Our Story
In early 2003 my wife returned from a foreign mission trip with our church and told me about this Dave Ramsey guy who told people to get out of debt and not use credit. Turns out the lady that organized the trip had a niece who worked for Dave at the time and had just become debt free. So my wife came home with this awesome story and through the connection we ended up getting a pair of free tickets to a simulcast location for one of Dave’s Total Money Make Over events.
We attended the event but didn’t have any money for any of his books. The content was good and it made sense but we were just too immature at the time to do anything about it. That summer, being a talk radio junky, I began listening to Dave Ramsey around the time we found out that we were ripped off in the purchase and refinance of our house, the owner of the company is in Federal prison.
Two years later, in 2005, we were expecting our fourth child and we HAD to buy a van, since we had just sold the one we had and downgraded to two cars just before we found out. I had been in communication with a local FBI agent and Poster Master Inspector agent regarding the situation with our house, which was going nowhere fast, and really needed some advice. So I called Dave’s radio show to ask about the house situation. After telling me to sell our brand new van, I didn’t call about the van, he gave me some advice about dealing with the mortgage company. We kept the van, talked to a lawyer about the house – found out that our time to seek recourse personally had expired and I kept listening to the Dave Ramsey Show on one of the local radio stations.
In November of 2007 I told my wife that we either needed to start doing the Dave plan or I would have to stop listening to the radio show, those Debt Free Friday’s were starting to get to me. In December the Lead Pastor of the church plant we were a part of personally challenged us to begin tithing. We started 2008 using a written budget and tithing but still borrowing money. In November that year we got a workout offer from our mortgage company and after running the numbers (status quo vs. Dave’s debt snowball), we accepted it and made a commitment to live according to Dave’s plan. In addition, we also stepped forward to lead Financial Peace University at our church to help keep us on the straight and narrow. I recall vividly the conversation we had about how, if we did this, I was certain we would be tested because of what this would mean to our family and to our young church family.
Turns out ‘tested’ was the understatement of the decade.
In January of 2009 we started our church’s first FPU class, I was sick with pneumonia for almost 3 weeks and by the end of the month was laid off from an IT consulting job I had had for 3 years. Fortunately we had sensed some uncertainty on the job front and we had saved almost $10K when our emergency started. It took a little over three months to find employment, we were down to $500 in savings and I was literally in the backyard talking to a neighbor about selling my van when the job offer phone call came. I started my new job just 5 days later.
Four days after stating my new job, our younger daughter became sick with a condition similar to Crohn’s disease called Ulcerative Colitis. She was hospitalized in May/June and almost died. Thankfully, she recovered. In the midst of that my wife was wrapping up her internship and graduated with her Masters in counseling. The first break we caught was that my health care benefits started on day 1 and because we have a high-deductible HSA plan all of our daughter’s medical bills were covered at 100% after we hit our deductible/stop loss amount, which happened by the afternoon she was admitted.
Our lives didn’t just look like a country song, they looked like a country album. But it didn’t stop this family and, through it all, we never gave up. By the Fall our daughter was back in school and things were back to normal, my wife had found a great job and for the first time in almost 15 years of marriage we became a two income household. Now, my wife and I and our four kids (14, almost 13, 10, 5) were turning the corner and on the road to financial success. Despite all the set backs of 2009, we ended the year having eliminated almost $25K in debt.
In January, I heard about the 2010 Budget Fitness Challenge on Dave Ramsey’s website and I entered, what could be better for a nerd than to have one of Dave’s financial counselors review your plan and show you were you can improve. We quickly moved past round one and in mid February we found out that our story was chosen to be featured on the website. The greatest honor was the comment in the notification that we were being featured “I think you guys have one of the most inspiring stories we’ve featured and am happy that things are improving for you guys… The story should be up on the site later this afternoon. I think many people will benefit from seeing it.”
Ironically, I read that email from Dave’s team while I was standing in our daughter’s hospital room where she had just been readmitted for a flare up. Thankfully this time we were only there for a week before she was released to home and starting to get better. It was another month before she was able to return to school full time but due to our budgeting and sticking with Dave’s plan. This incident was an inconvenience, not a financial emergency and we were able to focus on our daughter’s health and getting her back to 100%.
We are now in the habit of making a budget at the beginning of the month and we revisit it every pay period. We use cash for everything we go out to purchase except gasoline (which we budget for and use a check card). In late March as we were revisiting the budget the night before payday we discovered that due to our budgeting we had approximately 25% of our last payday still in hand, allocated to specific areas but we weren’t penniless the day before payday. Furthermore, April would be our first true “Magic Month” with three paydays, and the third payday would have 65% of our paychecks free to go to the debt snowball and a few minor things that we had been putting off.
In the 16 months since January 2009, we’ve eliminated almost $42,000 worth of debt. We now own two vehicles outright with no payments (including that van that Dave told me to sell 5 years ago, I should have listened!), and we will NEVER have a car payment again. Due to the circumstances of 2009 we did borrow a tiny bit of money, my in-laws had co-signed a signature loan a number of years ago and when I got laid off they paid it off in full to protect both of our names. Then during the time our daughter was in the hospital we needed some significant unexpected repairs to our van (really should have listened) that they covered for us.
Thankfully due to the higher tax rate on severance pay in 2009 we got a decent tax return which cut that balance in half and by the end of March 2010 we no longer owed money to any more family members, it was a beautiful Easter Dinner at their house this year.
While we are seemly on the right track now, our mortgage situation is a ticking time bomb. We currently have a five-year, interest-only balloon mortgage on a house worth $30,000 less than they owe. The balloon payment isn’t due for several more years, so we have a little time to get out of this thing, we are gazelles but we are still only a few steps ahead of this cheetah!
Our family has endured some tough times, but through it all we have kept our heads up and stayed focused. We have determination, discipline, faith, and each other—everything we need to win. In just a few years, we will be able to say goodbye to debt forever! And after that, we will need to get some shades because the future gets even brighter.