21 January, 2011

1 Question Fridays: Our Apartment / Steps to DEBT FREE

First I want to say that Eric and I have nothing but the greatest respect for those working through more difficult financial and housing situations than we are.  We know we are very blessed.

Eric and I have been married for over a year now.  Surprisingly, the question we get more often than when are you having kids? is when are you buying a house?  Many assume that just because it's a buyers market, and that we're married we should be house hunting.  Well, here's our situation, and we why have chosen the apartment life.  But really it's a bit of our financial story and our steps to become DEBT FREE!


This story begins a few years back.  When Eric and I first met neither of us owned our cars, in fact I totalled my car and had to replace in early in our dating years.  We both lived at home.  Because I lived at home I felt like I didn't need to have a "budget".  Boy was I wrong.  Budgets are for everyone! I did not keep track of my money and long story short racked up some significant debt.  I also owed the government for one year of my private Catholic university education (an agreement worked out with my parents).  Add it all up.  We found ourselves getting engaged with nearly $50,000 of debt (cars, student loans, credit cards).  Help!

Sadly, we didn't think anything of it. Everyone has a car payment.  Everyone pays student loans for years!  Everyone floats a little credit card debt.  We're normal.  And, we thought we could afford a house.  We even went to look at two different houses "in our price range" whatever that meant!

Well, thank you to Dave Ramsey, we are no longer NORMAL!

After we looked at the second house my dad pulled us aside.  He asked us if we'd thought through property taxes, a new roof, cost of a lawn mower, furniture to fill the house, etc.  And that was the moment we realized we needed to save for a house, not just rush into it because "everyone was doing it" and "it's a good time to buy."

This conversation made us realize we needed to get a grip on our finances.  Me more than him.  We talked through little tips and tricks, but nothing was really helping me.  One day in January 2009 I found myself wandering the finance section of a bookstore where I stumbled across this New Year's Resolutioners gem, a finance book in normal people language:
America's Cheapest Family Gets You Right on the Money: Your Guide to Living Better, Spending Less, and Cashing in on Your Dreams

I quickly read through it.  Yes, it had a lot of value, but I wasn't buying a new car. I wasn't doing the family grocery shopping.  I wasn't buying a house. I needed to get out of debt.

What I didn't realize, is that this book laid the foundation for me to be ready to listen to Dave Ramsey.  This book taught me to at least STOP my over spending, and to track my debts and payments.  In doing that I learned how much interest was KILLING ME from ever paying down my debts.

Just a few weeks later, my parents were offered the opportunity to take Dave Ramsey's Financial Peace University Dave Ramsey's Financial Peace University: 91 Days to Beat Debt and Build Wealth, Complete Participant KitThey started sharing the system with us. They also told us how manageable it was.  And how our money belongs to God and we're just stewards of it.  It hit me.  It hit me hard.  I was a squandering fool and I needed help.  Badly.

My parents decided as part of their "Give Like No One Else" they'd gift us a copy of the audio CDs and the opportunity to look through their workbooks.  So in May of 2009 as we drove to and from Orlando for Eric's Ironman 70.3, we listend to the first have of the CDs.  We stopped between each one and took notes on what we needed to do.

When we got home from our trip we started our first "Budget Committee Meeting". We set the timer for an hour, his nerd and my free spirit united, and we got started with the debt snowball and building our $500 emergency fund.  Within weeks we were crossing off stupid little debts.  And now 20 months later we own both cars, have no credit card debt and are down to the last 5-6 months of paying my student loan.  BOOYA.

And this is where the apartment comes into play.  Obviously we couldn't dig ourselves into more debt by living in a house.  Eric did a ton of research to find us a cheap apartment.  But in order for it to actually be cheap, it needed to allow us a short commute to work, other wise we would waste the saved rent money on gas.  My little mathematician did some number crunching and negotiating and scored us a deal on our first apartment.  Which, has an ideal location too!  The super cheap rent gave us extra money to throw at our debt snowball.  Last December we filed for a two-bed room apartment.  The extra room cost less than our storage unit, so that was a no brainer!  Good bye storage unit.

And we are proud to say, we just re-signed our lease for only a 10% cost increase, when most units were going for 30-60% more than what we pay.  Thank you negotiating skills from Dave Ramsey and Clark Howard.

So here we are, 5-6 months from being debt free.  Another year (at least) in our apartment.  And we couldn't be happier.

Here are some other reasons we really love our apartment life, and why it fits our super busy life:

  • pool
  • gym
  • movie & book library
  • small space to clean
  • small space to decorate
  • big enough kitchen for the two of us
  • no lawn or house maintenance
  • call one number for light bulbs, drain-o, heat, AC, etc
  • lock the door and leave for the weekend, or week
  • gated community
  • friendly staff
  • safe
  • maintenance guys are not creepy and they're constantly walking the property / cleaning /being awesome
  • location, location, location

In addition to Dave Ramsey and America's Cheapest Family, we also listen to Clark Howard and read The Simple Dollar, a blogger who mostly follows DR, but give some other alternatives. 

7 comments:

  1. Sooo awesome! The Economides and Dave are two of my group's authors! I'm so glad they're really helping you guys out. Such a smart way to get started.

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  2. Sounds like you guys are really growing into disciplined adults! i'm so impressed by how much you have retrained your spending habits and really gotten rid of so much debt in such a short amount of time!! GREAT WORK YOU TWO!!!! I'm following in your footsteps :] Thanks for being the example!!!

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  3. Thanks :) Keep up the good work. It can be tricky at times, but the pay off (pun intended) is so worth it :)

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  4. Wow, you guys really have a handle on things! I went to hear Dave Ramsey speak a few years ago with my husband who was my boyfriend at that time. Dave Ramsey is one helpful dude! You guys are taking care of that debt really fast. Awesome job!

    Whitney

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  5. Thanks, Whitney. It sure is a great feeling!

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  6. i loved reading this post. i know so many young newlyweds who buy a house before or right after they are married. and these houses are not just any house, they are bigger and more expensive than any house i grew up in with my family of 5! i think a lot of young people think they have to check things off a list in order to think they are living the right kind of life...find a partner, get married, buy house, have kids, hire someone else to watch kids, etc. life doesn't really work like that!! but, i'm not surprised how responsible and sensible you two are about something like this. (unlike my cousin and her husband, who "borrowed" $20,000 from my grandma to put down on their house...and they say they'll pay her back $2,000 a year for the next 10 years...my grandma was like, "i'm not going to be around that long!")

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  7. Girl this is so inspiring....I have about 30,000 of debt of undergrad and my husband has none...with our very limited income its overwhelming and I don't know where to start with saving and having debt...looking forward to reading more! :)

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Thanks for reading! We'd love to hear from you!