If you have not had a chance to read Part 1 & Part 2 , I would take the time to do that. It helps you understand our journey and may help you in your journey to become debt free. Let’s start of with a visual of how the beginning of this stage felt:
The company I worked for was moving towards a substantial set of layoffs. Our industry was hit hard, like many in 2008-2009 timeframe, and the writing was “on the wall”. It was a terrible time, because if you remember, we were back in consumer debt and managed to get ourselves into more “secured” debt with a bigger home and a cabin. I was in a horrible place emotionally. It took it’s toll on us, physically and emotionally.To add to the turmoil, I had to have surgery during this time and was on a short medical leave. My husband went back to work to make ends meet while my pay was cut. Afterall, we had gotten ourselves into a place where there was no “wiggle” room. I looked for solutions everywhere, including taking a loan against our 401k plan at my job. (Not a smart move, and especially if you are potentially going to lose your job). Notice I said “I”. hmmm…transparency is key to making sure that you work as a team with your spouse. (more on that later).
This is a photo of us during the stressful lawsuit and the potential layoff at my job…I look at this picture and remember how hard it was on all of us…I don’t like to look at this picture other than to know it is a great reminder. The promise we/I made to ourselves to never be in a similar situation again.
I started hunting for a job, while working fulltime. A very stressful place to be, especially if you have been a loyal employee for 10 years. I wasn’t very successful at first. I look back and see that future employers may have detected my “desparation”. I kept praying and I found a job posting on Career Builders. It was a position that had a connection with a previous boss, whom was now a Vice President. I applied and started the process. Our industry was in a downsizing mode, I was only looking to “replace” my current salary and get us back on track. My prayers were answered and I accepted the position. Our second try at the Dave Ramsey program began… Our first step took place during my job hunt, we handed the bill paying responsibilities over to my husband, and we started to work together more consistently. No trying to protect each other from stress and hiding financial situations. My husband is home with the kids and it made more sense for him to track our spending and pay our bills. Besides it helped keep me accountable for sticking to our plan and for him to be more aware.
It was a very slow go but, we followed the babysteps and were very diligent about our spending. We took every bit of extra, as well as our snowball ,and attacked the smallest to largest debt. Though our smallest debt wasn’t that small. At the same time, we worked to try to refinance out of our current mortgages. To our dismay we didn’t qualify due to our home value and debt ratio. As hard as it was, we continued to have tenacity and after 2.1 years we paid off all of our consumer debt.
Sold our rental, paid off the legal bills, paid off any and all credit cards, and fully funded our emergency fund with 3-6 mos of living expenses.
To celebrate we went on an all cash paid vacation to Destin Florida. It felt so good to be free from the consumer debt and pay cash. We had not been on a vacation for 7 years! It was the best vacation ever, because we felt so free from having paid off our debt! Now it was time to tackle our home and cabin mortgages. More about that in Part 4.
I generalized alot in this post. But, Dave Ramsey’s plan spells out the easy steps. Follow them exactly and you will be well on the road to Financial Freedom.