By Guest on August 3, 2012 6

Journey to Financial Freedom

This is a guest post by Amy. She and her husband have overcome extreme financial adversity on their journey to financial freedom. If you want to guest post on this blog, check out our guest post guidelines.

We got married young (22 and 23) and like most young couples, we made some very naive decisions. In the matter of four months we graduated college, got our first “real” jobs, purchased a (much too expensive) house, financed a second vehicle and started an on-the-side business. What we didn’t know at the time was that three of those decisions (car, house and business) would cause major stress that endured for years.

Financial Freedom

The biggest detriment was the purchase of our house. We financed a house at the tune of $180,000. Payments were ONLY going to be $1,300 a month. This was 45% of our monthly take-home pay. Not too bad, right? Wrong! Not only that, but we spent another $20,000 on furnishings for the home. So, before we had even been married for one month, we were in debt over $200,000. Not to mention our student loan and car debt, and we soon afterward wracked up some huge credit card debt from a bad business decision.

Fast forward one year. We’re expecting our first child. Like any first-time parents, we couldn’t wait for our baby girl to come. However, she came a little sooner than we would have liked. Alexis Ann was born three months premature. She spent her first 130 days of life in the NICU at Blank Children’s Hospital. It took a toll on us. An emotional toll and a financial toll. Not only did we have the expenses incurred from a 130-day stay in Intensive Care, Justin lost his job, and we were putting all of our daily travel expenses to the hospital on a credit card. Ouch!

Fast forward one more year. We were 25 years old and in debt over $270,000. Not to mention we had a fragile daughter at home to take care of. Stress was high. But, God is good! He lead us to a class being offered at our wonderful church. Financial Peace University would forever change the outcome of our marriage and the financial future of our family.

It was NOT easy but in four years, we eliminated all of our non-mortgage consumer debt. We made job changes, relocated, rented a trailer house, and started the quest to save money for a more affordable home for our family. By living below our means, working second jobs and being very intentional about our finances, we saved up enough money to pay CASH for a house. We wrote a check for $78,167 on March 28, 2012. We are now debt-free. It’s an AMAZING feeling and we hope to use our story to help others who are in the shoes we were in just a few short years ago.

Here are our tips for improving your family’s financial situation and paying cash for a house, if you choose.

  • Pray. This is huge. The Bible tells us that all things are possible with God (Phil 4:13). We pray a lot and give Him all of the glory He deserves.
  • Give. The Bible also says give, and it will be given to you (Luke 6:38). It’s not our money anyway, it’s God’s money. He allows us to us to be good stewards and manage it.
  • Budget. This was key for us in realizing just how much money we were wasting every month. We recommend Mint.com. Setting a budget is key for financial success!
  • Live below your means. Downsize if you need to. We went from a 2,000 sq. foot suburban house to a 1,200 sq. foot trailer house. It wasn’t fun but it enabled us to save cash to buy our house with.
  • Sell your junk. We made an extra $100-200 a month for 18 months by doing this. It took the place of second jobs and allowed us to be home with our kids more often.
  • Set financial goals. After seeing our mortgage tax form in 2010 and realizing that over $9,000 of our hard-earned cash was going down the drain in interest, we decided a mortgage wasn’t for us. The Bible says that the rich rule over the poor, and the borrower is slave to the lender (Proverbs 22:7), and we were tired of being slave to banks who were getting rich on our mortgage interest.

If you are serious about getting out of debt, we recommend you take Financial Peace University. This class offers much more great financial advice than I provided. We thank God daily that someone told us about this class.  It forever changed the financial future of our family.

 

Facebook Discussion

Facebook Discussion

Guest

  1. What a great story! Dave Ramsey and mint.com are excellent resources that I often recommend to friends and customers at an organization I volunteer for. We too got married young and thanks to both resources we paid off $78,000 worth of debt, and have built our emergency fund. We even paid for a trip to Hawaii in full after my husband’s last deployment. Congrats for paying cash for your house!

  2. Way to go, Barber family! This gives me goosebumps and tears. Your hard work has truly “paid off” & your story truly shows the importance of being debt free!

  3. Wow. I can only IMAGINE what it must feel like to be completely debt-free, and not have a house payment. What a blessing for your family.

  4. That is an amazing and incredible story! I am sure it is such a blessing and comfort to have a home and not owe anything on it. I would like, however, to point out that for most people, buying a home with cash is not actually financially responsible. I went to your blog and saw that you paid $400/month to live in your trailer, and it is wonderful that you were able to find that circumstance, but very few people would be in a position to pay that amount of rent, especially with 2 kids. A mortgage is a debt, but paying rent is also a form of a debt in that you owe someone something in order to live. Allow me to illustrate how having a mortgage can be beneficial: I will use a purchase price of $100,000 because most individuals in the country do not live in an area where purchasing a $78,000 home is possible. At current rates, if one were to get a 10-year mortgage on a $100,000 home (assuming 0% down), the amount one would pay in interest would be approx. $14,500 plus closing costs of approx. $1,500 for a total loss of $16,000. Now let’s say a couple or family decides they want to purchase the same home with cash. I would say that a rent payment of $650 would be the bare minimum for a couple and especially a family in most safe and non-rural areas in the country. Let’s assume the family can save $25,000/year. In four years, they would be able to purchase the home in cash, but would have spent $31,200 in rent money versus ‘throwing away’ $16,000 in interest and closing costs. Additionally, if a family were able to save $25,000/year, they would be able to pay down a mortgage much more quickly than the 10 year period, making the interest they owe even lower. Conversely, if a family were not able to save that amount per year, it would extend the amount thrown away on rent even more. Even when you factor in cost of home maintenance, a mortgage represents a significant savings.
    My point here is not to say that what you did was ‘wrong’ but to clarify that a mortgage, especially on a home within one’s means, is not the evil that some portray it as and can, in many cases, be a much better long-term financial choice than renting and purchasing a home with cash. Everyone is in a different position and it seems like you made the best possible choice for your family. Congratulations on your journey to financial freedom!

    • Thanks for the input. I agree that we were “throwing away rent money” but over the course of 18 months we paid rent, we only “threw away” $7200. That’s a lot when you look at it that way but we started searching for an affordable house when we moved her but didn’t find one until the 18 month mark. We definitely would have purchased a house much sooner if one was available but we live in a town of less than 1,000 people and we wanted to make sure we were getting a good deal on a home.

      All I know is that by looking at our tax forms each year, for 8 years and seeing that $8,000-$9,000 a YEAR in mortgage interest was enough to make us rent for awhile.

      Thanks for the input. I would say that paying cash for a house isn’t for everyone but it was definitely a goal we had an it was an amazing feeling when we achieved it. :)

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