5 Things We Gave up To Get out of Debt

The title of this post really should be "5 Things We Are Giving Up to Get out of Debt" since we're not out of debt yet, but we can see the light at the end of the tunnel. For the past two years, we have been throwing all our extra income at the student debt we have amassed. (I need to get permission with my husband before I share just how much debt we had, but let's just say that the amount could have bought us a house.)

Now, we are so close to being in the four digit debt amount that I can almost taste it, and I'm drooling. But, in the meantime, we are expecting our first child in about 6 weeks. In addition, we have one vehicle that may or may not make it through the winter. Finally, we have moved into a slightly bigger and more expensive apartment. Not to mention we're not exactly sure how to budget for diapers, baby stuff, and all the things that go with growing one's family by a person. Still, we are committed to saving on the luxuries that we formerly enjoyed in order to get out of debt faster. So, in no particular order, here are some things we have given up these past two years to help us achieve our goal of being debt-free in 2016:

1. Scented Candles-- Oh how I love Bath & Body Works scented candles (and just scented candles in general.) I light one of those bad boys up and all is right in the world, or at least in our little corner apartment of the world. But let's be honest, these are a luxury item. They aren't necessary for daily life; they have no return on investment; they had to go.

2. DVD's-- This is something Rob has given up since our Dave Ramsey lifestyle began two years ago. At first it was very difficult for him, and I know that some days it is still a challenge for him. However, he has been so gracious at giving up this small pleasure while we work on paying back Sallie Mae and her gang.

3. Beauty products-- I used to spend a decent amount on make-up, hair products, and hair cuts and colors. I have since gone down to getting my hair cut once every six months or so. I also use up all the shampoo / lotions / eye-liners / facial creams that I have. If I need to buy something, I buy it cheap at Target. No more Sephora beauty products for me. I even bought some eye-liner at the $1 store; I won't recommend it, but I still use it because that's life on a budget. When someone forgot their shampoo at our place, I used it up even though it probably wasn't  the type of shampoo my hair needed.

4. Books-- I used to buy more books because I was living overseas and usually the only way to read a book was to buy it for my kindle or purchase it when I was home for the summer. Reading books is a great stress reliever for me, and I love sharing books with my friends too. However, I have significantly cut back on buying books with the exception of a few devotional books and two pregnancy related books (one which the library did not have.) If I do decide I "need" a book, I buy it used on Amazon, usually at half the price of what it would be normally.

5. Concerts, plays, & shows. Rob and I went to a few concerts when we were dating. It was great fun, and it was during one of those concerts that I knew I was falling in love with Rob. Those concerts are distant memories now, and we have not been to a show or live music event since we started our debt-free journey. I feel slightly jealous when I see people enjoying a Cold Play or Avett Brothers concert, but when every dollar counts, paying anywhere from $30 to $60 for each ticket seems superfluous. I'm sure that we'll have a chance to enjoy live shows again, and we could always take advantage of FREE shows and concerts that are happening around town.

These are some small sacrifices we are making to get out of debt. What are some things you've given up (or thought about giving up) to help you achieve your financial goal?

More Conversations with Dave Ramsey

The other day our financial planner called us to see how we were doing.  I should clarify-- we met with the financial planner one time and then realized we had an enormous amount of debt we had to tackle before we considered investing. So we had been indirect with her until this point, and she had continued to call us for the past year and a half.

I finally broke it down for her:  "We are following Dave Ramsey's baby steps until we are out of debt."
      "Well in that case, it may just not be a good fit for us to work together at this point" (did I sense frustration in her voice?) She went on:"I just want to make sure you're not overpaying on your loan payments."
    "You have no idea" I thought to myself.

I then explained that no where could we be saving at an interest rate that was comparable to our 6 to 7% interest rate on our loans.
    "No, but you can be investing at a rate much higher than that. See, there is a difference between finite and infinite interest which a lot of people aren't educated about." She went on to say that most student loans have a finite amount of interest, but most investments have an infinite amount of return. I tried to wrap my head around it, but the conversation was brief, and I think she sensed we were a lost cause.

After getting off the phone with her, I started second-guessing our plan. "Is it wise to be overpaying on our loans?" I asked Rob.
    "Portia, she was just trying to get into your head so you would start to doubt your plan and follow her plan instead."

Yes, that's likely true--it is her job to find and retain clients after all.  But ever since talking with her, I have been trying to look up everything I can find on finite and infinite interest and have found nothing. So how can I be "educated" on this topic Dave Ramsey? Is it even a thing? Or is it code for financial advisors trying to sell you something you don't understand?  

Conversations I'd Like to Have with Dave Ramsey

Rob and I were first introduced to Dave Ramsey by some of our friends who gave us his book, Total Money Makeover as a wedding present. Our first mistake was that we did not read this book before we were married. Our second mistake was that we read his book after we had financed a (newish) car.

But, we were still able to get back on track after these two set-backs. We have our monthly meetings, and we budget out everything for the month. In the process of managing our money, I have become somewhat of a Dave Ramsey fan fanatic. I regularly listen to his radio show; I receive his email updates, and I often ask myself "What would Dave do?" when trying to make financial decisions. However, I do have some things I would like to discuss with him.  I tried to use the online "submit a question" form, but I never heard back. So in hopes that some of my readers may have some ideas, I thought I would post the conversation topics that I would often like to discuss with Dave Ramsey here:

Question 1: I have a Masters degree in Literature, but I have been unable to get any full-time job related to my degree. (Dear Reader, please DO NOT get a Masters in Literature.)  Do you recommend I go back to school and get a more useful degree or should I continue to look within my area of education.

Question 2: I know that in baby step 2, (you can read all of Dave Ramsey's steps to financial freedom here or hear him explain it himself in the video below) Dave suggests you pay off all debt, minus your mortgage, using the debt snowball. According to Ramsey, the debt snowball is where you make minimum payments on all debts, and then put all your extra monthly income toward the smallest debt. Once you have the smallest debt paid off, you continue to use this method until you have paid off all your debts. However, the debt snowball assumes that you own a house. If you do not own a house, Dave recommends saving for a down payment after you have completed step 3 which is having "3 to 6 months Expenses in Saving." However, I think this is way too conservative. Yes-- buying a house is a big financial commitment. But at this point in the economy, so is living in a 2 bedroom apartment. Surely there can be a happy compromise here Dave. Every month for a 2 bedroom apartment in our city, we would spend in excess of $1000. That would be $12,000 a year that could be going toward a mortgage.

Question 3: This question relates to question 2. The other day on the radio show, a couple called in for their debt free scream. In other words, they had paid off all their debt, including their house & student loan debt, in four years. This couple was only 27, and they had been following Dave's steps for about 4 years. Dave congratulated them profusely and rightly so, but he didn't say anything to the fact that they owned a house while they still had student loan debt. This begs the question--isn't it possible to pay off student loan debt while owning / buying a house?


Question 4: I really admire how Dave Ramsey has helped millions of people get their finances together. But sometimes when I am listening I feel like I have done something wrong with my life, with my finances. When I was 20 something, I wasn't really saving for the future; I was doing non-profit work in China. Does this make me irresponsible or careless with my money? I don't think so. I was frugal and paid attention to my finances; I lived and traveled within my means. However, I certainly did not get ahead financially. Some of my friends who have also returned to China are in similar situations as me. I would love for Dave to give some perspective & advice to this group of people: what can we do now that we have some career and financial gaps in our lives?

From one of your biggest fans,

Portia