KIDS!

Shortly after I got my job at BYU Tara and I got pregnant with our first child, Rhett. One of the best things about working at BYU has been the benefits, especially the health care benefits. We’ve always wanted to have kids, but having good insurance made it a lot less stressful on us financially. Rhett was born October 2017 and then 21 months later, Jack was born in July 2019. I am super grateful that I have been able to provide a solid foundation financially for them because of my job.

We Got out of Debt

3 years ago, we were in a small amount of debt and had zero assets. Our debt came from two sources: a car loan and a student loan that amounted to about $10k. Because of this job, we were able to get out of debt and start putting money in our asset column.

We Grew Our Assets

Once we were out of debt, we started saving aggressively. I wrote an article back in August 2018 on how we save 40% of our income every month. We have been pretty consistent at saving close to that every month, despite buying our first home in November that same year. Once we bought our home, our focus shifted from high yield savings to index fund investing. We were already putting money away into my 401k every month, but we wanted to have more short-term investments. We started putting more money into our Vanguard account where we buy an index fund called VTI. Most recently, however, we started putting more money into a Fidelity index fund called FZROX (I plan on writing another article on this soon). Because of good market conditions and our aggressive savings rate, I’m happy to say that we now have over $35,000 in investments! In 3 years we went from -$10k to $35k, a $45,000 difference. Tara and I are super happy with where we are at, but feel like we can accomplish so much more!

We Were Able to Travel

Tara and I have always wanted to travel the world, but haven’t really had the money to do so. BYU has given us those opportunities. They offer 22 vacation days a year that also include 12 paid holidays. Those vacation days carry over every year which often means we have lots of extra time left over. Not only do I get vacation days, BYU sends me on work trips that I can bring the family along for. Our trips have included Italy, Disneyworld and an upcoming trip to Cancun.

How I view “jobs” now

My job here has been a huge blessing in our lives in a lot of different areas. It really has laid the foundation for us to grow in so many different aspects of our lives, not just financially. Having said that, I still realize that long-term I don’t want to have a “job”. Working at BYU may be the best case scenario for me, but I still want to have financial freedom one day and the ability to say: “I don’t have to rely on this job”.

Our long-term goal is still the same: we want to be financial independent. My job here at BYU has been the biggest catalyst in us getting closer to that goal and we are super grateful for that! It has been really nice being able to reflect on my 3 year work anniversary and all the things that have changed!

Avoid Debt.

We hope that this will be something that you guys (our kids) will get sick of hearing from us. Avoiding debt also helps teach important lessons about saving and interest. Our hope is to help them not be “normal” as Dave Ramsey would describe and think of debt as a burden, not a ticket into the “good life”.

Save first, Spend Later.

One of the best things we’ve done with our money, is made our saving automatic. Every month, money is deducted from our accounts and added to our “FU” money accounts and our investment accounts. Every month we do this, our money continues to grow. It has helped us not worry about having enough money to save at the end of the month because it forces us to live off of what is left after saving.

Learn How to Budget.

Budgeting is such a simple thing, but is so easy to overlook. It’s amazing to see the difference between the months when we budget and the months we don’t. Making and keeping to your budget will even make spending money the things you want a lot more fun. It takes away the guilt that can sometimes come with purchases because you know you have planned to spend that money.

Invest.

Investing doesn’t have to be complicated. You can learn a few easy techniques and do it all yourself. Doing it yourself will save you lots of money in the long run because you won’t be paying someone else to do it. Just like with saving, always be putting money away before you spend it. 

Learn to be Frugal.

There will be times in your lives when you won’t have loads of cash. Being frugal is the best way to make your money last a long time. Even when you are making loads of cash, being frugal is an excellent way to keep that cash around. Your mom and I have been through times where we had to stretch every dollar we had. Luckily both of us are naturally frugal people, but it is something that can be learned and perfected. Best way to practice this is to budget.

Always Be Learning.

There is always going to be new things to learn and keep up with, especially when it comes to financial literacy. Your mom and I love to listen to audiobooks to help us stay motivated and on the right path. Never be complacent. 

We hope that this will be something that will be taught in our family by example. Some of the best lessons we have learned in life have been through watching our parents. We will probably make mistakes as we go through our financial paths, but hopefully we can provide you with the best tools to make your own financial path successful. 

We love you!

Mom and Dad

If you follow Dave Ramsey at all, you’ve probably heard him talk about avoiding eating out (“Beans and Rice” ring any bells?). He believes that it’s the most important thing to get rid of when trying to get out of debt. When we were trying to get out of debt, we had a really hard time with this, because we LOVE food and especially food we didn’t have to make ourselves. Although we didn’t eliminate eating out entirely during our debt free journey, we did minimize it as much as possible. We are big believers in Dave Ramsey’s principle to avoid eating out if you are trying to get out of debt and strongly believe you should budget a specific amount every month.

Tara and I have been trying to save more and more money every month for a variety of things. Because of this, we have put our budget under scrutiny over and over to see where we can get better. The “eating out” portion of our budget seems to be the biggest culprit for times we haven’t saved quite as much as we would have liked. To avoid going over budget, we’ve tried a few methods to pinch down on our expenses.

No-Spend Months

One of the best ways to avoid eating out all together is to go on a “no-spend month”. Tara and I have done this a few different times and have always had good results. I wrote an article that details this a little bit more in depth that you can read here.

Having “no-spend months” can be difficult and isn’t our preferred method, despite it’s benefits. To compromise, we came up with a plan to use cash every single time we ate out.

Use Cash

At the start of the month, Tara and I decide on a fixed amount of money that we want to spend on eating out. Once we have this figure in mind, we go to the bank or ATM and withdraw that exact amount. This money can be used at any point during the month, but should only be used for eating out. Once that money is gone, it’s gone and we can’t use any other money to eat out.

Dave Ramsey’s envelope method is very similar to this and has helped countless people. This has been the best method to help curb our overspending. We aren’t perfect at this, but it’s definitely been the best way to help us stick to our budget.

It’s simple tricks like these that sometimes can make the biggest difference to a budget. Eating out is definitely one of those things that can eat into your budget and wreck havoc.

What do you guys do to avoid overspending on eating out? Have you guys tried a similar method? What has or hasn’t worked for you? Leave a comment below. Thanks for reading!

We Bought a House

In October 2018, we bought our first house. We had been saving up for quite a while and were happy to finally find something that fit in our price range. If you haven’t read about how we got our home, read it here.

While our house has been really nice to have, it has also stood as our biggest hindrance to FI. Our mortgage is the biggest expense we have and the only debt we have. Tara and I have talked on multiple occasions and have agreed that paying off our house is our top priority going forward. This follows Dave Ramsey’s baby step 6 and is the second to last baby step.

We’ve done our best to make sure our home is a blessing and not a burden. The best thing we’ve done is remodel our basement to have a mother-in-law apartment that we rent out. This helps offset our mortgage costs and helps us save for other things. To read about the remodel process, go here.

We Invest and Save

Ever since we got married, Tara and I have always had a really high savings rate. After we paid off all of our debt in 2017, we started to invest very seriously too. In total, we invest or save about 30% of our income. Our favorite investment is an index fund called VTI through Vanguard. We use that for our personal investments, as well as for our two sons’ college/mission funds. 

We welcomed another son into our family last week, but have already been saving for his future. It was decided early on that we would start saving for both of them even before they were born. As of right now, we put $50 for each son into Vanguard. My goal is to up that amount to $100 each in a year. We aren’t sure how we want to go about giving our sons that money yet, but are open to suggestions if anyone has them.

I recently discovered a new index fund called FZROX through Fidelity. They are a total stock market index fund just like VTI, but have ZERO fees. I also like how they are only $10 per share, but I’m not sold on moving all my money over to it yet. I will write an article on it soon to go over my experience thus far. 

A big chunk of our saving is going towards FU money. If you don’t know what FU money is, read more about it here. Not only does FU money help in unplanned emergencies, it also gives peace of mind. Tara and I both agree that having a big chunk of cash lying around would feel really nice, so we’ve put a decent amount of money towards that. 

I put our FU money into Marcus for a while until just recently when they lowered their rate from 2.25% to 2.15%. Which I was happy with them for the most part, but another account I had with Wealthfront had just announced that they were offering 2.57%, so I decided to switch over. I still have my account open with Marcus, so I may go back at some point. 

My 401k continues to grow. I put in 5% to get the 4% match. I am not super fond of the investment options that they provide nor the fees they take, but you can’t beat a 4% instant return. My work also provides a free 3.5% of your salary every month that helps out. 

I got a raise at work

In February I got a raise at work. 10% increase. I was pretty excited, especially since I didn’t expect it to be such a big increase. I like what I do at my job a lot and can see myself staying there for 5 more years or so. My work also has a pension plan if you stay for 5 years (I have been there 2.5 years). Plus, they have really good benefits that allows me to have babies without breaking the bank. 

 We cut back spending

A few times this year, Tara and I have had a “no-spend” month. We basically only spend money on the essentials like food and gas for an entire month. We aren’t perfect at this because we often get invited to something like a birthday dinner and don’t want to turn it down. 

These no-spend months help keep our expenses in check. We aren’t typically big spenders anyways, but we do love to eat out. We usually end up with an extra $500-$1,000 the month we do these and we highly recommend trying it!

Passive income and Side hustling

Although this hasn’t had a huge impact, we have started making some money on the side. Our blog has earned about $200 since the start of 2019 and continues to make us a little bit of money. 

Tara started a business selling home-sewn baby clothes called Baby Gowns Co. She launched her business about a month ago and has been able to make decent money.

I have also been referring businesses to a company that processes credit cards for merchant accounts and gives me a portion of every business I refer on a monthly basis. 

Besides saving more FU money, accruing passive income has been our 2nd most priority. Passive income and FI go hand in hand and is one of the fastest ways to get out of the “rat race” and into FI. Hopefully we will have more updates on this to come. 

Net Worth

I’m not totally sure how to calculate our net worth with our house. I’ve seen some people only calculate the debt portion while others subtract the home’s worth by what they owe. For now, I am not going to include our home in our net worth.

Our liquid net worth has grown substantially since we started blogging in 2018. There’s been some market volatility, but that really hasn’t hurt us too much. Plus, having a decent chunk of our money in online savings accounts has made it so they haven’t been touched much. 

We plan on continuing to have increases in our net worth from year to year, just like this year. With our savings rate and compound interest, we will start to grow substantially in the coming years. 

Thanks for reading! We have really enjoyed being able to share our road to FI with you and hope you have enjoyed it too. If you have questions for us, feel free to comment below or email us at thefundfamily@gmail.com. Feel free to share your road to FI as well. 

I really enjoy this book and would highly recommend it to anyone who wants to become wealthy in the simplest way possible. Collins lays out complicated things, like investing, into very simple terms and makes it easy to understand. I love everything he teaches and follow it closely. Here’s some of the main points of what he teaches and how we apply it.

Avoid debt

This one is pretty self-explanatory, but is always a good reminder. The main point that JL Collins makes is that debt will seriously inhibit your path to wealth and should be avoided as much as possible. “Carrying debt is as appealing as being covered with leeches, and has much the same effect.”

Build up “FU” money

FU money grants you the ability to have options and to be able to say “no”. This is probably my favorite concept of his. I love the idea of being able to have my options open and a good amount of money set aside.

The market always goes up

The stock market is a volatile but through those years of volatility, it has always managed to go up. If you view your investments as long term, you will be far better off than trying to time the market.

You can invest on your own, without an advisor

Collins suggests investing in Vanguard funds and doing it by yourself. With a little bit of knowledge about index funds, you can easily manage your own portfolio, without having to pay advisors. Collins suggest a total stock market index fund called VTSAX or a similar one (we buy VTI).

This book may be the only book you will ever need to meet your financial needs. It’s simple, yet gives you essential knowledge for wealth building. To buy the book you can find it on audible or with the link below. Leave comments if you have any questions or if you’ve read the book already.

Swagbucks.

Swagbucks is an online survey website that gives you points for every survey you take. They aren’t just surveys as you can also watch videos or get cashback on purchases at popular stores. Tara and I both set up separateaccounts and did surveys for about half hour a day each. We ended up with enough points to get amazon gift cards for about $25 and I got a $10 visa gift card. We used this to help with some of our renovations on our house and bought a gift for our son. Taking the surveys can be a little time-consuming, but if you are able to take a good amount of surveys a day, you can earn quite a bit of points for gift cards

Microsoft Rewards.

This one I just recently started and haven’t been able to redeem my points for anything yet. It’s similar to swagbucks in that you can redeem your points for gift cards or enter contests, but it’s more related to bing searches and short questionnaires. You rack up points if you come back every day and complete one of the tasks they have, which are really simple to complete.  In just a few weeks of using microsoft rewards, I have 3k points. For a $5 gift card, you will need about 6,500 points, depending on which card you are going for. If you invest just 15 minutes a day, you could easily get 6,500 points in a couple weeks. For not a whole lot of time, it’s a pretty good deal.

Sell old clothes.

I didn’t do this one, but Tara did with some of her clothes and some old baby clothes. She goes into secondhand clothing stores that will buy clothes in good condition. Just by selling some of Rhett’s old clothes, she was able to make around $50. If you have extra clothes lying around, this would be a good option for you. This isn’t really something you can rely on regularly, unless you have a lot of clothes or buy clothes regularly.

Become a referral partner.

This is another one that we are currently working on, but have seen success with others around us. Companies will often have a reward for referring business to them. For example, a local insurance company will give you a gift card for referring a friend to them. Others, like P2 Worldwide, will offer you a portion of the revenue they make. If you can find the right niche to do this in, you can make a lot of money. I’ve heard of people making $2,000 extra a month being a referral partner.

Cashback credit cards and apps.

This is SUCH an easy one and something you should be doing on all of your purchases. These money saving apps help you earn cash back on everyday items from stores you are already shopping at. Some of these apps will scan your receipts and if they find it somewhere else for cheaper, they will refund you the difference! Other apps give you a percentage of what you spent, which is pretty awesome if you ask me! My personal favorites are Ibotta, Paribus and EBATES.

What are your favorite ways to earn extra money? Comment below

We were prepared

Luckily, a few years before, Tara and I had decided that we needed to prepare for something like this to happen. We had started an emergency fund and made sure that it would be enough to sustain us for a few months. This extra money gave us peace of mind and made my job loss a lot less painful.

We knew the emergency fund wouldn’t last and promptly decided that I would need a new ways to make income. The first thing I did was file for unemployment. This was a hard decision for me because there is a stereotype and stigma around unemployment, but this is what the system is for- to temporarily help people who need it. This gave us a portion of the income that we had expected while I was working and helped us while I searched and worked towards a new job.

Tara had a part time job at the time, but was able to pick up a few extra shifts to help with expenses. That extra income was a huge help!

Immediately started looking for new options

It was at this time that I decided that I wanted to explore a new field. The one I had been working in wasn’t what I had hoped it would be and I needed a fresh start. One day, a letter came in the mail advertising a master’s program for web development. I had worked in computers before and it was always something I was interested in and felt good at, so I investigated as to what it would take to get a job in that field. I quickly learned that it was something that didn’t require a specific degree and that I could teach myself how to do it. My dad was instrumental at getting me started on the right path by pointing me to places like freecodecamp.org and codecademy.com. Once he introduced me to these sites, I was hooked. Instead of working 8 hour days, I was studying and practicing code.

Within 3 months of studying, I was introduced to a man who worked at the university nearby. He asked me about what I was studying, the experience I had and told me about the openings they had in the universities IT department. He said that they usually will hire people without a lot of experience and urged me to apply. I had never thought that I would be someone that could get a job at a university, especially having very little experience in that field, but  I followed his advice and applied. After 4 different interviews, I was offered the job with about triple the salary I’d been making at my previous job.

Why being let go was one of the best things to happen to me

This job allowed Tara and I to become debt free, start investing, go on cool vacations and do so much more with our lives. We are about to buy our first house and all this was made possible because I was let go. I look back and think of where I might be today if I had stayed in that job and “comfort zone”, even if it wasn’t something I enjoyed or even wanted, and I can’t help but be grateful for how things have worked out. That is why being let go was one of the best things to happen to me.

Thanks for reading! I would love to hear if you have ever had a similar experience or situation. Leave us a comment below and make sure to follow us on your favorite social media platforms.

Today’s interview is with Will of AlphaFinancialist.com

Personal

Name: Will

Age: 30

Your home location: Houston, TX

Career/Source of regular income: Registered Nurse, Cryptocurrency Miner, Blogger, Online Business Owner

What do you do for fun?

I guess fun is a relative term. I read SEC filings (10Ks, 13Fs, etc.), blog about personal finance and investing, spend time with my wife and dogs, research stocks, travel, and learn.

Success Tips

What has led to your success?

Hard knocks. When I was a young man, fresh out of college, I was eyeball deep in debt. I was in such dire financial straights that I ended up filing for bankruptcy at the ripe old age of 24. I’m a stubborn man, and sometimes I have a bit of a “stick it to ‘em” attitude, so I decided to turn my life around in a major way.

After being in such major debt at a young age, I vowed to change my lifestyle and my view on money and finance completely. Six years later, my wife and I have a household income of over $200,000, I have several passive income sources, and I’ve been accepted to an MBA program, where I will study finance. Additionally, I am preparing for the Series 65 to become a Registered Investment Advisor Agent for the LLC that I formed. We save and invest over $100,000 per year – and each increase in income goes solely towards funding our financial freedom, traveling, and investing. As a result, my wife and I are projected to become millionaires in our early-to-mid 30’s. Now, I want to focus my time and effort on helping others achieve financial success and independence, which is why I formed my blog, AlphaFinancialist.com. I want to inspire others, hopefully those in their teens and twenties, to avoid the costly mistakes that I made and realize that you can live life EXACTLY how you wish by making conscientious choices and developing a millionaire mindset.

Advice to people trying to achieve success?

I would say to anyone who is serious about becoming wealthy: take the plunge, make a commitment to yourself, and realize that wealth is a product of mindset. You CAN change your life and live in prosperity and fulfillment – all it takes is determination and eradication of fear from your life. Dissociate yourself from selling your time for money as soon as you possibly can. Find ways to rapidly increase your salary early in life, and then use that money to establish income streams that will support you indefinitely.

Often, having a salary is necessary early in life if you don’t come from a wealthy background. Choose lucrative fields as a college student that GENUINELY interest you, pursue them with all your ability, and dedicate your income to investing in real estate, businesses and entrepreneurship, and stock investments. Leverage your education into a source to build your empire, and then focus on your investments. AVOID consumer debt at all costs and live frugally. Above all else, follow your true passions in life.

How do you measure success?

I measure success in two ways. First, I believe success is personal and individual. Success comes from being happy, satisfied, stable, and content in all areas of your life. If you make a million-dollar salary, but you sell all your time and hate your job, I don’t consider that success. Success is freedom in life: the freedom to go where you wish, do what you wish, and be who you wish.

Second, I believe success encompasses financial freedom. Financial freedom is different from being rich – it is the ability to live life without relying on any person or employer to support yourself and/or your family. Again, financial freedom is personally defined, as my needs may not be the same as another’s. I believe when you can support yourself indefinitely while simultaneously pursing your dreams and goals, you have reached the pinnacle of success.

What are your success habits?

My biggest success habits include paying myself first (investing a large portion of my income), continually seeking knowledge and learning new skills, thinking outside of the box, pursing my passions instead of chasing a salary, and valuing my time.

I avoid unnecessary materialism, but I don’t scrimp on things that are important to me. I strive to live a full, successful, and purposeful life. I read daily, and never forego an opportunity to improve myself.

Financial Independence/Retirement Plans

What does financial independence (FI) mean to you?

I consider financial independence a state in which one no longer feels obligated to work to continue to maintain their lifestyle. Financial independence is enormously freeing, and you have the opportunity to choose to work, knowing that if you’re employed, your employer needs you more than you need them. I believe financial independence is an achievable goal for ANYONE; the only variable factor is lifestyle. While my wife and I are on the cusp of reaching financial independence, I will continue to work to accumulate wealth so that we can live a lifestyle that includes ample travel, comfort, and peace of mind.

Do you have plans for financial independence/retirement?

While financial independence is a readily achievable goal, I don’t have any immediate plan to retire. Rather, I think that I will soon transition to focusing on business endeavors, investing, real estate, and ecommerce full-time as opposed to working for an employer. I don’t know that I ever want to “retire” in a sense of ceasing to work due to an accumulation of wealth. I believe that I will continue to work, though at my leisure and on my time, for the foreseeable future.

Why do you want to achieve retirement/financial independence?

I want to achieve financial independence solely as a means of security and financial protection. I already spend quite a bit of time focusing on my passions and business endeavors; when I “retire” from my proper profession, I will simply focus on entrepreneurship.

If you had to start over, what’s the most important thing you would focus on?

If I had to start over, I would focus on making investment a top priority. While I am in a comfortable place now, I could have been years ahead of where I presently am by making smart choices in my late teens and early twenties. Though I feel fortunate to have the level of financial acumen that I do so early in life, I would have avoided the costly mistakes I made in the past and changed my mindset about money and wealth much sooner.

What tips do you have for others who want to grow their income?

While I am a huge advocate for investing, I truly believe that the ultimate way to quickly grow your income is to pursue entrepreneurship. Regardless of whether you are a pilot, doctor, lawyer, or construction worker, if you are employed by someone other than yourself, there will always be a cap on your earning potential.

While you should strive towards entrepreneurship, it may take time to become successful. On your way to establishing successful businesses and passive income streams, focus on making the absolute most amount of money that you can. My wife and I moved across the country to double our salaries. Find opportunities to really squeeze your profession for every cent that you can so that you can focus on raising capital for investing and business. Sometimes, it requires sacrifice and effort. If you really want to speed things along, find the opportunities that are going to help you progress rapidly.

Do you have any sources of income besides your career? If so, can you list them?

Yes, I have several. One of my easiest passive income sources comes from cryptocurrency mining. I have many GPUs and a few mining rigs setup, which required a good amount of startup capital but have subsequently been paid off from the venture. I make approximately $1,000 a month from cryptocurrency mining, simply by leaving my rigs turned on.

I also work on the side as a financial planner, helping individuals come up with comprehensive personal financial plans and investment plans. I charge approximately $60 per hour at this juncture in time to provide financial planning services.

Additionally, I’ve created AlphaFinancialist.com, a personal finance and investing blog focused on helping my readers achieve financial independence and make solid investment decisions. While I do make money from affiliate advertising and sales, I only promote businesses and services that I ethically feel will have a positive impact on the lives of my readers.

Do you have a budget? If so, how do you implement it?

I have had a budget for years. I built it on excel, and every expense gets tracked this way. Over time, my budget spreadsheet has evolved to include projected balances, auto-summing columns, graphs demonstrating areas of expense, and a whole lot more. Budgeting is, in my opinion, the number one thing that individuals can do to take control of their finances and change their financial outlooks.

What is your investment philosophy/plan?

I spend quite a bit of time analyzing investment opportunities. I believe in buying stocks in companies that are fairly priced, ethically sound, competitively superior, and understandable. When I look for investments, I spend a great deal of time reading over the company and their SEC filings (10Ks, 10Qs, etc.) and valuation metrics such as P/E and PEG ratios, revenue growth, debt and price/book ratio, cash flow, compound annual growth rate, and others. Simply put, I believe in buying solid companies with promising futures at a reasonable price.

Do you give to charity? Why or why not? If you do, what percent of time/money do you give?

Presently, I do not give to charity, as I feel as though I still have financial goals that I need to reach to secure my financial future. However, I have spent time volunteering for organizations such as hospitals, meals on wheels, and on missions to other countries.

Thank you to Will and his awesome interview! Everyone should check out his site at alphafinancialist.com. He is an expert in his field, as you can tell from the interview.

Buying a car is a big purchase. There should be a lot that goes into what you want in a car, including price. Tara and I have bought 4 cars in the 4 years we’ve been married and would like to share our experiences of when we bought our cars with cash vs. when we bought our cars on credit.

Cars we bought on credit

While we were dating, I bought my first car on credit, a Mazda 6. This was the worst experience I’ve had buying a car, mainly due to the crappy salesman I had to deal with. I didn’t have any experience buying a car and so the salesman took advantage of that, promising me a certain payment, only to call me back the day after I had the car needing more money down and a different payment amount. The loan I had taken out was around $7,000 so my payment was relatively small ($120), but I didn’t realize how much that small payment would hinder my wealth building in the long-term.

About a year later, we got in a wreck and realized that we barely had any equity in the car. The insurance paid off the loan, but we were left with only $1,000 to buy another car. We felt we didn’t have other options so we decided to get another car on credit. This car was cheaper ($4,000) and the payment was only $100 a month. This car seemed to be a really great deal at the time, but it ended up having quite a few problems. The A/C died on us and the brake pads quickly went out. We also had some suspension issues that would have cost us around $1,000 (had we fixed it).

Car we bought in cash

Shortly after we bought this car, we realized that we would need another car (Tara and I both worked at the time). We knew we didn’t want to buy a car with credit this time and decided to find a car to buy with cash. We found an old Honda that was listed for $1,500.The seller was a private seller close to where we lived. He wasn’t trying to up-sell us on anything and was willing to work with us having only $1,200 cash. We bought this car pain free and drove it for another year before selling it and moving to Texas.

Not everyone’s experience with buying a car on credit is necessarily bad. I think our experiences are especially bad looking back on how it has hurt our financial growth. We were really good at paying extra on our cars and getting out of debt, but if we could have put that extra money towards investing, we would have had around $15k+*.

In our society it is “normal” to have a car payment. We have decided that we don’t want to be “normal” anymore. Our next car purchase will be with cash. And the next. And the next. And the next. You get the point. It takes time and dedication to save and pay cash for a car. We currently drive a paid for SUV that we love. I think because we own it and don’t have payments on it, we appreciate it even more. It’s no longer a burden, but a blessing.

The difference

The biggest difference for us buying cash compared to on credit, wasn’t the actual buying experience. It was after we had bought the cars. Our first car left us with few options after we had gotten in a crash. The second car had issues that we had to fix on top of making payments. Most of all, we slowed down our path to wealth.

Not having payments has helped us to grow our net worth substantially. We are able to take trips like the one we are going to in May. But most importantly, we don’t have the stress that car payments bring.

What experiences do you guys have with buying a car? Did it feel different buying cash over on credit? Does it help bring you peace of mind?

*This is based off of us making double the payments at $240/month over 4 years with 11% returns. Dave’s Calculator

Debt is something that has become common place within society. In fact, according to an article written by USA Today, the average American household has $137,063 in debt.

The reasons vary for going into debt. Tara and I went into debt for a few things including 3 different cars, a wedding ring, and a student loan. What we owed had totaled around $25,000, although we had different amounts at different times. Most recently, we were able to pay off more $10,000 in less than 6 months. Each time we got a loan, there was always some sort of justification, but deep down we both felt that it wasn’t the right decision.

To most, having payments is a normal part of life. Our goal is to not be like most people; we want to be free and be able to make our money do what we want. With payments, we don’t even get to see that money before it is taken out of our hands. Having things is nice, but having financial independence is much nicer.

What we did to get out of debt

Paying off $10,000 in less than 6 months may seem like a lot, but it was actually quite easy for us. Here’s what worked well for us.

1. 1. We listed our debts and exactly how much we owed. Sometimes it was hard to look and see how much we owed, but knowing exactly how much is important to getting rid of it.
   2. We made a budget and stuck to it. Tara wrote an awesome post behind what it takes to make a good budget. Discipline to that budget was key.  
   3. We had specific goals. Having a budget in place, we were able to put numbers behind our goals. These measurable goals allowed us to know how long it would take to pay off our debt. After seeing how long it would take, we went back through our budget and tried to trim off as much as we could. The more we were able to trim, the quicker we could be out of debt.
   4. We paid off the smallest loans first and then moved on to the bigger ones after the smaller ones were paid off. There is some debate to if you should pay off higher interest rate loans first, but paying off the smallest worked best for us.
   5. We celebrated every time we paid off a loan. We didn’t do anything crazy to celebrate, but we always found a way to celebrate the small victories, like going for ice cream. 

Once we paid off our last debt (my student loan) we decided that we would never go into debt again (except for a mortgage). After going through what we went through, it would take a frontal lobotomy for us to get another loan.

What we don’t recommend

1. Loan consolidation. Your goal should be to have 0% interest. Going from a higher rate to a lower rate may make it easier in one location, but you will end up paying these consolidators money. Unless your interest rate is ridiculously high, we recommend just working hard and paying it off yourself
2. Keeping up your same spending habits. This is probably what got you into debt in the first place. There are sacrifices that will need to be made in order to fully be debt-free.
3. Use your 401k to pay off debt. There are penalties for taking money from your 401k early, plus you’ll end up paying taxes on it. Depending on where you sit in the tax bracket, you could end up paying 25-50% in taxes.
4. Try to pay it off in an unreasonable amount of time. While setting your goals, you should be realistic. Setting unrealistic goals will make it harder to stay on track. Plus, there’s still life to live in between, you should be able to still enjoy some things.

Influences

Our path to getting out of debt started with my dad, Trevor. He blogs at rvonfire.com and has been one of the greatest influences in my life to getting out of debt and working towards financial independence. One of his best traits is his ability to get us passionate about business and finance in general. I owe a lot of my knowledge and success to him.

Another great thing my dad did was point us to important resources. He gave Tara and I Financial Peace University a little after we were married. Dave Ramsey’s approach has been ingrained in my mind and has led me to a better life. We’ve used Financial Peace as a foundation for our wealth building and it was the catalyst to us getting out of debt.

One of the best to describe debt is J.L. Collins from jlcollinsnh.com. His metaphor to debt being like leeches gives the perfect image of how it should be perceived. I highly recommend reading anything he puts on his blog. I’ve never read anything I didn’t like.

Getting out of debt takes time and dedication. It probably won’t be easy. There were things we had to sacrifice in order to get out of debt that made things not ideal. Being completely debt free has been one of the biggest burdens lifted off of our shoulders. Every aspect of our life has improved. Our marriage has definitely gotten better because of it.

If you have paid off debt, let us know! We would love to hear your story. Every story is different, but all are inspiring. If you are currently getting out of debt, let us know too! We would love to see what has worked for you and maybe offer some of our own advice.