A little over a week ago, I eagerly shared how because of God's direction and leading...we have been able to pay off 18k in 8 months. In no way was this easy or did it come natural to us. To be honest, we have made some really poor and unnecessary financial decisions in our past. Ones that we really had to buckle down and pray to God to help us find a way out...and this one was 1000 times worse.
December 2013, Jeremy and I made one of our biggest financial mistakes. We had been talking about buying a car for awhile and toyed with the idea, but never really did an research about what the car buying process would be like. We wanted to buy a brand new car, which if you follow Dave Ramsey, he would have advised against that 100%.
Now, I am not against buying brand new...to be honest, my parents always bought brand new, but they also always bought the most basic model and paid with cash. Our eyes were definitely bigger than our wallet and we wanted the highest model with everything in it. BIG mistake.
After setting our hearts on the brand new 2014 Corolla S, the dealer knew he had us. Not wanting to work with us on a monthly payment (what we were both so concerned with)...which is ANOTHER BIG mistake, he convinced us to lease the car instead.
What Jeremy and I failed to realize besides the obvious, was that...it's not about the monthly payments, it's about the total COMPLETE price. And that's the difference between a wise person and a...well, not so wise person. Most buyers are more worried about the monthly car payment rather than the full price of what they will be buying the car for. But hey, I feel like I can say that openly, because we were not so wise people.
It was the worst mistake we made, but it only gets worse. The lease was for SIX years. Yep. Signed our names on the dotted line, felt more like giving our souls to the devil. We knew how much we had messed up, when we did NOT even feel happy just a few hours after driving away with our car.
8 months later, by the grace of God, we found out about Dave Ramsey's Financial Peach University, the SECOND time attending CCV, our church (see previous posts about our journey with CCV), we both knew...that God had bigger plans than we could have ever expected.
A month after starting our class, we made many HUGE decisions after praying about what we should do about our OTHER debt that we still had. MISTAKE #100? We should have never got our car before paying all other debt off FIRST. But since we hadn't, we knew it was time to take action and become SMART with our finances.
After paying off all of our "smaller" debts, we were finally left with our car...our LEASED car. We had already put so much into it and knew we wanted to actually OWN it, which was our intention in the first place. It was no easy decision, but we finally decided we would do a lease buyout. Oh the many late nights and lack of sleep we did while we prayed AND educated ourselves about this process before making any hasty moves. It was a very stressful process, but we were convinced that God wanted this for us.
November 21st of last year, our loan was officially processed by our bank and we owed 18k on it. We both made a pact with God that we would pay our car off in less than a year. We would do whatever it took to make that happen, even if it meant to give up some things that we all enjoyed. We knew that in the end it would be worth it. Our banker laughed at us at how ridiculous that sounded, but we knew it could be done.
It's been a long and hard journey. One of many sacrifices made and lots and lots of DISCIPLINE.
But I am so happy to announce...that we OFFICIALLY OWN our car! It's definitely an AMAZING feeling. But one that truly would have NEVER happened without God. As I was going over finances for my coaching business the other night, tears flooded my eyes and I couldn't even put into WORDS what I was feeling. I shared with my husband that because of God's doing, I made enough JUST from helping others this month to COVER our LAST and FINAL car payment of $1,000 last week.
I'm seriously crying as I post this! God has been so AMAZING and gracious to us. I want to pass on what has worked for us so that you can make a change in your own life and NOT make the same mistakes that we did.
HOW TO PAY OFF DEBT AGGRESSIVELY:
Step 1: List all of your debts from smallest to largest.
Don't worry too much about interest rates, unless one is absolutely ridiculous. Pay a good amount to each debt, that way you can eliminate the smallest debt immediately.
Step 2: Budget your money! Give every single dollar a name and tell it where to go!
I am a huge budgeter! I hate math, but love budgeting...weird right? But I'm very meticulous with my monthly budgets. I give every single dollar a name. I usually take care of all the "monthly reoccurrence" bills first...tithing, cellphone, internet, water/electricity, Netflix, car insurance (which I could write a whole other post on how I determine how much to put aside every month), rent/house payment. Then with the money you have left over use it for your debt. If you want some fun and know you need it, then give yourself a limit of how much to spend monthly in this category. Our entertainment fund is $100 a month. Sometimes we go over, but most times we don't.
Step 3: Use cash!
Yes, I said cash...as in paper money. Use it and you will lose it less often. We use cash for our groceries, gift/present category, miscellaneous, and small car necessities (i.e. oil changes, filters, car washes, windshield wipers, etc). Our grocery budget is $320 a month and that includes my Shakeology. Be strict about what you buy! We are very strict with what we buy for our groceries. No gummy fruit snacks, juice, cookies, cakes, etc. Not only is it healthy for our bodies, but it's also healthy for our wallet!
Step 4: Put your 401K on hold.
I know, I know! This can be super controversial, and you don't have to do this, but we did. Dave says if you can pay off your debt in 18 months or less that there is no harm in doing this. Well, we trusted God and took a huge leap of faith. We currently still have our 401K on hold because we are building our security fund and house down payment. We will activate it next year at the 18 month mark. Some may think we are stupid for that and that's fine...but I personally think it has been the BEST financial decision we have made! But...DO NOT PULL FROM YOUR 401K TO PAY OFF DEBT! A HUGE no-no!!
Step 5: Use any extra money towards your debt.
We got about a $1600 refund from Toyota when we did a lease buy-out. We could have easily spent that money, but we didn't. We put that towards our car loan IMMEDIATELY! It was like money from Heaven. Our ENTIRE tax return went towards our car loan! BAM! And any bonus money or raise went towards it too. Since I no longer relied on Jeremy to pay for my monthly Shakeology that also freed up a good amount of money. And any money that I made from my business, I would put towards it too.
These 5 steps will be a challenge, trust me...it was a challenge for us! But I can promise you, that it can be done! With faith, prayer, and God on your side...you can become debt free and stay debt free. These steps aren't just to help you out of trouble...they are to KEEP you out of trouble.
P.S. Please share on if you found this helpful <3
-Becky
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