This year, my wife and I have some definite financial goals and we have a plan that we are following.

Debt-free

The biggest financial goal we have is to become completely debt-free.

Yes, that includes our house!

Let me share a little bit about our journey, and then share some things you can take away from it.

Our Journey

My wife and I were introduced to Dave Ramsey back in 2004. Well, we weren’t introduced personally – just introduced to his book: “Financial Freedom.” We had been married less than a year at that time and we had a little bit of debt: I had a credit card (which I had maxed out between a laptop computer, engagement ring, and honeymoon) and my wife had a car payment.

I was terrible with finances. I mentioned that maxed-out credit card. At one time before we got married, I had gone to an ATM to withdraw $40 from that credit card, deposited the money in my checking account, and then paid that same credit card $40. Did I mention that I was terrible with finances?

My wife, on the other hand, was pretty good with finances. She did have a car payment, but she had money in savings and managed her money pretty well. She is a big reason we are having financial success now.

During those early years in our marriage, we worked to pay off those debts, quickly paying off the credit card, followed by paying off the car a year or two later. We were also putting money into savings.

We started to get a little lax in our spending as my wife went to school to become an LPN. She also became pregnant with our son. I always knew that my wife was special, but this pregnancy proved it. She had a rare condition where morning sickness wasn’t just in the morning – and it wasn’t just during the first trimester. She was sick all the time and all through the pregnancy – including during labor. We were told that only 2-3% of women experience this (yea!).

So with the pregnancy complications while going to school, we depleted our savings and began charging on a credit card. Oh, and we got a new car with a matching payment.

And then came my daughter. This was like pregnancy #1, but about three times worse. Luckily, the credit card now had a higher limit.

By the time my daughter was born in 2009, we had over $20,000 in debt between medical bills, the car payment, and the credit card. This was in addition to the $90,000 mortgage we had.

My wife graduated college, got her LPN, and started making a little more money. We started making up ground. We were able to pay off the car in 2010 (about 2 years early), as well as the medical bills. The credit card was dwindling.

We had moved from Illinois to Michigan in 2009, and then back to Oklahoma in 2010. My wife’s parents allowed us to stay at they’re house for a very low amount (thanks, Dad!), allowing us to finish off the credit card and put a good chuck into savings.

We bought our current house in May 2011!

This presented us with an issue. We still had our house in Illinois. We were renting it out, but the market was still in decline there. We lost the renter and ended up going into short sale.

We found our credit card again and charged about $3,000 – mostly on one Black Friday!

Then we found Dave Ramsey again. I had never listened to his radio show before that, but I would hear it on my way to work. My wife and I started to get intense. Gazelle intense.

We paid off the credit card again, leaving us with just our new mortgage. We built up a 3 month emergency fund as well. My wife was back in school again, this time working toward getting her RN – but we were doing it debt-free this time.

At the end of January 2016, we are looking at about $30,000 left. We plan to continue our intensity, and should have it completely paid off this year.

Action steps

We started by following Dave Ramsey’s baby-steps:

  1. $1,000 emergency fund
  2. Pay off all debt
  3. Fully-funded emergency fund
  4. Invest 15% in retirement
  5. Fund children’s college
  6. Pay off mortgage
  7. Build wealth

Full disclosure: we don’t follow his plan to a T. We have also listened to others’ advice and adapted. Dave’s plan, though, is the primary foundation.

As Dave will tell you, your biggest wealth-building tool  is your income. And the best way to maximize that tool is by reducing expenses. Getting rid of debt is one of the biggest ways to drop your expenses.

Imagine what you could do if you didn’t have lingering medical bills, credit cards, and car payments. Some people will agree on the credit cards and medical bills, but will still say something like, “But we’ll always have a car payment.”

That is not true!

Our last car payment was in 2010. In 2013, we paid $5,000 cash for a minivan after my car died. Literally. It wouldn’t start when I was at work. I got a ride home that night. My wife and I came back a few days later and I was finally able to start it. I was able to drive it 4 miles to the salvage yard and it died again as I turned into the parking lot. I coasted the car into a parking space and turned over the title for $200.

If you plan properly and learn to be content (in other words, don’t feel like you have to have the newest and shiniest things), you don’t have to have a car payment.

It takes discipline and accountability. It takes budgeting and paying attention. It takes being able to say no – to yourself and others.

It helps to have a reward

My wife and I have set a reward for paying off our house. It is a family trip to Disney World.

Dave Ramsey signing our "Pay Off That House" board

Dave Ramsey signing our “Pay Off That House” board

My kids are 9 and 6 right now. And they would love to visit Disney World. And we would love to take them. But we have to pay off the house first.

We set this goal in 2013 and we told our kids. They were excited about Disney world, but not excited about the timeline. To a kid, a week is a long time; a couple years is an eternity.

We got them involved by helping to color in squares on a board we developed. Much like people use a picture of a thermometer to show the progress toward a goal, we created a rough blueprint of our house with squares representing $500 each. When all the squares are filled in, the house is paid off.

With them helping to color in the squares, and the visual reminder of our progress, it helps to keep us all motivated.