Earlier this year I found Dave Ramsey on YouTube. I didn’t follow his plan 100% since my husband and I had developed our own plan after we took a hard hit when the real estate bubble burst. However the more I turned to Dave’s channel for inspiration on our financial goals, the more I felt compelled to better align with his baby steps.
According to our plan, we paid off most of our debt, but not our car loan nor our house. We kept these debts outstanding and planned to stick with the repayment terms even while we had 6 months worth of expenses sitting in savings. During the same time, we applied 15% of our household income toward retirement. Mainly this was because of my husband’s desire to keep a safety net and put money aside for our future. Not long after my May post on Ramsey, he also began watching Ramsey’s YouTube channel. While he still felt most comfortable sending 15% of our income toward retirement, he did agree that paying off the car loan was financial priority number 1.
As soon as he said that (literally the same day), I took 2/3’s of our savings and applied it to the car loan. We had already cut back on all extras and been making monstrous car payments, and this massive withdrawal allowed us to pay my Honda off in full. Ultimately, we paid a 5 year note off in one year and 11 months.
It felt surreal when we made the last payment and the title arrived a week or so later. While our savings was the lowest it had been in years, we held the title for both our vehicles free and clear. It felt liberating to also know that every single item in our home was owned outright. At this time, we have no outstanding debt besides our house. Wow! As Dave would say, this makes us weird according to the American standard.
When we left for Germany we had about 3 more months worth of savings to go to replenish our 6 month’s reserve. It builds quickly when you have no consumer payments! Of course, as you know, we then experienced the tragedy of my dad’s passing. This brought several expenses we did not expect, as we dealt with unplanned travel, services and estate management.
That said, we were able to not only meet, but beat our savings goal when we received $130,000 in life insurance and beneficiary funds. In frankness, the receipt of this money is the reason for today’s post. After seeing that money in our checking account, I cannot begin to explain all the materialistic imaginings that came with it. I was dreaming of a vacation home, rentals, handbags, a quad, new clothes, furniture, and the list goes on and on and on.
For the record, there is NO WAY $130,000 could pay for everything I started to imagine buying – and that doesn’t even take into consideration the dreams my husband had for how to spend the money. In the end, we built up our savings and applied the full remainder to our mortgage. In other words…
We stuck to the plan!
It wasn’t enough to pay our house off, but it reduced our aggressive 7 year repayment plan to 3 years. This is amazing, and I am eternally grateful to my father for his generosity and foresight to plan for his death. (As an aside, if you have not thought of estate/death planning from a financial perspective then I strongly encourage you to do so for the sake of your family.) Paying off our house is a major step toward our financial independence, and I’m thrilled to say that we now owe less than a $100,000 for a home valued at more than $400,000. In truth, much of that is due to market appreciation and home renovations we’ve done, but even so, it is quite an accomplishment.
In (hopefully less) than 3 years, we’ll be 100% debt free. When this happens we’ll be better than weird, we’ll be able to live and give with a spirit and generosity that I can only imagine. I have total faith we’re headed this way and that’s because I have a written plan that was put in place months ago and has already aided me in making wise decisions with my money.
I cannot say it enough – set your intention, put it to paper and then give it everything you’ve got. With determination and grit, I believe every noble intention will deliver fruit.