Why Live Debt-Free?

A lot of people have had some interest in our hope to someday be debt-free.  And, I mean 100% debt free.  So I thought I would share a little bit about how we got here, and why we want to live this way.  No, we are not Dave Ramsey followers.  I have heard about him, and started reading one of his books a few years ago, but never finished it....not even half of it. 

There are skeletons in our closet.  We're not particularly proud of them, and that's why I like to keep them in the closet.  But it may be time for me to show them to the world, for any of you who may be struggling the way we once did.

In 2007 I would say we were on top of the world.  We had just built a 1600 square foot house, with an attached garage and full unfinished basement, on 5 acres of land with a barn and a pond.  And we were expecting our first baby.  At the time, we both worked the same hours, at the same company so we shared a vehicle, a Ford Ranger.  But the Ranger didn't have a back seat so we had to buy a new car, or two new cars rather.  I switched to a different shift at work.  Now we were no longer working the same shift and sharing a car this way was getting a bit difficult.  So we increased our debt by exchanging one car payment for two. 

We had some minor issues with the house in the first few months, all of which were repaired by the contractor, since most new homes have at least a one year warranty.  We also had a few other surprises, like the cost of our electric and water bill.  Electricity alone averaged about $200 but up to about $250 in the winter.  Previously we had only paid about $100 a month.  And the water bill was $40 where as we had normally only paid about $15.  And now we had a 5 acre yard, which meant we had to buy a lawn mower.  In the subdivision where we lived before, we either borrowed a mower, or paid someone.  So the lawn mower, was one more monthly payment.  Also, this house was much bigger than our first house, so we needed new furniture to fill it up, and we financed that too.  This wonderful house was getting expensive.

In February 2008, Abby was born.  While babies are the sweetest little bundles of joy, they are also expensive.  And no one could have prepared us for how expensive this sweet little girl would be.  The hospital bills rolled in, which we expected no doubt.  But at 2 weeks old, Abby was spitting up more milk than she was keeping down and she was screaming in pain.  She had reflux.  Which meant we had to use an expensive formula.  My original plan was to breastfeed, which wasn't working out anyway, but now we were spending $75 a week in formula alone.  Yep, $300 a month just on formula, that we absolutely had not planned for (if you think I'm exaggerating, check out the price of Similac Alimentum the next time you hit the baby dept).  Plus another $40 for her reflux prescription, and no telling how much on diapers and wipes.

In Spring of 2008, we put the house on the market, and started looking for something smaller and more affordable.  We had a few bites, but no offers.  The housing market was sliding.  We refinanced our house for an interest-only loan to free up some income.  In August we found a house, not far from where we lived, in a nice little neighborhood.  It was similar to the first house we owned, which we had been so happy to sell in 2006.  The house was for sale by owner.  We made an offer, and were able to close quickly.  The seller was recently divorced and needed out of the house.  Somehow the mortgage company gave us a loan.  And we attempted to float two mortgages.  We moved into the smaller home in October after doing a few minor repairs. 

That winter, the recession hit our jobs.  Shawn got a pay cut and lost a team leader position.  Now we were making less money, and we owned two houses.  We were at rock bottom, and we were suffocating in debt.  With no place else to turn, we hired a 3rd party agent to "short-sale" our big expensive house on 5 acres.  We were able to walk away with no liability, but our credit score was scarred....mine reached as low as 410.  But at least we still had a roof over our heads.

This was a turning point for me.  This is when I finally embraced the idea of being debt free.  But a few things had to change.  In the past I had always managed the checkbook, and Shawn never really had a clue of how much money we had.  So, I printed a ledger and put it on the refrigerator door.  I kept our balance there and he was able to update his own receipts and see how much money we had in the bank without asking me.  I also printed a calendar, and on each Friday, I listed what bills were to be paid and how much money we needed to keep for the next week.  This lets BOTH of us see how much money we have and what bills are coming up.  Finally, I made a chart of all of our debt and listed the balances from the smallest to the largest.  And we slowly began paying things off, snowballing our debt.  We paid off credit card balances, our furniture loan, and our lawn mower.  We also paid off a 401(k) loan and a small student loan.  Last year, we paid off one of our cars.  The first time we have ever paid off a car, in almost 10 years of marriage. 

I mentioned before that we are nowhere near being debt free, and well, we're really not.  We still have one car payment, a mortgage, and student loans.  But we have been making progress.  We have started evaluating whether we need things, and whether a purchase is a good decision.  I even pray now for God to guide me before I make a big purchase.  Before we were making these decisions on our own, and clearly we were wrong.  I truly feel that God will provide for us, and provide a way for us to fund this adoption without incurring additional debt. 

So why do I want to be debt-free?  One simple word, FREEDOM.  Freedom from the chains of debt, the entrapment, and suffocation that we once felt.  Freedom to spend our money the way that God would have us spend it.  Freedom to give back to those in need.  Freedom.