This week we are excited to share another story from our Young Debt-Free Families interview series. Derek from Life and My Finances shares his young family’s story about rebounding financially from divorce.
On the surface debt is just, well, debt. It seems that everyone in today’s society has debt. It’s been normalized to the point that we brag about our “super low” payment on our 7 year car notes. Student loans are seemingly the price of admission into the workforce, and people will tell you to put money elsewhere instead of paying off that debt.
If this is you then know that there’s nothing wrong with debt on the surface. But what happens when that debt comes due and you can’t afford to make the payment? What happens when you can’t even afford to travel home to visit family because you are paying a mortgage, car note, student loans, and old credit cards? What happens when your spouse has to begrudgingly go to work when they’d rather be home taking care of their kids?
Debt has a way of spilling over into all aspects of life. While debt is just debt, it impacts us in so many ways. Most of all, it takes away our freedom and limits our options.
I really enjoyed Derek’s story below. It’s a story of ups and downs. Going through a tough divorce, paying off debt multiple times, and thankfully having a positive outcome in the end. The road to a happy life often has its bumps along the way. Those bumps just make us appreciate the final outcome that much more.
Debt Free Living Interview with Derek from Life and My Finances on Rebounding Financially from Divorce
1. Start by telling us about yourself. Please include any details you feel comfortable sharing about your family, job situation, income level, and amount of debt paid.
I think I’ve had three cycles of debt freedom now – not exactly the picture perfect success story…
My name is Derek. I started LifeAndMyFinances.com back in 2010 when I was battling debt the first time. I was newly married and our debt of choice was student loans (of course!). Things were great until that first payment came due…and we realized that we couldn’t afford to pay it.
Long story short, my wife had to get a job and I tried to work my way up the corporate ladder in finance, plus make a few bucks with the website on the side.
We scrimped, we saved, and we loaded nearly $1,000 extra dollars a month toward the debt (some months more). By the end of 14 months, we had paid off $18,000 of student loan debt and were completely debt free (we of course didn’t own a house yet).
And then we moved, bought a house, got a dog. We did everything that we thought would make us happy…but we weren’t. We argued a lot. My wife wanted to spend, I wanted to pay the house off in 4 years. She liked to party, I wanted to read books.
Things just weren’t working. She dropped the big “D” word on me 2.5 years into our marriage. We were divorced just a few months later and divided the assets. I kept the house and the equity, which meant I was in consumer debt…again. This time to my ex.
I was mad. Angry that she gave up on our relationship. It hurt me to even see her face. So naturally, I just wanted her out of my life.
Before, we paid off debt with fear. This time, I was paying it off with anger.
I wrote articles for cash, I mowed lawns for my nephew, and I even flipped a few cars (which went surprisingly well). After 6 months, I had done it. I paid off the $22,000 that I owed her.
And now, I had that pesky mortgage. Her name was off the deed, but still on the mortgage. I could see it now…her coming up to my house a year from then, saying she met someone and they were trying to buy a house together, but she couldn’t get approved because her previous loan was still outstanding.
Nope. I didn’t want to see that play out. All that pain coming back up my driveway. No thanks. It was time to pay off the mortgage.
We had $54,000 left. With all the same tactics I learned while paying off my ex, I was able to eliminate the mortgage debt in less than a year!
Once again, I was completely debt free.
And then I met Liz. She was beautiful, smart, and most importantly, a saver!! Hahaha.
We stocked up money like nobody’s business and used it to buy a rental with cash (which we still have). We saved again, bought another house with cash, and ended up flipping it for $27k in profits!
Life was good, but then we got the itch…for a bigger and better home. Our current house was worth $150k, we netted $100k from the sale of the flip house, but our sights were set on a home valued at $275k.
We pulled the trigger anyway and landed back in debt to the tune of $25k. It felt like a big deal at the time – to go back into debt – but honestly, it was the best move we ever made.
The mortgage was gone in about a year and now we’re living happily in a sprawling home on 6 acres in a town we love. We’ve got two young kiddos and life honestly just couldn’t be better!
2. What inspired you to payoff your debt? Did you have a specific moment where you decided to make it a goal to payoff your debt?
I hate being controlled. I want to make my own decisions – the right ones – without any outside influence altering my thought processes.
Debt can have severe impacts to clear decision making.
That first student loan debt put me and my ex in a spot where we couldn’t even travel home for Thanksgiving! We couldn’t afford it. It was terrible!
What if a close relative died back home? Were we going to skip that too? What if we got injured and suddenly had a mound of medical debt? What would we do?
Put simply, having debt made me afraid and upset – two emotions that don’t often lead to success. Now that all that’s behind me, life is peaceful and easy. Our wealth grows effortlessly and the fights are seldom.
Debt freedom is definitely the way to live.
3. How did you stay disciplined throughout the process to pay down your debt?
It was simple really. We set a big goal and then figured out all the little goals we had to hit along the way. The debt snowball tool I created was a huge help (and has helped a ton of other people as well!).
Every month, we’d sit down and review our progress.
Were we ahead of our goals? Behind? What more could we do to speed up the debt payoff?
Sometimes, it was still tough, even when we were making progress. So we allowed ourselves small rewards for hitting those little goals. Things like a dinner out, a baseball cap, and for a medium-sized goal – a new bicycle!
4. Were there any apps, tools, or websites that were especially helpful in paying down debt?
Not really (other than the debt snowball tool I mentioned earlier). My day was filled with work, then goal tracking, and then writing about it on my website.
I guess that was one of the big things – the accountability factor to all of my readers. And they were really cheering me on along the way.
So if someone out there is looking to pay off their debts, get with a group of others that are doing the same thing. Cheer them on and they’ll cheer you on! It’s a great way to keep that momentum going!
5. What advice would you provide to other young families who are overcome by the stresses of debt?
You. Can. Do It.
Truthfully, anyone can. I’m nothing special. When I paid off my house, I was making $60k a year at my day job….not $200k. It’s possible for everyone.
All you have to do is get scared or get mad or maybe just dream big! Get emotional about your situation and change will happen.
As I’ve often heard quoted, “When the pain of staying the same is greater than the pain of change, you’ll change!”
Get uncomfortable with your current situation! It’s time to change!
Then, once you’re ready, have laser focus on each debt. One at a time in the debt snowball. What’s your smallest one? $500? Do everything in your power to change it to $0. Then ask yourself, “What’s the next one?” $1,200? Tackle that one with a vengeance.
Pretty soon, you’ll look up and they’ll all be gone!
6. What was the most challenging part in your journey to become debt-free?
For me, the most challenging thing was my old friends. They just didn’t get it.
Sure, I was doing weird stuff like:
- Riding my bike to work every day to save money on gas
- Not going out to eat anymore
- And not doing expensive fun stuff with them either – like bowling, going to the movies, or heading to the bars
They constantly hassled me and made me the butt of their jokes. Thankfully, I had personal finance friends that continued to cheer me on. I simply had to shut out my old friends and embrace my new ones. It’s a simple concept, but certainly not easy.
7. How has becoming debt-free changed your family’s life? How do you expect it will impact your family’s life going forward?
My life today is 10 times better than my life when I was in debt.
When I was in debt, options were limited. We only had a few bucks left at the end of each month and if anything went wrong, we were in trouble financially and absolutely stressed out.
Today, we have absolutely no debt, have a huge emergency fund, and we’re also investing heavily for our future!
If anything goes wrong (like our water heater going out), we simply call up the repair guys, tell them to bring us a new one, and we pay them with cash. Totally stress free!
8. What are future plans for your family after becoming debt free?
Now that we’re debt free, we don’t need to worry so much about the present or the looming unknowns of the near-future. Our focus has shifted to the distant future.
- How much will we need to save for our kids’ college if we want to fund half of it (we’d like them to have some skin in the game – it worked well for me!).
- And, we’d like to send our kids to private school, but it costs $7,500 per year, per kid! What if we started investing a ton of money now – then we wouldn’t have to worry about those yearly costs for the next 15 years!
Beyond that, we are thinking about putting a master suite addition on our house. It will free up a bedroom for a guest room and it will provide a sort of “getaway” from our kids at night (we currently have a bedroom sandwiched in between them).
9. Are you pursuing (or have you reached) financial independence?
I am kind of secretly pursuing FI (it stresses my wife out beyond belief when I talk about it because that would mean we’re both not working and therefore have no corporate insurance – she’s a stay at home mom doing photography on the side).
I’m 35 now. I figure we’ll be millionaires in the next couple years and we’ll have enough saved and invested by the time I’m 45 to take an early leave out of corporate. I’m not convinced yet that that’s the right step for me and my family, but I do love to have options! 🙂
10. Is there anything that you haven’t yet covered that you’d like to share?
It seems like everyone is in debt. It’s almost strange to say you have no debt in this day and age. My hope and prayer is that more people strive to be weird, to go against the grain, to actually do something that you think is right without worrying about what anyone else will say or think.
If debt is constantly taking you down emotionally, put a stake in the ground today and commit to get rid of it once and for all! It’s totally worth it!
11. Where can we learn more about your story?
Come visit me at LifeAndMyFinances.com/About! I tell my story there and also all my featured articles on many of today’s top sites!
Thanks so much everyone for reading! I hope to meet you all over at my site soon!