Balance

For me, I think the hardest thing about trying to pay off debt is finding a good balance. Dave Ramsey encourages his followers to become "gazelle intense" when they start paying off debt, meaning that they only spend money on the absolute essentials (food, shelter, utilities and basic clothing and necessities) and ALL extra money goes toward the debt. A lot of people would call this extreme, and maybe it is, but the fact is, it works. Clearly, the more money you put toward your debt, the faster you will pay it off and the sooner you will become debt free.

The difficulty is that when you live gazelle intense, life isn't very much fun sometimes. Don't get me wrong, you can have a good life without having to spend money all the time, but sometimes spending money can be fun too. Phil and I both really like to shop for two things: clothes, and things for our home. We don't care much about traveling or eating out. We don't buy many (if any) toys for Luke. We don't go to concerts, amusement parks or really anything else that costs money. But we do like to buy nice clothes and nice items for our home. I guess everyone has their thing, right?

So we have made a decision, and that is that we are still going to allow ourselves to buy a few new things for ourselves or our home here and there and we are NOT going to feel guilty about it.

The key to this is discussing it as a couple and having a budget. We have agreed that we both feel ok about setting a little (and I mean little) money aside in our budget each month for us to buy as we please. Talking about it first gets us on the same page and helps us to make sure that neither feel like the other is being unfair. We do want to pay off our debt as quickly as possible, but we also want to feel like its ok to buy something new once in a while without feeling like we have done something wrong.

Our "Home Improvement" budget will vary each month, so if there is something we really need, or want to try to get, we will see if we can work it into the budget when we do our planning. For our "Clothing" budget we have decided that each of us will get $50 a month, and it will roll over to the next month (so if I only spend $20 one month, I get the $30 I didn't spend, plus $50 more the following month).  We are even going to give Luke his own $10 a month clothing budget (not that he knows) because he needs a few new things too once in a while!

I think the key here is learning to be flexible and find a good balance. Not everyone is the same and so not everyone will define "gazelle intense" the same way that Dave Ramsey defines it. That doesn't matter. What really matters it working together for a common goal, and one day soon, achieving it.

Don't compare

Not long ago I wrote a post about why we wouldn't be buying a house yet. I still 100% agree with everything I wrote in that post, and yet I must admit that there are times when I look longingly at other peoples' homes and dream of the day when we will own ours. We live in the most darling community. It is only about 10 years old, so pretty much everything is new construction. We are surrounded by brightly painted craftsmen style homes and modern condos. I love taking Luke for walks in the morning and looking at the cute homes, surrounded by neatly trimmed lawns and only blocks away from parks and community gardens.

Only problem? It's easy to start the comparison game.

When we moved into our apartment, just three months ago, we couldn't stop talking about all the features it had that we loved. Our previous two apartments were much older and therefore a bit run down, not to mention small. This complex was built only 3 years ago, so everything still feels new and clean. Plus, it's big. 1200 square feet, 9 foot ceilings in every room, big windows, an open concept kitchen and living room, wrap around balcony. We felt like we were "living the dream" by finding a place as nice as this.

I now am realizing however, how quickly, if you aren't careful, the charm can wear off, especially if you pay too much attention to what other people have.

The fact is, there will always be someone who has nicer things than us. That's just how the world works, and honestly I'm glad its that way. I wouldn't enjoy my morning walks nearly so much if every house on the street was the same.  Many of the reasons we fell in love with this apartment had to do with the fact that is was different than everywhere we had lived before.

So how do you keep from trying to keep up with the Joneses?

1. Count your blessings. That may sound cliche but its true. When I stop and think about all that we do have right now, I think a lot less about all that we don't have. 
2. Find like-minded friends. "Friends" doesn't have to actually mean people you hang out with (although that's important too). A few of my "friends" that help me keep things in perspective include: bloggers who live a similar lifestyle, books that inspire me, Pinterest boards with decorating ideas for our space, and Dave Ramsey (I know, nerd.)
3. Clean up. I have found that it is more easy to become discontented when our apartment is messy. When I take just a few minutes to clean things up, I see all the charm again that I loved in the beginning. Using a space well will always make you appreciate it more.

I am lucky to live such a good and happy life; I think most of us are. We just have to remember that, and most of all, don't compare.

Small successes and interest payments

We paid off another loan! Woohoo!!! It feels great to know we are slowly, but surely, making some progress. Since our move, everything has been a little crazy, and we finally starting to get our new budget in order again. Since this loan was a little bit smaller, we decided to take all the extra money we had and just pay it off with one lump sum. Hopefully next month we will have determined how much we can put toward out loans each month and really start working the "snowball".

The thing that just kills me about loans are the interest. If for no other reason, I would just want to pay off these loans to avoid the interest that we are racking up. Phil took this loan out while he was still completing his undergrad and the total principal was $5,500 at 6.4%. We had already paid around $1,100 on it before he started his Masters at Thunderbird and then it went into deferment while he was in school (but it was still accruing interest). So guess how much we had to pay to pay off the loan in full? $5,550.54!!! That's more than the initial loan was even for! And that is not even including the $1,100 we had already paid in the past, so it was all that interest just adding up over time. And that's just one of our "small" loans. That's nothing compared to the $18,000 loan at 7.9% interest! Yikes.

So, we are really trying to just put as much money to these as we can and knock down the principal so the interest doesn't just swallow us up. The best thing you can do is to never borrow money in the first place (we have learned our lesson). The next best thing you can do is pay more than the minimum payment on the debt you do have. When you make a payment, the amount goes toward paying off the interest it has accrued first and then the principal, so if you only pay a little it basically does nothing to get your loan amount down.

We are definitely in this for the long haul, but we know it will be worth it in the end.

Why we aren't going to buy a house...yet

Lately we have been asked a lot if and when we are going to buy a house. This questions almost always immediately arises after we tell people that we are living in an apartment. We never got this question in any of our previous apartment homes, but I guess now that Phil is done with school and has a "real" job, apartment living is not considered very cool.

I get it. Owning your own home is part of the American dream. It's a step into adulthood and responsibility. We want to own our own home one day too. But, we have decided that it's going to be a while before that happens. Here's why:

1. We already have a ton of debt. There is no reason to take on more debt when we are trying so hard to get rid of the debt we already have. If we can achieve our goal of paying off our student loans in 5 (or less) years we will start looking to buy a house around that time. 
2. We don't want the extra expenses. Sure, renting can be a hassle at times. You don't get to paint the walls or remodel the way you want. You have other people living literally all around you. You usually don't have a yard. But owning a home can mean a lot of extra expenses that you don't have when renting. There are HOA fees, property taxes, maintenance, and insurance to pay for and those things add up fast. 
3. We don't need or want the extra space. Yes, you read that correctly. We are Americans who don't want an enormous home. Why? Because then we have to furnish that enormous home. Having a smaller space helps us avoid the desire to get more things, which inevitably costs more money. We like to live a simple, minimalistic lifestyle, and we hope that our home and possessions reflect that. Obviously, not all homes are big, so we could buy something small and upgrade later, but that just doesn't make sense to me. It's fairly easy to move into a bigger apartment when you run out of room; it's not always so easy to sell and move out of a smaller home into a bigger home whenever you want. 
4. We like apartment living. I know that sounds crazy to a lot of people, but for us apartment living works at this stage in our lives. We like having someone else do the maintenance. We like the amenities such as a swimming pool, fitness center, and playground. And despite arguments that renting is just throwing away your money, we don't mind paying the monthly rent. The way I see it, paying rent isn't all that different than putting gas in your car. You fill up at the beginning of the month and drive your car everywhere you need to go. Once the tank is empty you don't think, "well that was sure a waste of money", because it wasn't. The money you spent on gas provided you the means to get where you needed to go, just as paying rent each month provides us with a roof over our heads and a nice place to call home. It is money well spent. 

We do want to own our own house one day, and we will. But for now, we are happy to call our apartment home. 

More ways to save

Another way that I have learned to save money is by making lists and doing what I call "pre-shopping". Doing this has made a huge difference in helping me to avoid both impulse buys and buyer's remorse.

This method has two parts (both easy): first, make a list, and second, research the item. Its not rocket science, and I'm sure many people already do this, but I think its worth talking about anyway. I'm a big list maker, so step one is easy for me. I use this method most often when it comes to clothes, but it works for anything you want to buy. As I see or think of an item of clothing I want, I write it down (I have a list on my phone that I add to) and then I will look online or window shop for the item and compare styles and prices. Keeping a list (which I review while I am shopping) helps me to remember all the items I am hoping to get, and not just splurge on something that I don't really need. If I see something that I really want that is not on my list, I have to decide if I am willing to cut something else in order to get it. I don't just buy it all (I have to stay within my budget, remember?) so I decide to either add the new item to my list and hope to get it later, or buy it now and push something else back for a later time (or cut it altogether).

Another benefit of making the list and researching the item is that it helps me decide if I really want the item or not. Often, I see something and think I have to have it, but after a few days have gone by I usually realize it wasn't so great after all.  If however, I am still thinking about the item after a few days or even weeks its a good sign that its something I really want and am willing to spend the money on.

Remember, just because you have a list and know that you really want the items, doesn't mean you can just blow your budget. Sometimes you just have to go without (Phil and I are really good at that) and never get the thing you long for. But at least having a list and doing some research helps you prioritize the spending that you do do so that it doesn't get out of control.

Ways to save

I'm always looking for new ways to save money. Some are obvious, some take a little more work, but they all make a difference in our ultimate goal of becoming debt free. One money saving tool that we use is menu planning.

I have planned our weekly menu on and off since we got married, but lately I have been really working hard to stick with it and it truly makes a difference in our grocery budget. To make planning easier, I have created a list of about 35-40 meals that we like to eat, and I just rotate those meals in and out during the month (I do try out new recipes fairly often, but its nice to have a basic list of meal ideas that I can always fall back on). 

I plan the meals one week at a time (sometimes I'll do two weeks in advance, but I'm not always as good at that), then create my shopping list. I always make sure to have a good supply of stock items, such as milk, flour, eggs, sugar, tomato sauce, spices, pasta, etc, so most of my weekly list items are meal specific. I get everything I will need for the full seven days (or two weeks) and only go to the grocery store again if I forgot something essential (which is rare). I have become a much more creative cook and am often substituting items in and out of our meals so that I don't have to go to the store again.

Menu planning saves us money in lots of ways. First, making our list keeps us from wasting money at the grocery store by buying items at random, or buying more than we need. Also, have you ever noticed that you go to the grocery store for one thing you end up buying five things? Getting everything we need for the whole week in one trip keeps us from buying those extra things when we meant to only get one.  Menu planning especially keeps us from being tempted to eat out, which often is a result when you come home hungry and don't know what you have or what to make. It is also healthier because we make almost everything from scratch.  

I know I'm not the first person to plan out meals in advance, but I also know that most people don't do this. If you are looking to save money, this is a great way to start. 

More on budgeting

I want to write some more about budgeting because I feel like there is so much more to say. In my last post I talked about budget tools and the importance of creating a budget together.  I want to talk some more about how having a budget has helped us and some of the day to day things we do.

Right now we are pretty much living off of savings so we have to be really strict to make sure we don't plow through that money too fast. We sit down together on the Sunday before the beginning of each month and plan out how much we have to spend and what we will spend it on. Usually your total income will be the same each month, but it can vary due to extra jobs, commissions, bonus, etc. Our "income" varies a little right now because we are using savings and so we can go up and down as we determine our needs for the month. For example, last month we determined that we could pay for all our expenses with $1900 from our savings and so budgeted for that amount. This month, however, our rent increased and we planned to get some work done on our car so our expenses are a bit higher. We budgeted for $2100.

Sometimes determining expenses can be a little tricky, especially if its the first time you have used a budget. We have been using mint.com to track our expenses for a while, so we have a pretty good idea of how much we will spend on most categories. Once you start tracking expenses it can be shocking to find out how much you actually spend on some things. I think one of the biggest culprits is eating out. You don't think much about $10 or $20 here and there, until you get to the end of the month and realize you spend $300! (or more!) And I'm not exaggerating. We have lots of friends that eat out for the majority of their meals (especially for lunch and on weekends) and don't even realize how much it all adds up to.

A few things we have learned to help us with our budget are:

1. Assign every dollar to a category. Even if the category is your savings account, every dollar should be accounted for, otherwise its easy to spend it somewhere else (and likely go over your budget).
2. You must live within your means. There were lots of months where I would set up our "budget" but then we would just go out and still buy whatever we wanted and not actually stay within the budgeted amount. For most people, budgeting not only means organizing your money, but also learning to go without a few things. Phil and I have had to cut back on lots of things we would like to do or buy, but the end goal makes it all worth it.
3. Be realistic. We like to eat out. We (I) like to shop. We have hobbies. Its ok to set aside money for those things. We still want to have a life, but we also want to get out of debt, so we have to find a happy medium. We agree that its ok to eat out once or twice a month, but no more than that; and its ok to buy a few new items of clothing, but not if it goes over a predetermined amount (usually around $50).
4. Be flexible. This month we knew we would have expenses for Mother's Day and Birthday gifts, but somehow we forgot to budget additional money for Phil and Luke to get me a Mother's Day gift. They still got me something, but then we went back to our budget and saw where we could move some money around so that we didn't go over our total monthly amount (specifically, I decided to wait a little longer to dye my hair again, and our printer that we thought we would have to pay to fix magically fixed itself, so we took money from those budgets and applied it to our "gift" budget).
5. Review your budget often and together. I look at our budget almost every day (I might be a bit obsessed); I like to view our recent transactions and make sure we are where we are supposed to be. Also, reviewing frequently allows you to make changes if needed, adjust categories (like we did for Mother's Day) or slow down on spending if you went a little over board during your last trip at the grocery store. Doing it together keeps everyone on the same page and keeps you happy as a couple. There are no secret or surprise expenses that one or the other might not agree with or be upset about.

All of that being said, there are probably lots of other tips when it comes to budgeting, more of which I'm sure we will learn as we go along. But for now, we feel good knowing that we tell our money where to go, not the other way around.

The budget

People don't usually like the word "budget". Usually it has a negative connotation of some sort, kind of like "diet". But having a budget doesn't have to be a negative thing. In fact, when you really figure one out, its sort of freeing.

We started using an online budget tool called mint.com shortly after we were married and continue to use it today. You create an account that you then can link  all other financial accounts to so you can see everything in one place. We see our checking and savings accounts, Roth IRAs, HSA, and student loan accounts. You can also create a budget each month so you can view it regularly and easily keep track of where your money is going. Mint will list all of your transactions and then you can assign them to different categories so that they fall within your budget.  It has been a great tool for us. 

That all being said, it has taken time to really learn how to create a proper budget. For a long time I had budget categories, but I mostly just looked at where I had spent money after it had already been spent, rather than telling our money how it would be spent beforehand. That is the key. You have to start each budget before the month has started, determine how much your income will be, and then assign every dollar to a category. It can be hard at first, sometimes you have expenses you don't expect, but after a few months you start to get a pretty good idea of how much you will spend and what you will spend it on. 

Some people may feel that planning how much you can spend on each category (ie: clothing, eating out, groceries, etc.) will be limiting, but as we have started to efficiently budget I find that I feel a lot less guilty. For example, when we didn't plan ahead (remember, you have to do your budget together!) how much to set for clothing that month I would buy things but then always feel guilty for spending the money, even if it was something I needed. Now I know exactly how much we have agreed to spend so as long as I stay within that amount I don't feel guilty. 

Creating an efficient budget (together! If you're married) is really the first step to taking control of your money. Once you start that, your debt-free future starts to become a little clearer. 

Surprises

We decided that we would use our tax return to help pay off one of Phil's smaller loans. I was so excited. Making payments is nice, but paying off a loan in full just feels so good. We got our return, calculated the total payoff amount (principal plus accrued interest) and sent in the payment (around $5000). I checked it everyday until it processed and showed a zero balance. It felt like such a victory, not only did it bring our total loan balance below $100,000, I was also so proud of us for using our return to help pay off the debt instead of blowing it on something else.

Then, a couple days later Phil was looking at some stuff for school and said, "I don't think our total loan amount is right." What?! Both of us keep track of and talk about our money, but I spend the most time on our budget and paying bills. I had been tracking these loans regularly since we were married so I didn't know what he was talking about. He then explained that he had also taken out a loan directly from his school, it isn't a federal loan like all of the others so it doesn't show up on the website that I usually look at. It was for $16,000.

Phil wasn't trying to hide this from me, he just hadn't thought to specifically show it to me and I didn't know to look for it. I almost cried. We had just paid off that small loan, and even though $5000 seems like nothing compared to $100,000, it felt like a lot. It felt like progress. Now we had even more debt, A LOT more debt.

This experience helped me learn a few things. First, make sure both spouses can see everything that has to do with money. Phil had been seeing that number in his statements from the school, but just didn't really think about it until he got his final loan total now that he is in his last semester. But, if he had just forwarded on those statements to me, it wouldn't have felt like such a blow when I found out later on.

Second, debt stinks. Ok, so I already knew that. But do you see the numbers I am throwing around here?! I am talking about tens of thousands of dollars! You could buy a house, in cash, with the amount of debt we have (depending on where you live of course). That is a lot of money. And the sad thing is, we are actually on the low end of the student loan debt spectrum (or at least in the middle somewhere). We have a lot of friends who will have four or five hundred thousand dollars in debt when they finish school. $500,000!!!

Just don't do it. Go to community college. Or a trade school. Work your way through, even if it takes a little longer. Don't get loans. Just don't.

More on credit cards

So talking about credit cards...might as well dig in a bit. I'm not an expert, but I have learned a few things that I think are really important. First of all, how often do we hear the words "credit score"? Like every single day, right? Society seems to think that having a credit score is one of the single most important things an adult can have, or maybe even that it makes you an adult. Lets blow away the smoke shall we?

First of all, nobody needs a credit score. Ever.

You often see or hear commercials that say things like "low credit score? no credit score? no problem!" Its important to clarify here that a LOW credit score and NO credit score are NOT the same thing. Car dealers and pay day loan sharks and such want you to think they are, but they are not.

A credit score keeps track of your ability to borrow money. Thats it. So if you have a high credit score it means you are good at borrowing money. If you have a low credit score it means you bad at borrowing money (make late payments, default on loans, etc). If you have NO credit score, it means you don't borrow money. I have already established that borrowing money is not the way to go, so not having a credit score is actually a good thing! Really! It means that you pay for things with money you actually have.

But you are all thinking, wait! What if I want to buy a car?! What if I want to buy a house?! I need a credit score. No. You don't. Unless, you want to borrow money in order to buy that car or house (although houses are a little different and I will address that below). See, that's the problem most everyone in this country is facing. We are told we need to borrow money so that we can get a credit score so that we can borrow more money so we can buy things we can't afford. (No, we can't afford them. Remember, if we could afford them, we wouldn't need to borrow money in the first place).

So, what is the solution? Well, if you never get a credit card and never take out a loan you will never have a credit score. Which means you wont be able to buy a car you can't afford, so you will either have to save up until you can pay cash for that really nice dream car, or you will have to buy an old beater until you can get something better. As for a house, well it would still be best to save up and pay cash for a house too. Phil and I hope to be able to do that one day. But, if that isn't realistic you do have another option. Thanks to Dave Ramsey (of course) I now know how to get a mortgage without a credit score. It's called manual underwriting. It's what people used to do before credit scores became the norm. Yes, you still have to have a good down payment, a job, and proof that you have been in good standing with your bills (such as rent, electric, water, etc), but hopefully that would be the case anyway. My understanding is that not all lenders know how to do this anymore, so you may have to look around a bit, but now you don't have to go take out some loan just so you can get a loan...understand?

Isn't it freeing knowing that you don't need a credit score? It sure is for me. 

The credit card

Like so many, Phil and I have had our share of credit cards. I got my first card when I was 18 and getting ready to go to college. It was a Capital One card with something like a $300 credit limit. My mom, who like the majority of us believed the myth that we all need a credit card to build our credit, allowed me to apply for it. Don't get me wrong, my mom did nothing wrong here, she didn't know any better and neither did I. We have all been ingrained with the idea that we need a credit score to do anything; it's only recently that my mom and I both have learned that that is not true. My mom did have the wisdom, however, to teach me to use my credit card carefully. I used it only a couple times a month to buy gas and groceries and then always paid it off in full.

Later, when Phil and I got married, we opened a joint checking and savings account with Wells Fargo, and each got a credit card through them. Looking back now, I don't even remember asking for a credit card, it seems like it was just part of the package and we signed away. I don't blame Wells Fargo either, their bankers are just doing their job. And most of them probably believe you need a credit score too. 

We never considered not using our cards, at least not at first. We continued to use them as I always had, buying the things we needed anyway and then paying them off in full every month. We never carried a balance, and we had the "benefit" of getting 1% cash back on all our purchases. That is not a lot, but, we told ourselves, if we were buying it anyway why not make a little money while doing it?

You are probably wondering why, if we always paid off our cards and received cash back, is it a big deal? Why close them? Well, that was our feeling too, for a long time. Actually, until about a month ago. We have known for a while that once Phil graduated we would get super intense and pay off all our debt as fast as possible, and the closer it gets to that time the more excited I am to get going on it (we can't start yet because we don't have an income and need to save everything we can for moving expenses once he starts a new job). We really want to be debt free, and even though we have never carried a  balance on our cards, we came to a realization that to keep using them was kind of counter to our goals. When you use a credit card, you are borrowing money. It doesn't matter if you pay it off right away, you are still borrowing it. And we are done borrowing money. No more. Ever. I don't want to worry about the "what ifs" any more. When you pay for things with money that you actually have, you never have to worry. You never have to worry about paying it back, or interest rates, or missing a bill, or not having enough, because YOU HAVE ENOUGH!

So, we cut up our cards (two Wells Fargo cards and a Target card, I had closed my Capital One card previously) and even though we still have our student loans to pay off, I feel even closer to our goal. 

Becoming free

If you couldn't tell already, I love Dave Ramsey. I listen to his podcast nearly everyday, and I always feel more motivated to pay off our debt and be smarter with money. Almost every day on the show he features a "Debt Free Scream" which is when someone, usually a couple, comes on the show and tells Dave how and why they paid off well of their debt and then they countdown and scream "we're debt free!!!!" It's awesome and so inspiring.

One day a couple came on the show to do their scream and Dave started asking them what made them decide to do it. The wife started talking about how she had bought a new car, a really nice new car, and how even though they were paying off their other debt, she was hanging on to that car. She said that she realized after a while that she didn't like what that car said about her. It wasn't really the car itself, it was that she was keeping it because it made her feel good, it was a status symbol and she realized she bought it so that she could look good to others, not because she really needed it. She had made that car more important that anything else in her life. She realized that she didn't like how that idea reflected on her and she decided to sell the car and help her family get out of debt once and for all.

Of course we need things, and its even ok to just have some things that we like and want. But the point that really stuck with me was that it can be so easy to put our things before God. Suddenly a car or a house or some nice clothes or whatever become more important than Him. I think sometimes Christians feel like being rich is bad because then if means you are prideful. But, I don't think being rich is bad at all, its just how you feel about and what you do with those riches that makes the difference.

"Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal: But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal: For where your treasure is, there will your heart be also." (Matthew 6:19-21)

Part of the reason getting out of debt is so important to me is because I don't want to be a slave to money. Some might argue that getting an education is an acceptable reason to go into debt, but even if it is, debt is debt and I just don't want it in my life anymore. When you have debt it can prevent you from doing all the things you would like to to do, including lots of good things like donating to charities, developing skills and talents, and improving your family situation and lifestyle. Money is a tool, you just have to learn how to use it properly.

Living like no one else

My parents never have had a lot of money, so growing up I learned that I couldn't always have everything I wanted. In fact, I never had everything I wanted. But I always had everything I needed. My mom stayed home to raise my brothers and I and did a great job stretching every penny. She was crafty and made our Halloween costumes, birthday decorations, and yummy meals. My dad worked hard to provide for us each day at work, and then came home and worked some more to make our house and yard a home. I have never looked back and wished I had more toys or more clothes or that we travelled to more places. We were a happy family with what we had, even if it wasn't as much as the Joneses.

Now that I have a little family of my own, I have grown to appreciate my upbringing even more. I realize how valuable it was for me to live in a family who worked hard to make do with what we had, and never placed to much emphasis on money (or the fact that we didn't have much). I'm not saying my parents were perfect with money. Now that I'm older and can talk about money with them, I have learned that they didn't always make the best financial choices either. They racked up some credit cards and spent more on things here and there than they should have. But, they still taught my brothers and I to be careful and wise with the money that we earned.

Now, with over $100,000 in debt, my dream is to just have a home for my family like I had growing up. I don't need to be a millionaire. The future is unknown to us and there is no way to know now how much money we have in the future. That is not really important to me, and never has been. I just want enough to have the things we need. It can be hard sometimes to differentiate between want and need. I love to shop. I love to get new clothes and things for our house. I love to sew and buy patterns and fabric. I like to travel and see new places. But those things all cost money, and truthfully, as much as I want those things, I don't need them.

Some may wonder what the big deal is. Why not just live like everyone else? "Make your monthly payments on your loans, get a credit card and charge a trip to Disney on it, finance new furniture, and don't worry about buying new clothes, you deserve them!" Isn't that what we all hear all the time? Well the fact is, I just don't want to spend my life making payments. I don't want to worry about falling behind on a credit card and getting called by debt collectors. I want to own the things that I have in my house. And I don't want to feel guilty every time I put on that shirt that I really didn't have the money for. I don't want to live like everyone else. Its just not worth it. Our goal is to pay off our loans in 5 years, that may sound crazy, but I know that we can do it. Like Dave Ramsey always says, we will have to "live like no one else, so that later we can live like no one else." And we will.

More on the debt

Even though we knew it wasn't good to have debt, we didn't really feel it was all bad either. It just seemed like a necessary evil. However, we are both naturally frugal and so didn't spend a lot of money on other things and always tried to live within our means in other areas of our life.

Phil felt that he needed to go to graduate school to progress his career, and I supported him. He was working at a local company as a buyer while I finished my degree. Once I graduated he planned to start a masters program. He decided that an MBA would be best and so started preparing to take the GMAT. This is where some of our sense of frugality was misplaced. We didn't want to fork out the money to pay for Phil to take a real GMAT prep class (it was around $500 if I am remembering right) so we paid something like $90 for him to take an online prep class which ended up being pretty useless. At the time we just thought we were saving money (ironic isn't it?), but we realize now that spending the money on a real class probably would have paid off in the end.

Phil is smart and has always done well in school, but isn't a great test taker (on standardized tests, that is). He took the GMAT several times and never got a great score, which really limited his options on where he could go to grad school. However, he had international experience and spoke Chinese which opened the door to Thunderbird School of Global Management, a private college in Arizona. Thunderbird was ranked #1 in International Business, and all we read about it convinced us that it would offer Phil some good opportunities to get a better job. The only downfall? Tuition and fees would total around $100,000.

We should have seen that number and turned and ran the other way. Was an MBA really worth that much? Was it really the only way to get a better job? No. Of course not. But for some reason we didn't feel the weight of having that kind of debt hanging over our heads. Its not that we didn't talk about it. We did. But ultimately we decided it was ok. We agreed we would pay it off as quickly as we could and it would be ok. We convinced ourselves that it was our only option.

Looking back now, we did have other options. Phil could have continued to work for one more year and taken a real GMAT prep course to try and better his score and increase his options. Had we stayed in Salt Lake I also would have had some better job opportunities (one that I really wanted but turned down because we were moving to AZ) and could have worked full-time and saved all of that money. Even if Phil hadn't been able to improve his GMAT score, he probably could have done an executive MBA program at the University of Utah at night and continued to work full-time. We could have cash-flowed his entire program, paid off the loans we already had, and been debt free.

Hindsight is 20/20. We made our choices and chose to come to Thunderbird and take on the debt. That is done. There is no point in dwelling on the past. But, I hope that others might learn from our mistakes. The truth is, it was easier to just get loans than to do a little work. We wanted instant gratification. Phil was tired of his job. I was ready for a new adventure. We didn't want to have to wait until he improved his score, or we had saved more money. We didn't want to stay in our same tiny apartment, or be stuck in a job that wasn't very fun.

But that is the problem with society today. We all want things right NOW. And we can get them...if we borrow the money. But, like others, we have learned the hard way that sometimes (maybe all the time) its worth it to wait. Its worth it to work. Its worth it to not have debt.

The debt

We were married in December 2010 and Phil already had just over $10,000 in student loan debt. We made our monthly payments, but didn't make much of a dent in the debt. Someone gave us The Total Money Makeover as a wedding gift and we both started reading it a few months into our marriage. We liked its teachings and agreed with the principles. We started using a website called Mint to manage our various checking and savings accounts and to create a monthly budget. We still use Mint on a regular basis. At that time we also increased our loan payments by en extra $100 a month, but we both felt too scared to really attack the debt and pay it off. We wanted to save our money for future expenses.

The truth is, Phil never should have taken out those loans in the first place. Had he planned a little better, he could have worked more and paid for school in full with his own money. We were able to pay for my schooling without taking out any more loans. But at the time he really didn't see or feel anything wrong about it. Everyone was getting loans, he did too. 

We are all in control of our decisions, but society really does have an influence on us. College has become so much more expensive that it used to be, even compared to just 20 or 30 years ago. I remember my dad talking about how inexpensive school was (relatively speaking) when he was in college. He would work hard all summer to save up and then pay for a full year of school with his earnings. Student loans didn't even really exist, and certainly weren't the norm. Now, the government guarantees student loans, and they aren't bankruptable (meaning even if you file for bankruptcy, you still have to pay your student loans, unlike every other kind of debt) so it makes sense for schools to increase the cost of tuition and encourage students to get loans because then they get more money.

Phil and I are wiser now, we see through this scheme. But it has taken us a while to get here, and unfortunately $100,000 more in student loan debt. Despite our reading and budget making, we still made the decision to come to a very expensive graduate school and take on more debt. Over the past two years we have really come to realize how burdening debt can be and are ready to be free from its weight on our lives. We still have a long way to go. This is just the beginning of our journey.