When I hear, “We can’t get out of debt because (insert excuse),” I get it. I understand the conviction with which you hold the belief. I see the reasoning from your point of view. I feel your burden and hear the tension behind your words. The majority of Americans have said or thought, “I can’t do it, because…”
That’s fine. It’s just fine…unremarkable…complacent… okay… Call it what you wish; they’re the thoughts and words of inaction and a refusal to make a decision for a better future. You say you want the best, but your actions tell a different story. Sound familiar? Financial planning is facing your numbers head on and choosing to create your future.
My wife has seen the positive effects that being better than fine, remarkable, and active have had on our lives because we were once complacent, too. Here is how we erased $60k in debt in 18 months (through a pregnancy and birth, a switch from two incomes to one, a recession, and a job loss) in her words:
John and I married in June of 2007 and lived it up for sixth months afterwards. We enjoyed eating out several days a week, were members of an expensive gym, spent way too much on our wedding rings and subsequent honeymoon, and shopped whenever we wished. To top it off, we were just making the monthly payments on our student loans. We felt like we were somehow entitled to this lifestyle now that we had our Master’s Degrees and were earning money. This all came to a halt in January of 2008 when we found out that I was pregnant. At the time, John was working at a financial planning firm, and I was teaching at an elementary school. Not only were we bringing in six figures, we were also in two professions where we should have known better, but refused to take our own advice. My daily mantra to my students was, “Set a goal and make it happen,” and John’s advice to his clients was, “You have to get out of debt- that’s first and foremost.”
Our debt was at $60K (not taking our mortgage into account- just credit cards and loans). We arrived at this number by adding up our credit cards and loans in the debt snowball spreadsheet on our website (the directions for following it are on the spreadsheet). Before we started paying off our debt we saved an emergency fund of $1,000. We realized that we had to try to live on his salary alone to eliminate debt quickly and plan for our possible one-income future. To do this, we gave up the gym, cable T.V., some home and cell phone features, eating out, shopping (my weakness), and season tickets to Royals and Nebraska games. In fact, to this day, we do not belong to a gym, have cable, shop on more than an as-needed basis (something I still struggle with), have Royals season tickets, and we’ve sold our Nebraska Football tickets for the past two years (a real sacrifice for John).
To earn extra income, John sought and was awarded a job as an adjunct professor at Webster University. He continues to teach classes in graduate accounting and finance one to two nights a week. I was invited to lead educational workshops during this time, and continue to do that as well. We did not decrease our level of charitable giving. In fact, we prayed about it and felt led to give more even though it was difficult.
As far as having a baby, we called our health insurance provider multiple times to make sure the amount they quoted for the birth was correct. We then saved that amount above and beyond our emergency fund. We searched for the lowest prices on baby items like diapers, wipes, etc. and did not buy anything until we had a coupon or they were having a sale. We wanted the best for our daughter, and we got it all at discount prices. Our family and friends were also incredibly generous with their gifts.
Another key component of paying off our debt was using a spending plan that included the expenses worksheet on our website (directions for using it are on the spreadsheet). For John and I, this worksheet is better than a traditional “budget” because it shows what our “fixed” expenses are, how much we earn each month, what we have to spend, and the excess we have leftover. A cornerstone of getting out of debt is facing the reality of what you are spending each month and how that relates to what you’re actually earning.
My favorite part of those 18 months (besides having our sweet daughter) was the opportunity to make something happen for our family that we never thought we could accomplish. At no point did we place blame on each other. Regardless of our separate poor choices in the past, the debt we were stuck with was ours.
Best of all, John has been through and conquered obstacles that many of our clients face. Not only does he have the financial skills to help people meet their goals, he understands where they’re coming from emotionally. He doesn’t judge their previous actions, but encourages them in their choice to meet with a financial planner and take steps to change their life.
Money is a limiting factor in the decisions you make daily. John and I have created our lives anew from the bottom up, so that we aren’t stuck because we can’t afford to make it happen. John’s dream was to open his own fee-only financial planning and investment management firm. He helps people sort out their finances so that they can send their kids to college without loans, eliminate debt, take vacations as they wish, leave an estate to their children (among the many other goals our clients may have), and feel secure knowing that they’re on a path toward a successful financial future. I admire the kind, disciplined nature in which he operates and believe strongly in his ability to aid in improving his client’s lives.
In writing down our story for this blog, I was hit with the thought, ‘What would it be like if we hadn’t taken these steps to eliminate our debt?’ I want you to consider writing your own story (just in your head). Can you get to the happy ending the way you’re living right now? If so, kudos! If not, call John. He’ll sit down with you, listen to what you’re facing, and offer you the optimism and knowledge to get there.
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John P. Chladek, MBA, CFP® is the President of Chladek Wealth Management, LLC, a fee-only financial planning and investment management firm specializing in helping families and couples who are not yet retired realize their financial goals. For more information, visit https://www.chladekwealth.com.