into the equation, we wouldn’t have placed ourselves in this situation by using debt. The momentum you make from paying off that smallest amount, and continuing to contribute that to the next balance allows you quickly begin to knock these debts out. There is also a strong feeling of accomplishment with each balance you are able to take down to “0” This keeps you motivated and moving towards the next balance.
My Debt snowball took 11 months to complete. I made my first payment on December 20th 2018 & my final payment on November 5th 2019.
I took on a second job and worked 65 hours per week on average during this time. Below is a little more detail and what i believe are the 2 keys to getting out of debt.
Income: While in college, I worked at Chick-fil-A. This was a great part time job while in school that was flexible with my schedule. This allowed me to work, go to class, and still have somewhat of a social life. By the time I graduated, I had worked myself up to a management position. The Monday after I graduated college, I had my first interview for a new career. I Interviewed for a claims representative for a smaller, national insurance carrier. The position was about an hour and a half from my home in Charlotte. Knowing I was not really interested in the position, I still interviewed. The interview went really well, but after declining their position, they set up an interview in the Charlotte office, for an underwriting position, which was what I was truly interested in. My interview went well and I was brought back for a second interview. At this point I thought I had it in the bag, only to receive a letter 2 weeks later stating i had not been selected. With this, I went back to Chick-fil-A, where I looked at the potential to pursue a career.
Throughout college, I was given steady raises and promotions, so at the time, being fresh out of college, the $14.50/ hr i was making seemed like a lot compared to what I was making while I was in school. Meanwhile ,I was in a financial position where I was struggling and even unable to make my minimum payments on my student loans. I was not generating enough income to support my basic necessities, but I was using my growth in leadership & responsibilities, as well as my relationships with my peers to justify staying in a position where I could not support myself. After being behind on my payments for months, i called Sallie Mae and had my payments adjusted to be income based. Little did i know this was just digging a deeper hole, as my payments would now not be large enough to cover the interest i was accruing. I set my income based payments on auto pay, and it was out of sight, out of mind.
I stayed at Chick-fil-A 2 more years, until finally in October of 2017, I was able to land a position as a Commercial Lines underwriter for a national insurance carrier. My new salary was near double what I was making at Chick-fil-A, but as ill outline later, income is the key a getting out of debt, but without the right behaviors, your situation will not improve. I was making more money, but this just led to more frivolous spending.
When I finally realized it was time to get out of debt, I looked at my income. I was making a respectable income but with all of this free time outside of my 45 hour work week at my full time job, I had the ability to really enhance my income and speed up my debt free process. When i left Chick-fil-A, i pridefully found myself thinking I was moving on to “bigger and better things”. That made it all the more humbling when I decided by best course of action to really enhance my income was go back to Chick-fil-A. The day i went back to Chick-fil-A, I spoke with my old GM and i had a number in mind for my pay, that I would come back for. Before i could even start my negotiation, I was offered a number higher than I had in my head.
While living with my grandparents, I was roughly 20 minutes away, but conveniently, the Chick-fil-A was about 2 miles from my office. I began working at Chick-fil-a Monday-Friday, 5:30 A.M.-7:45 A.M., before heading to work my 8-5 job directly after. This added roughly $500 extra a month that I could throw at my debt. Over time, I began finding more and more time to work, whether it be working 5:15-9 P.M. after my full time job as well, or even on some Saturdays. I ended up getting a modest, affordable apartment that was five minutes from Chick-fil-A, and my office. I was able to add $1,100 extra per month, until the time my debt snowball was completed. On top of this I received 2 additional pay raises at my full time job and received my first annual bonus. In all, i started my debt snowball making $56,000, with a plan to be debt free in 18 months. I would do so by paying $500 per week on my debt. By the end of my debt snowball, considering all raises, bonuses, and additional income, I was able to make $78,000 which allowed me pay $750 per week and to finish in 11 months as opposed to 18. Without taking a second job to really increase my income, this process would have taken an additional 4-6 months. The income is the tool to get out of debt, but as I said before, how you handle your income is how you make your money work for you.
Behaviors: When my income increased, my spending increased with it. I knew I was spending more than i was making, but i was not keeping track of it, so I did not know where it was going. I finally decided to track every transaction in a spreadsheet to see where the money was going. In the month of June 2018, i spent $4,108, which was nearly double my take home pay. Below is a breakdown of where my money was going by category:
I think people can relate to my spending. This was in the middle of summertime. I would get off work at go play golf at least once a week. I would go to the lake on Saturdays, or go out the brewery with my friends. I wasn’t going out and running up $75-$100 bar tabs, or buying a bunch of expensive items I didn’t need, but over the course of a month, haphazard spending without direction will lead to a breakdown such as this. This month also included an emergency where i had to pay to repair a flat tire and purchase new tires. If i had the correct behaviors in place, I would have been prepared for my emergency, and simply paid for this with my emergency fund.
Stumbling back across Dave Ramsey really opened my eyes to the importance of the behaviors required for me to control my money rather than allowing my money to control me. There are 2 key behaviors that that allowed myself to get out of debt.
Self Discipline: Hebrews 12:11: No discipline seems pleasant at the time, but painful. Later on, however, it produces a harvest of righteousness and peace
I’ve always made it a point to be hardworking and self-disciplined person. I have typically found success in every line of work and i like to credit this to my work ethic and self discipline. This was true in my work but from my spending snapshot, there was clearly no discipline in my finances and spending. Getting myself on a planned written budget each month was the first step I needed to give myself a boundary for my discipline. Having a budget is telling your money where to go instead of wondering where it went.
I use the Every Dollar app for my budget. It took about 15 minutes to make my first monthly budget. On Every Dollar, you break your expenses down into a number of categories including, housing, transportation, food, personal, health, and debt, where each category has subcategories within. Throughout the month, as you make a transaction, you input this to your budget. When you add a transaction, your remaining balance in that category will slowly decrease. When you are out of money for that category, you either find a category to pull from or you spend no more money in this category until the next month.
Prior to budgeting, i was spending $300-$400 a month on food. I started budgeting in Dec. 2018. By the time May 2019 came and went, I finished the month spending a total of $30 eating out on food, and $77 on groceries. I spent ¼ on food compared to June 2018 when i was paying no attention.
My diet is what us folks in the debt free community call “beans and rice”. No discipline seems pleasant at the time. I didn’t enjoy eating PB&J or ramen for lunch at work, while my friends would constantly go out to lunch. There were nights when I wanted to go to chipotle or order a pizza instead of eating a chicken breast with rice and green beans at home. This unpleasant discipline did not stop at my diet. I didn’t enjoy waking up at 4:45AM each morning to go to work a part time job before a 9 hour day at my full time job. None of these are inherently bad things, however over the span of time, a lack of discipline in these areas, would have kept myself from accomplishing my goal in my time.
The one principle associated with self discipline that really helped me push through when I was ready to give up, is the principle of you reap what you sow. 2 Corinthians 9:6- whoever sows sparingly will also reap sparingly, and whoever sows bountifully will also reap bountifully. I knew the choices I was making where to set myself up for a financially free life, with the ability to give, and have a prosperous future. This is what i was sowing at the time. The farmer that wants a yield of corn does not plant wheat, they plant corn. When you plant corn, you will reap a crop of corn each time. On the days where I wanted to stay in bed and not go to work at 5:30 A.M., or I was frustrated with my part time job where I once was a manager, but now was being told what to do by my former subordinates, I had to step back and realize I was planting my crop. I was setting myself for my future. I was getting myself out of debt and never going back again. This behavior associated with self discipline was so so difficult, at times, but was absolutely necessary to complete the goal of the debt snowball
Delayed Pleasure: We live in a society where it feels like we no longer understand the value of a dollar. In the social media, pressure cooker, targeted advertisement world that we live in, it has never been easier to spend your money so quickly. It’s now all about going to the hip new restaurant, or going on fancy vacations. Ever since I turned 16, I’ve always wanted a truck but i was still driving my “boring” sedan at 26. It can be difficult to see everyone enjoying all of these things that I would love to have, to a point of jealousy.
Unfortunately, a number of people “enjoying” these things are still living paycheck to paycheck, and buying these luxuries, while drowning in credit card debt. In today’s society , this is normal, but from what I’ve learned getting out of debt, and closely paying attention to my finances is that normal sucks. Normal is broke. Normal is having a car payment. Normal is racking up credit card debt so you can get more points
My peak of delayed pleasure was when i received my first annual bonus at work. I had an expectation of what my bonus would be and i was set on using this to knock a chunk of my debt snowball. The day i heard news of what my bonus would be, my expectations were blown away. It was 2-3 times the expectation i had set. Unfortunately i knew that i wasn’t going to be able to celebrate with a large purchase or a fancy vacation, because i knew that money was going to Sallie Mae. I spent less than 1% on myself and dumped the rest of it on my student loans. It was hard to feel i worked so hard for something, yet I got to see no tangible evidence of this at the time. Looking back, as hard as this decision was at the time, it was the right choice. Looking to “reward myself” with my bonus, would have set my ultimate goal of debt freedom by weeks or months.
During my debt snowball, I was still able to enjoy a bachelor trip for a friend in Charleston, as well as weekend trips to Charleston and Savannah with my girlfriend. It’s not that you cannot enjoy things such as this, but they were strictly budgeted for and funded through additional hours of work totaling up to 80 hour weeks before going.
During this process, there were plenty of naysayers. One of my co-workers said: A credit card is the best invention ever made because of the points. I heard- “I could die tomorrow, i wouldn’t want to spend all my time working, I want to enjoy my life and just pay my loans off over time”
I even heard, “why would i budget every single dollar I make? This gives me no room in my budget if i want to buy lunch for a co-worker or something like that’. While this is noble, you cannot truly give at a deep level where you can really make a huge impact if you are still spending your income on payments.
I try to start each day with prayer and Bible time first, before I do anything else. Since I started this routine back in 2012, I’ve started in Genesis, and read cover to cover until I finish, and then I start over. A few days after reading the start of the total money makeover and really evaluating and praying about my situation, I felt it was time to really commit by going back to Chick-fil-A to ask for my old job back. The same morning I was going to Chick-fil-A to inquire on working part time, when I was doing my daily reading, i just happened to start in Romans 13. I came across verse 8 that read: Let no debt remain outstanding, except the continuing debt to love one another, for he who loves his fellowmen has fulfilled the law.
While Biblically, this has a deeper meaning that pay off your remaining outstanding financial debts, but it’s funny how God communicates with us sometimes. I’ve never heard Him communicate something so clearly to me.
One other scripture that has stuck with me through this time is Proverbs 22:7: The Rich rule over the poor and the borrower is slave to the lender. I don’t want to be in bondage to my finances. I want to live a life I am able to enjoy while blessing others along the way through giving abundantly.I have now positioned myself to do such a thing. I made this decision to build wealth in the future. To establish that is is possible to live off cash. A behavior that I pray will trickle down to my children, and to truly change my family tree. The debt free journey was the most difficult, long term decision, i’ve ever made. I can now build wealth, and give generously. There were plenty of points where I wanted to give up, but looking back it is now truly my greatest accomplishment in 26 years.
Show to visualize, I tracked my payments on running list in my notes app: the totals do not match exactly, so a few payments are missing, but the majority of the payments are listed below.
12/20/2018-$1834
12/30-$500
1/4-$500
1/17-$500
1/31-$1500
2/6-$364.60 –
2/15- $500
2/28- $2014
3/7- $1000
3/15-$4,858
3/26- $1000
4/5-$500
4/12-503.96
4/19-$500
4/26- $500
4/28: 401K to 0
5/3-$649.12
-$17,223.68
5/10- $440
5/17-$500
5/24-$550
6/1-$550
6/7-450
6/13-$650
6/17- $200
6/19- 347.10
6/21-600
6/28-600
7/5-600
7/12-600
7/14-421.6
7/18-$1200
8/1- $1740.59
No More Student Loans
8/15-$650
8/23-$650
8/30-$939
9/9- $750
9/13- $750
9/20- $750
9/30- $1649.65- Car paid off
11/5- $2093.8$- Last outstanding Medical debt
DEBT FREE
My last advice to anyone that is struggling with debt and their finances is there is no better time than now to get your finances in order, and anyone can do it, regardless of your situation. It is easy to get into debt but it is difficult to get out, but the personal growth and disciplines developed in this process will leak out into the other areas of your life. You will be more intentional, you will work harder, you will be more grateful.
I hope my Debt Free Journey has been able to show as an example that anyone can do this. If you are ready to take the next steps, check out all of the resources on DaveRamsey.com
My Debt Free Story 