How We Got Rid Of Our Debt So I Could Stay Home

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Last week I wrote a post about Ryan and I's choice for me to be a stay at home mom with our kids. In it I admitted that we had been in a ton of debt, but overcame it after I lost my job when we moved. Many of you asked for a follow up post on how we did that, and so here it is.
I came out of college with about $10,000 of student loans. Ryan, thankfully, had none. I purchased a new car for about $20,000 and Ryan had his limited edition car he bought after deployment for around $45,000. That right there is just a stupid amount of money. My goal was to pay off my student debt and my car before we got married.
Last June, after our wedding, I am proud to say that I had no student loan debt and I owned my car. I also had taken advantage of my corporation's matching program for my 401K over the past 2 years. I entered our marriage basically debt free and with a good amount saved up for retirement.
This is where things got hard for us. I lost my job when we moved, cutting our income in half. When we first got to Arizona, every month was so stressful financially. We still owed over $20,000 on Ryan's car and owed about $10,000 for some wedding expenses and rings. We felt like we were drowning. If you have never been in a great amount of debt, this may sound funny, but I assure you, being in debt is suffocating.
My parents had always stressed that my sister and I were supposed to take Financial Peace University (FPU) along with pre-marital counseling before we got married. Because Ryan and I had a short timeline, we agreed to take FPU as soon as we got to Arizona. I cannot tell you how much of a blessing this course was for us. Ryan always says, "FPU changed our life forever."
Through taking the course, we began to tackle our debt, set up a feasible and realistic budget, and realize that we were not spending money the way we should.
The first big decision we made was to sell Ryan's car. I think I was more emotionally attached to it than he was. We had dated in that car, drove that car home from our wedding and moved across country in it. When it came down to it, it wasn't practical for a family (only 2 doors), couldn't drive in snow and was extremely expensive to maintain and repair. We traded it in for a brand new Jeep and our car debt dropped below $10,000. Our interest is below 3% and out car payments are only $150 a month now.
Yes, we could have traded it in and bought something less expensive and used, but we invested in the Jeep as a reliable source of transportation for the years to come with our growing family.
Next, we budgeted out how we would pay off the wedding debt, car debt and also set up our retirement over the coming year. FPU teaches you the importance of saving for retirement, so we set up two Roth IRAs. By March, with our new budgeting, we were able to save an additional $6,000+ into those accounts.
We had to look at what we NEEDED, what we liked, and what was just unnecessary. I was intentional with my grocery shopping and started packing Ryan's lunch every day for work. I also cook dinner almost every night of the week. I used to coupon like crazy when we lived in the Southeast. Out West, it isn't very easy, but if you can coupon, DO! I would get paid to take stuff out of stores. No, that is not a lie. We are still living off of my toiletries stockpile I created almost two years ago. I haven't paid for deodorant, toothpaste, shampoo, or razors in over two years. That all came from couponing.
At first, living by a new budget is NOT easy. But after awhile, you get used to it and it isn't that bad. You find creative, cheap or even free date ideas (Alphabet Dating, Club Sexy or Childhood Date Night). You figure out that you don't need brand name items. You settle on an amount you will still let yourself spend on clothes or entertainment...and you stick to it.
Here, today, on May 8th, 2013, I am so proud of Ryan and I. We started our marriage with $30,000 of debt and no clear savings for retirement. As of right now, 11 months later, we only have $5,000 of debt left (the car) and have saved over $7,000 in our Roth IRAs. So if you really look at that, we could be debt free. The only reason that we put that money into the Roth's instead of towards the car, is because you can only put $5,000 a year into each Roth IRA. Once the year is over, so is your chance to add in that money. Our money is making more in interest in the Roth IRA's than it costs for the low interest we have on the car debt. Therefore, it is wisest financially for us to put the money in the Roth instead.
We have agreed that we will pay extra on our car payments throughout this year. We have also started saving the money that was going towards our other debt each month, now that we paid it off. That money we save will be for buying a house in the next year and also for the baby.
If you feel like you are trapped in debt, you can overcome it! We are living proof of that. FPU is an amazing course and it is offered almost everywhere and online! I really stand behind my belief that every person can really benefit from taking that class.
If you have any other specific questions or want to talk more, just email me! (:
"Each day I rediscover what my body is capable of doing."
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