Financial Peace: Debt

We buy things we don’t need with money we don’t have to impress people we don’t like.
— Dave Ramsey

I want to share with you Adam’s story of how he decided to tackle debt.

How His Story Begins

“The expression, “in deep debt” is a relative statement; however, relatively speaking, I was once in deep student loan debt. My story starts in 2012 when I graduated from a private university in Texas with a BBA & MBA. I was not a person who led an extravagant lifestyle, but looking back I could have done much better managing my resources. I worked full-time while going to school to cover living expenses, books, and some tuition; however, each semester I borrowed money to cover the remainder of my tuition bill. Through the two degrees I accumulated approximately $42,000 in loans and a couple of thousand in accumulated interest.”

What He Did About It

“With the extreme uncertainty of what my future should look like, I mostly avoided my student loans at first. I just about breezed my way through the six month grace period before I began contemplating making payments to my student loans. At the time I just started my career, I was making enough money to support myself and live comfortably; things changed when the reality of a $513 monthly payment was due soon, I needed a game plan.

I’m certain I heard the name “Dave Ramsey” mentioned by my parents at least a dozen times during this time frame. They knew I was avoiding my loans and they knew I needed the direction Mr. Ramsey gave them during their own journey with debt. Finally I stopped by the bookstore and purchased The Total Money Makeover. Once I started reading I could not, for the life of me, put the book down unit it was finished. I realized the way I was living was NOT normal. I pursued my education with the underlying pursuit of financial stability; however, not having a plan to pay off my debt was intrinsically toxic to my objective of being financially sound.

In November 2012, I began building a budget and wrote it across the length of my bathroom mirror, there it served a constant reminder of the lifestyle that would be conducive to an accelerated repayment of my student loan debt. With this new found intensity, I began liquidating my assets (what little I had) and established my $1,000 emergency fund within the week. Within the next few days I outlined a plan that would allow me to pay off my student loans, optimistically speaking, in about 3.5 years. Most notably this plan included a strict budget on groceries, the elimination of the internet at my apartment, and trading in my smartphone for a flip phone.

Through trial and error I grew into my budget and even created spreadsheets to assist with budgeting and the detail of my student loans. Essentially I would get to work early on pay days, set aside the funds I would need for that period, pay bills, and send the rest to my student loans. The goal was to have a zero sum budget, which meant my checking account often approached zero (it becomes less scary after a few months, remember you have an emergency fund). During this journey you will certainly become “that guy” in the eyes of your peers and friends. I’m sure I have been labeled more than a few times as crazy, lame, tight-wad, etc. Just remember, this is only temporary, you have a plan and it’s worth the sacrifice."

Where Adam is Today

"By the grace of God, I made my final payment last week and I am now anxiously refreshing my browser waiting on the payment to clear both my checking account and my student loan servicer's website for each to show a zero balance. That’s right I am debt free! It took me two years and eleven months to pay everything off, amassing to over $48,000 in total paid (including interest). As George Strait says in his song Amarillo by Morning, “I ain’t got a dime but what I got is mine, I ain’t rich but Lord I’m free.” This is not the end, only the beginning of a new phase of my financial journey, on to baby step 3.”

You Can Do The Same

“I cannot thank the people who posted their success stories enough, I used to read your testimonies when I was feeling tired, or just needed faith. Through your encouragement, and that of my family and friends, I was able to stay on track and execute my budgets. For those of you who are still grinding through your debt, make sure to set incremental goals throughout the year, and keep with it! For those who are on the fence about budgeting, tighten your belt and challenge yourself to do something great. Mr. Ramsey, thank you for sharing your story and being the catalyst of change in so many people’s lives."

Further Resources

Here are some great articles from Dave Ramsey that I would highly recommend:

Get Out of Debt with the Debt Snowball Plan

The Truth About Debt Reduction

The Truth About Debt and Relationships