our success (read: half-way there) story could be summarized in three bullet points: debt is slavery, doing more with less, and balance.
quick background: came to US in 1992, when i was 13. went through junior high, high school and college by trial and error - parents too busy working for food and learning english, no older siblings to show me the way. that's how i ended up with appox. 95K in student loans and credit card debt. married a wonderful girl 2.5 years ago, and our wedding and a couple of her loans brought us up to 115K. bought a house 1 year ago. i think we own $700 of it by now. interest is a killer.
Debt is slavery is self-explanatory and crystal clear to probably more than 97% of everyone who's reading this. what's not so clear are the other slogans that crawl in and nest in your subconscious, while growing up in US: "you deserve this," "everyone has a bit of debt, it's expected," "the quality of your possessions demonstrates the quality of your life," etc. So, while fighting debt is easy, fighting these other beliefs is a little harder.
GRS and a few other personal and self-improvement blogs have been a great help in challenging and dismantling these notions over the past 12+ months. Event though we are tempted to obtain luxurious items or upgrade the house (bathrooms and backyard could really use it), we've been talking each other out of spending more than we have and adapting a save-up-for-it attitude for all major purchases. meanwhile, the debt snowball is picking up speed. but it wasn't like this from the getgo.
Doing more with less can be said another way: scarcity of a resource helps you manage it better. shortly after we got married, both of us took well-paying jobs (tech sector, greater Boston area). you'd think we'd start canceling and cutting up credit cards left and right. i had all the intentions of making a lump sum payment at the end of the month to whichever creditor was charging the highest interest. months went by, and there wasn't much progress. there never seemed to be enough money left over at the end of the month to send another payment.
then we decided to buy a house in the area. by the time the mortgage bills started arriving, we realized our housing would cost twice as much. and that didn't include home improvement and upkeep costs. so, as most of the monthly income went to pay for mortgage and initial repairs, shedding the shackles of debt started slipping into the future, and i became quite depressed about the situation. GRS et al. to the rescue! the only way to achieve goals (becoming debt free, frugal living, financial independence) is to take deliberate steps towards them, i read. An easy way of dealing with finances is to automate them, JD and other wrote. so, i started paying our future selves first, by deciding on a monthly total of debt payments, and pumping up the scheduled payments to sum up to that amount. since then, 3 small cards are closed, 2 student loans are paid off, and two more creditors are getting sacked by January of 2008. i keep up with the debt snowball by reassigning the freed up dollars to automatically go to the next creditor on top of the list. it feels so good to know that a loan scheduled to be repaid over 3 years will be gone in 4 months.
so, the funny thing (interesting funny, not ha ha funny) is that we're doing much, much better at getting rid of debt with less money. scarcity of a resource helps you manage it better. but how tightly do you manage it?
Balance is a word or a concept that can be applied universally. in our financial journey, we're trying to achieve balance in two specific areas: saving for retirement vs repaying debt and saving/repaying debt vs spending money on ourselves.
we've had multiple discussions on the (psychological) benefits of being debt free vs the benefits of starting early in saving for retirement. i'd like to think that we've achieved a happy balance between the two (20% of pre-tax -> savings and 15% of post-tax -> debt reduction). once again, only after reading about it multiple times on GRS et al., did i realize how important it was to start saving early, while we have two salaries and time on our side.
the other area, spending money on ourselves vs saving/repaying is a little harder to comment on. on one hand, you want to have the gazelle intensity that Dave Ramsey talks about. on the other hand, you don't want to let the years go by without creating memories. i guess what we're going for is going for big ticket items (significant purchase, or a week-long trip somewhere) once or twice a year, making sure that the we get a great return on our investment, i.e. that we use the item for all it's worth, or have an unforgettable experience, something to tell the kids about in later years. giving yourself a break every once in a while is a good way to re-energize and keep plowing away.
so, there it is: debt is slavery, doing more with less, and balance. i'm an avid reader of GRS and find the material very relevant to our lives. thanks, JD, and keep it going.