During Thanksgiving last year, my husband and I went on a road trip to Portland, Oregon, to get away from our home offices for a week. With all the lockdowns in place, it was really affecting our mental health, and we needed a change in scenery. Since we did not want to fly due to the dangers of the pandemic, we decided to drive from California all the way to Oregon. This gave us many hours to just sit and talk as we made our way up north to Portland.
Portland was always a city we loved. We had fond memories from our childhood when our families visited for vacation. It wasn't until we were there, that we realized that the Portland we once knew has changed dramatically due to the pandemic and recent riots and events happening in the city. We still enjoyed being there, trying out some new street food, visiting Powell's books and wandering around the city. The change in scenery helped us blow off some steam and relax and bring some joy back into life during these crazy times.
When we were in Portland, we realized that our family was only 3 hours away in Seattle, so we decided to visit them during Thanksgiving. We did what we could to social distance and also had negative test results for safety measure. While there, they talked a lot to us about all the investments they have been making and how they benefitted from the recent market rallying. They also talked about all the money they already saved up for their children for college, even though they are just starting kindergarten. I could tell that my husband was very excited to join in on the conversation, but sad at the same time because he knew that we were not in a state to start investing and saving our money, due to the debt we have accumulated over the years.
You see, my husband never had any debt. When we first moved in together, we decided to renovate our home, and spent about $32,000 on the renovations. $20,000 out of the $32,000 dollars went on an 18 month 0% promotional credit card, which in his eyes at the time was completely manageable to pay off within that period. At that time, he was not aware of my large credit card and student loan debt that I have accumulated over the years that was already accruing about $350 of interest each month. This was one of my deep secrets that I had a very hard time sharing with anyone, including my soon to be fiancé at the time. As time went on, more debt accrued. My husband had a car accident, and his car got totaled. He needed a new car, and that added another $25,000 after downpayment to our $15,000 debt at the time, totaling roughly $40,000. Granted, the car loan had a very low interest rate of 1.9% for 5 years, it was still something he was very dedicated to paying off faster than 5 years. His plan was very strict and he already had his own personal budget to make sure he met all the deadlines to pay the least amount of interest possible.
Then, one day, while on a trip in Cabo San Lucas, Mexico, he decided to pop the question, and I said YES! I was so excited, but scared at the same time, as I still had to share with him the financial situation I was in. We had talks about finances before then, and what we envision for our future, but I still have not shared with him the debt I had. Not to mention, now we had a wedding to plan, and that would add even more to our existing debt. As you may imagine, it was very hard to share with him that I had close to $100,000 in debt at the time, one third of it being credit card debt, and two thirds of it being student loan debt. This is when reality kicked in for both of us, and we were both scared knowing that we were roughly $130,000 in debt that we had to pay off, not including his home mortgage that we were also responsible for.
He soon realized that the credit card debt he had with the 0% interest was no longer the priority, and we had to start working towards paying off the high interest credit cards to minimize the financial damage in the long run. Back then many banks gave 0% interest credit cards with also a 0% balance transfer fees, which made this option for us very appealing. So, we started working on opening up more credit cards with 12-15 month of 0% interest and balance transferring as much of the balance to those cards as possible. This would allow us to take advantage of the debt avalanche payoff method and attack the credit cards with the highest interest first. My husband learned about this method back when he was in college and he watched Dave Ramsey's Financial Peace University videos about the debt snowball payoff method, and how it differed from the debt avalanche payoff method. We'll talk more about the difference in another blog post, but in short, the debt avalanche method focuses on paying off the debt with the highest interest first, while the debt snowball method focuses on paying off the smallest balances first.
While the debt was shrinking over the next couple of years, the debt soon grew back to the same amount again, because we spent about $50,000 on our wedding. This is something that was very hard to negotiate with our family. They were not aware of our debt, and they expected a very traditional Vietnamese wedding. Our family is very large, and out of respect, we had to invite at least the closest family, which ended up being roughly 200 people.
So, long story short, no matter how much we tried, we kept maintaining our debt, and things were not getting better.
When we were on our way back from Portland, we talked more in the car, and we decided that since we enjoyed being elsewhere for a week, that when the pandemic is over, we'll move to another state to really get more for our money's worth. We both work in tech, and we are fully remote at the moment, and it's very likely that our companies will allow us to work fully remote even after the pandemic is over. Because of that, there is no point to struggle paying a lot for mortgage / rent for a small room, when we could get twice or three times as much elsewhere. This was the point where I finally realized that by not taking the debt seriously, we are unable to take advantage of this opportunity because it would cost us more to just move, and we would have to rent, instead of being able to afford a home that my husband and I have been dreaming off.
Check out the video below where I talk more about why I'm deciding to go on the debt free journey and pay off debt as soon as possible:
When we got home from Portland, my husband told me to check out Dave Ramsey, because he has helped him tackle his debt, and at the end of December 2020, he was 100% debt free thanks to the first 2 baby steps that he used from Dave Ramsey's 7 baby steps program.
After watching Dave Ramsey, I also stumbled upon CNBC's Millennial Money on YouTube, which gave me examples of how other millennials were living and using their monthly budgets. Then came Our Rich Journey, Graham Stephan, and Meet Kevin: all are YouTube financial influencers that helped me learn the value of money and how life can be completely different when you are debt free, stress free, and can focus on growing your family, your net worth, and helping others as you become financially independent. I also made a video of these 5 financial advisors / YouTube influencers that got me going on my debt free journey. You can check them out here:
This journey so far has been a blessing, and by me taking the first step to actually confessing to the debt I have accumulated over the years, I can finally take responsibility for it and tackle it with the "gazelle" intensity, like Dave Ramsey would say.
Let me know in the comments bellow if you're also on this debt free journey with me, and where do you stand currently. I will be writing more blogs and will be releasing videos on YouTube every Wednesday and Saturday, so make sure to get subscribed if you haven't yet. Check out my channel here: The Unsavvy Budgeter.
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