July 11, 2008

Debt Free, Our Story

This post is dedicated to Brittany.  =)  This is our story, in a nut-shell, of how we graduated from school debt free with a fairly decent amount of savings. It will probably be really long so feel free to skip it. Although for those of you who stick it out, you will probably be disappointed by the end of the story since we didn't have some great miracle plan that we used. We mostly just had a few things going in our favor. Like, we didn't do law school or medical school and we never had a single medical emergency. (and no, multiple pregnancies don't count as a medical emergency especially since we had all the kids on Medicaid)
For starters, Luke already had the truck when we got married. He had only taken out a small loan on it since he had paid for most of it in cash and he only had two payments left on it. They were in yearly installments which gave us plenty of time to prepare for them. Other than that, he came into the marriage without debt. I didn't have any whatsoever even though I had been at BYU for two years. My Grandfather had set up some money for each of us grandkids and had put it in the stock market where it grew over the years. When the market started going down, my parents pulled them out and put the into CDs and said we could use it for either missions or weddings. Well, since I went to BYU at age 17 I wasn't looking to do either so I used the money to pay for tuition. And of course I did the normal, take 15 credits and work 20 hours. So, I only used the money for tuition, and then I worked to pay for rent and everything else. 
When Luke and I got married, he said that we were going to put everything I made into savings so we got use to living off of one income, no matter how small it was. He was making about $8.00 an hour and I was making about $9.45 (no, I wasn't working at the Cougareat anymore, I was working in Special Collections in the library)  Not bad for an on-campus job. Anyway, it was pretty easy to do that with just the two of us. We bought cheap groceries, paid rent, went to the dollar theatre, and spent no money anywhere else except to visit family. 
Then, 4 months after we got married, I was pregnant with Savannah. We both worked full-time up until I had her in August. All the while, everything I made went into savings and also, some of Luke's money. Since we had direct deposit we just set it up so certain amounts went into savings automatically so we just pretended that whatever was deposited into our checking account was all we had. 
We got on Medicaid so having Savannah didn't cost us a single dime. Of course, we had to buy all the baby stuff ourselves so we got a really cheap travel system (stroller that has a car seat that snaps into it) which is still the only stroller we have by the way, and a pack-n-play instead of a crib. We had decided that a good digital camera would be a better investment so we could record all our memories. We opted for that over a crib.
By that time we qualified for pell-grants so from here on out we got full-tuition grants. 
I was determined to finish my degree so for the first 8 months of Savannah's life she attended BYU with me. I wasn't working and we lived on Luke's small income, pulling from our saving when we had to. 
Summer of 2005 we moved to Wyoming for an internship. While we were there we got our first crib. Luke's mom knew someone who was throwing one away because it was broken. So, she picked it up for us. Is it ugly? Yes. Do I like it. No. Was I grateful to have it? Absolutely. Do kids really care about what they wear or what they sleep in? Not at all. Joseph is still sleeping in it. 
The Fall of 2005 was kind of rough. I had to take my last on-campus classes since I was pregnant with Joseph and we only had the one car. Since it is impossible to find a parking spot in the middle of the day I had to walk to campus. Not that that in and of itself is bad but we were new to the ward since we had left for the summer I didn't know anyone nor dare ask anyone to watch Savannah. Instead, I had a friend who lived in the tree-streets (the ones across from the creamery on 9th) who watched her for me. Thanks Sara Lyn! So basically, I loaded all my art stuff and Savannah into the stroller, walked a good 45 minutes to her house, dropped Savannah off, walked another 15 minutes to class, did my three hour art class, walked back over, picked up Savannah, then walked ALL the way back up that awful, hateful, dreadful hill, pushing my stuff, Savannah, and of course I'm pregnant, in the middle of the summer heat. I truly hated it. Of course, then it got cold and that wasn't exactly fun either.  It was pretty rough fall, but we did it!
When we got our tax-returns, which included child tax credit, instead of spending it on stuff, we put it away into a CD and pretended like we never got our hands on extra money since we knew we would need it later. These are all short-term CD's by the way.
By the end of summer 2006, we knew we wouldn't make it through the fall. We had depleted our immediate savings (still pretending like we didn't have money in the CD) and we were worried. It had become our goal to graduate debt-free and we prayed all the time for it. I had been trying to make a little extra money on the side. I tried selling my stuff at Farmer's Markets, I was doing on-line surveys and I was getting a little extra money here and there but obviously not enough to do anything with. It really become sort of my spending money so I wouldn't feel guilty for taking it out of the budget. If I wanted something cute for the apartment or if I needed new clothes, if Luke wanted something, or the kids, that is where I got the money from.
Anyway, I had gone to my old-bookbinding teacher for help with a project someone had asked me to do. Anyway, long story short, he said they needed a Bookbinding teacher, there at BYU for the fall. I couldn't believe it! It was an answer to our prayers. It was an evening class for 4 hours, once a week so I wasn't gone much at all and I made enough to cover rent and utilities for that semester. I believe it was about the end of this semester that I also started doing art work for Latter-Day Village.
The following semester, with child tax credit and earned income credit, we were saved again. Of course by this time we had discovered we were pregnant with Jacob. 
Somewhere in here is where the second car comes in. That old Buick actually belongs to Luke's parents. Since everyone had new cars it wasn't being used so we were going to buy it from them but they assured us it wasn't worth buying! LOL! So they offered it to us to just drive. It was a much needed blessing. Especially since it was getting really difficult to make all the doctor's appointments and things playing car tag all the time.
Well, Luke finished his undergrad just before Jacob was born. Now we had grad-school to worry about. We opted to stay at BYU because it was SO much cheaper than anywhere else and with three kids you couldn't beat the cost of living. Luke applied for this half-tuition scholarship and some kind of Civil Engineering scholarship. He got them both. While we still had to pay some tuition, obviously these scholarships saved us. Well, at this time, Luke decided he was going to quit working so he could concentrate on his 13 grad-credits. I was able to teach Bookbinding again that Fall, which of course, saved us. Actually, I think Luke was a T.A. so I guess he worked about 10 hours a week.  
So, we made it through those last two graduate semesters thanks to our savings, me teaching, and tax returns. 

So, we had done it. Graduated debt-free with a decent amount in savings left over. I really don't know what to say. We really didn't buy much. Every single piece of furniture we own was bought on super clearance. There are only three things in my closet that I have bought in the last 5 years that cost more than $30. I even went and checked so I wouldn't be lying. 
We were on WIC so we got all our formula for free, thank heavens, and of course the little bit of extra groceries was nice.
We have also NEVER once owned a credit card. As strange as this may sound to people, we simply cannot wrap our heads around the idea of spending money we didn't have. It really just doesn't make any sense to us. So basically, if we didn't have the money, we didn't buy it. 
I feel we were very blessed. And when I say that, I do not mean in any kind of way that we were blessed more than someone else. It was just that, since it was a very specific goal of ours and we worked for it and prayed for it, I know the Lord helped us achieve that goal.
I believe people largely underestimate how quickly those pennies build up.  I actually made most of Savannah and Jacob's baby food since it was SO much cheaper to do that than to buy it. I even made her wipes for a while. We always bought the cheapest brand of diapers and wipes. We rarely bought snack foods at the store since they are so expensive, and I don't think we ever bought produce that was over a dollar a pound! We rarely went out to eat unless it was from a dollar menu, we rarely went and saw a movie if it wasn't in the dollar theatre. I have discovered that, for me, since I don't have sensitive skin, shampoo makes a great face wash, cheap make-up works just as well as the expensive kind, and there are so many other female toiletries that are simply a luxury for fun instead of a necessity. For a while, before we had a good savings going we set up a budget and stuck to it pretty tight. We watched every penny and categorized it. We don't really need to do that anymore but every once in a while Luke likes to figure out where all of our money is going so he know where we need to cut back. 
I'm a firm believer that saving really isn't as hard as people think it is. There were times we were only putting $10 a paycheck into our savings but at least we were saving! Its probably just that if you're not use to doing it, it can be hard to stick with. 
Of course we spent money on fun things, its not like we locked ourselves in our apartment or anything. In fact, there were times when we spent a lot of money on unimportant things, but we always made sure it was never more than what we had or could afford.
Well, that's our story in a nut-shell!
Since we are on the subject of money, I just have to recommend one thing, and I don't do this too often. After we moved here to Idaho, Luke's parents gave us a book to borrow. Its called, "The Total Money Makeover" by Dave Ramsey. The book is mostly about getting out of debt and since and I have never had any I wasn't sure why they gave it to us. But, boy am I ever glad that they did! This guys goes into extreme detail about credit card and debt myths. It seriously is the most amazing book. We almost fell for the now common opinion that you have to have a credit card in order to get credit to buy a house. But he destroys that myth so easily. There were so many other things in that book that have helped us get ready for the future. 
He has a saying, "Live now as other won't, so you can live later as others can't". I would recommend this book to anyone! Whether you are looking to get out of debt, get some savings, figure out insurance, or learn about investing, this guy has it all! I would really, really encourage you all to just read it, that's all, just read it. 
Anyway, I guess I'll get off my soapbox now!  =)

8 super cool people speak:

John and Jami West said...

WOW! I had no idea you lived that way. I know this sounds seriously cheesy but I mean it... your story is inspiring! We don't have a lot of debt, but we have some. We are working so hard to pinch pennies and get it paid off. It feels good to see those student loans go down and car payments decrease. Thank you for writing this because it motivates me to do better. I have read that book as well and it really is amazing! Everything is true. We do the cash budget with envelopes and don't even use a debit card or anything. If we run out of cash we pull it from another envelope and work it out somehow. It's made us realize we were spending way too much on entertainment and food.

Mama Smith said...

EXCELLENT post, Sarah...Hope everyone will read your entire story...I will look into the book you mentioned...No matter what age we are...we can always LEARN something of VALUE...(smile)

Brittney said...

Thanks for posting that just for me!! And it was so detailed and great! I could tell you guys were very good at saving money - but I wanted to hear about it from you! I think it's so important to save also. And you feel great when you know you have money waiting for a rainy day.

I have to say we do have multiple credit cards, but we use them like cash. We don't use them unless we already have the money in a bank account. I like credit cards because of the rewards, the convenience, and the delayed payment. It's sort of an interest free loan (or actually you even get some interest because of the rewards). Many cards will give you up to 5% cash back on certain purchases. But I can understand not wanting to use credit cards too.

Congrats on graduating debt free. You are both obviously excellent at managing money and are able to realize that material things are not important.

Monica said...

That is really awesome! I totally know that the Lord blesses those who work hard and live within their means. Good Job!

Kelly, Matt, Kate & Isaac said...

Wow you guys are awesome! We definetly aren't going to be debt free when we are out of here, but it's amazing how the Lord blesses us for doing what's right!

Dan & Melissa said...

That is such a motivation for me...Dan and I are out of credit card debt and I'm so grateful for that. But we still have much to learn about savings. I think I'm going to read the total money makeover. I miss you guys. You were always a great example when it comes to money. You can feel so proud of yourself.

the Gardners said...

Wow! Thanks for posting that. It's always nice to get a different perspective and see what others are doing, so you know you are doing everything you can to save. So who did you do the online surveys through?

Serene Designs said...

The best survey companies I have found, where you actually just make money from doing the surveys instead of having to sign up for something or where you just get entered into drawings, were:

SurveySpot
Your2Cents Survey Center
MindField Online Internet Panel

For points that you can redeem for cash check out:

Synovate
Lightspeed Panel

One other survey site that does points for stuff is:
Zoompanel

The only reason I like to do them is because I like to get free DVD's with my points.

I hope that helps!

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