Rich and his wife both work in non-profit jobs and have been working hard to increase their income over the past several years. Even though they’ve never been in too much debt outside of a car loan and mortgage, it’s inspiring to learn about some of the sacrifices they made to keep from going further into debt. I can’t wait to see what Rich and his family have in store in the future!
I’m really excited to feature Richmond’s story and hope you enjoy it as much as I did!
Young Debt-Free Families Interview with PF Geeks
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.
Hey Financial Pilgrimage readers!
Richmond here from PF Geeks. I’m so excited to share a bit today about my wife and I’s journey in paying off debt, what’s worked for us along the way and where we’re heading next!
My wife and I met our freshmen year of college and we got married in 2015 right after graduating.
We were both incredibly fortunate to have our college educations paid for by our parents. There’s no question that we wouldn’t be where we are today without that head-start. We try to never take that granted and recognize that we were very privileged to graduate without student loans.
Ever since graduating, we’ve both been in non-profit work. I started working in ministry at a church and my wife was working at a small private school.
In our first year of marriage I was left unemployed for a period of 6 months. During this time, we were barely losing money each month. I finally landed another job, but it was only part-time and I had started grad school.
A year later we ended up having to replace my wife’s car because she got in an accident. We had already built up a few thousand in credit card debt, and added on a $20k car note to the bill.
Our total debt was just under $25k.
We finally paid off the car in May of 2019, exactly two years after buying the car and a full three years in advance.
The hardest part was figuring out how to balance chasing multiple financial goals.
We wanted to be debt free, pay for grad school, save for retirement, put money towards a downpayment for a house, and we were trying to build up our emergency fund so we wouldn’t take on debt again!
In 2018, we kicked things into fast gear. I was moved from part-time to full-time plus my grad school was part of the benefits package.
Over the last couple of years we’ve prioritized excelling at our jobs and we’ve consistently asked for more responsibility. As a result, our combined income went from $40k per year when I was unemployed to $60k to $80k and now we’re on pace to earn $110k combined this year.
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?
For the first year and a half of our marriage, we were debt free and it was an incredible feeling.
I remember the day we bought my wife’s car. We showed up, excited to make our first “adult” purchase. We signed the loan, got the keys, and I still remember the feeling driving away.
It was just a sense of burden and weightiness.
The next day we went over our budget, found ways to cut and save, and we starting paying an extra $1k per month towards the loan balance.
3. How did you stay disciplined throughout the process to pay down your debt?
Thankfully for us, we had fairly low fixed costs. We were renting a tiny, old, one bedroom townhome (580 sq. ft). All in, our housing costs were around $800 a month which is insanely cheap for Houston.
We hated living there, but it was worth every penny.
That day we sat down to go through our budget was a wake-up call though. We plugged all of our spending into Mint and had some real data to work with. The numbers were shocking.
We were spending more on food each month than we were on rent. For just the two of us, our grocery + restaurant spending was regularly over $700 per month.
We weren’t big spenders on clothes and entertainment and we didn’t have a bunch of subscriptions to cancel.
The first change we made was to start cooking and eating almost every single meal at home. The second change we made really cemented in our discipline for food spending. We started meal prepping. We would spend time on Saturday and Wednesday to cook a bunch of food in advance that we could eat throughout the week.
This got boring super quickly, but it was incredibly effective at saving money.
Over time, we actually started to compile a rotation of our favorite cheap recipes that we loved. Our goal was to keep every meal under $2-3 per serving!
4. What was the most challenging part in your journey to become debt-free?
After going through a budget overhaul, we knew exactly how much money we were able to save each month. If you don’t know this number, then I highly recommend using a zero based budget to figure it out.
The most challenging part for us was balancing all of our different financial goals. We knew we wanted to pay off our debt as fast as possible, but our interest rate was pretty low.
We wanted to save for retirement, save for a downpayment, and rebuild our emergency fund.
It’s impossible to do all of that and pay down debt as fast as possible.
We ended up getting our emergency fund up to a point that we were comfortable with. Then we split the rest of our monthly surplus towards retirement and paying down our debt.
We could have paid down our debt a year faster, but we were also able to put away a significant amount of money tax free.
5. How has becoming debt-free changed your family’s life? How do you expect it will impact your family’s life going forward?
Paying off our car loan was a HUGE weight lifted off of our shoulders and our monthly budget.
I still remember the day we made our final lump-sum payment. The $328 monthly bill went straight towards further building up our emergency fund.
Unfortunately, we are not 100% debt free. We are still paying down our mortgage, but it’s still been a big difference not having two loans!
6. What are future plans for your family after becoming debt free?
Right now we’re working on a three tiered plan for financial independence: Income, Saving, and Giving. I shared our more detailed plan in this interview with SemiRetireplan, but I’ll highlight phase one here.
My wife and I are both in our mid-20’s and we don’t have any kids yet, although we’ll start trying here pretty soon!
Our number one goal right now is to increase our income. We’re still trying to save a good percentage of our income and give to our church, missionaries, and other causes, but most of our time and effort is going to increasing the top-line, our income.
Over the last three years, we’ve both been working hard, getting results in our jobs, and our combined income has gone from $60k to $110k/year.
In this phase, we’re trying to experiment with other income streams as well. For a while, our only sources of income were our day jobs.
Right now, I’m freelancing on the side and experimenting with a couple of dividend reinvestment programs that are starting to build! Our goal in 2020 is to work on creating a source of residual income! I recently launched a niche site in addition to my personal finance blog called Meal Prepify that’s all about helping people learn how to meal prep.