So I have been a follower of the blog and forum for some time, and have made steps to increase my and my wife's financial help. I will spare many of the details, but my plan was somewhere between the ultra-conservative plans of Dave Ramsey (who despises all debt) and the more liberal plans of Clark Howard (who considers access to debt a useful tool, somewhat more than I do).
After I finished my Master's degree, my wife and I were looking at around $60k of student debt. For two adult's bachelors' and masters' degrees, that's not too bad but still a pretty good load. I had a mortgage ($75k on a $90k house), two car payments, and were floating $10k in credit card and other smaller debts (like bank loans).
The fortunate thing is that my wife and my combined income is in the $90k-$100k range and we live in Oklahoma. So the income, while moderate on a national level, is somewhat more impressive in Oklahoma (not trying to boast, but being in OK helps).
We found out in Fall of 2008 we were expecting our first child, and that really kicked me into gear. In early 2009, I got a modest bonus (between 2-3k) which immediately paid off one car and opened up 360 a month in income. We piled that on our credit card debt, and got it down to around a $1,200 or so by May.
Then my son was born (8 weeks early) and that put some things on hold while our lives normalized after his hospital stay and we learned how to be parents. God bless my wife's insurance plan which meant that $140,000 of medical bills cost me two $175 dollar copays! Not much happened for the next 10 months or so except that we remained current on the credit cards, mortgage, student loans, and car payment while we saved a bit up for emergencies and found out how much daycare, formula, diapers, and routine child wellness checks can cost!
Fast forward to March of this year, and my wife and I decided to take a plunge and move back to our hometown of Tulsa to raise our son closer to families. We were in Oklahoma City, with no family withing two hours of us, and that meant we had no real support system to help us along the way (most of our friends do not yet have children). My Grandfather passed away, so his house provided us a place to squat with no mortgage or rent while we sorted things out.
I am of course dearly grateful to my father for the offer to "squat" and only keep the taxes, insurance, and utilities current (around $600 a month). I also agreed to pay for the self-storage unit ($115 a month) as we hurriedly emptied the house so we could move in. Sure, it's got green carpet and wood paneling and a kitchen that could be the Brady Bunch, but everything is functional and roof, HVAC, water tank is all less than 3 years old. I am definitely not complaining.
My wife got a job offer very quickly (while Social Work pays poorly, there is nearly always a job available) and I telecommute, so the move came much quicker than we had anticipated. We put our house in OKC up for sale in April, and thanks to the soon-to-expire tax credit, were under contract in 6 days. May 1st, we moved but the house did not close until the end of August! Thank you banks for mismanaging your lending so poorly that you take 4+ months to originate a simple FHA loan. So I kept making house payments and double utility payments in the meantime.
Once the house finally sold last month, we cleared just under $10k after commissions, closing costs, and receiving refunds on insurance and escrow. Not too bad on a house I bought for $82k at age 24 5 years ago! We held that money for about 4 days as we went and paid off our second car and cleared a whopping seven dollars! This month, we took what would have been our mortgage payment and used it to pay off the last $1000 of unsecured debt.
So where does this put us today? Well, we paid off 2 cars, our mortgage (granted, no more house either), and credit cards in just under 2 years. I also contributed to my 401k the most my employer will match (6%) and kept my $100 a month to my Roth (modest, but it is something). We also put about back $4k in saving in the meantime, just in case we need it. AND we are expecting a second child in February, and have pre-paid most of the $4000 of out of pocket expense on the delivery.
So we are down to student loans, some modest monthly expenses (like utilities and the mini storage) a bit of money in the bank, and I still have to figure out what to do long-term on a house (buy this house or buy another), but my dad refuses to take any rent until after February when we get settled after our second child is born. And we have cleared up a ton of our income on a monthly basis.
It didn't seem like it at the time, but looking back and writing this it feels good to codify the saving and debt reduction we have accomplished. Saving and paying the debt simultaneously makes the progress seem slower that it really is. Feel free to offer any comments you wish, but more than anything I wanted to type this all out so I can feel good about where we've come int he last 2 years.
-Kasey in Tulsa
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