(post contains affiliate links:see disclosure)
My family’s journey to becoming debt free won’t make the news. It won’t become a book. It isn’t the type of story you scream about on The Dave Ramsey Show.
Honestly I don’t even like talking about our debt free journey because when I do mention it I can tell it makes people feel uncomfortable. It leaves them grasping for words. There instantly becomes this awkward pause in conversation when I mention it.
In fact I am only sharing it here today because I feel God tugging at my sleeves asking me to talk to you about the importance of handling financial windfalls well, and I can’t seem to write a word about it without first telling you our families story. How we have handled financial windfalls both well and poorly, and what we have learned from our mistakes, and our successes.
If I had to put our debt free journey into a sentence this would be it: My family is 100% debt free including the house today because people died.
Yes that statement is blunt, but making inheritances smell like flowers in spring time isn’t something I can do.
Don’t get me wrong I am so thankful for family members who paid their bills and left no debt unpaid. For family members who left behind life insurance policies to cover their funeral expenses and more. For family members who thought to pay off their homes in full before they passed away so proceeds from the sale of their homes could be enjoyed by those left on earth.
But it still hurts. I never forget the day the inheritance check came from my mother’s estate, I was crying so hard as I took it to the bank that the bank teller had to wait for me to stop sobbing to explain what I wanted to do with the check. She even had to go searching for tissues so I could dry my eyes enough to see the forms I was signing.
In that moment all I could think was “God, would you take this check and just let me spend one more day with my mom”. I know I will see her in heaven one day, but on that day all I wanted to do was exchange that check for another day with her here on earth with me.
But I couldn’t. What I could do however, was make sure I used the financial gift she left me wisely. To make it count. I knew what I wanted to do. My husband had been working 60 to 70+ hours a week for years to pay our bills. I wanted to give our family the gift of a dad and husband who was home more. I knew to do that I needed to reduce our monthly bills and the only way to do that was to reduce our debts.
Our lives before we became debt free
First let me tell you our debt wasn’t high to begin with, we had around $5000 in car loans, $10,000 in student loans and $60,000 in a mortgage. Roughly $75,000 in debt including the mortgage, or $15,000 without. Not large debt numbers, since we have always been thrifty people who have lived on a budget, refusing to carry a credit card balance from month to month. Our month to month payments were right around 25% of our take home pay before overtime and the second job. These numbers sound conservative, comfortable even but we had a few challenges.
One challenge was we wanted children raised in a home with a full time mom present. My husband is an RN, a good job, with good pay, but still one job in a two income world is hard.
We had also been paying cash for me and one child at a time to make the 3000 mile trip to my mom’s several times a year during her 4 year battle with cancer, and that wasn’t cheap.
These trips had left us paying minimum payments only on our debts, which was a first for us in many years of our marriage. They also left us unable to fix a home that was so badly in need of repair the ceiling was falling on our heads (well thankfully just the dining room table and no one was hurt).
I knew my inheritance check was coming months before it arrived and I spent the time praying to God about how use to wisely in a way the would best benefit my family and honor my mother.
Our Plan To Become Debt Free
Our plan ended up being a bit crazy, but it worked. With my inheritance check from my mom I bought a $9,000 home, paid off the rest of our student loans and our small car loans.
The plan was to renovate and then move into the $9000 home. Once moved we would fix the home we currently had mortgaged. In the end we were going to decide which one we liked best, and sell the other to pay off the mortgage and be 100% debt free.
With no debts we would have lowered our expenses enough for my husband to quit his second job and work a 40 to 50+ hour week ( there is hardly an RN position out there that doesn’t require you to work some overtime). The children and I would see him more and yet our family could still be able to live life thrifty yet comfortably.
The plan sounded great but those who have renovated before would have seen our error right away. We were not at all realistic about the cost of renovating two homes. Our money ran out just as the first home was finished.
We were moving into our newly fixed paid in full home and trying to figure out how to raise the cash to fix our original home when my maternal grandmother died. She left the share of her estate that should have been my mother’s to my sister and I.
With a grieving yet grateful heart I took the money my grandmother left me and set aside enough to fix our original home, as well as pay off its mortgage while we were working on it, and the inheritance stretched just far enough to buy a 3rd home for $15,000 and fix it up to rent.
We were now 100% debt free with 2 rentals.
Yes I know our debt free story should end there BUT it doesn’t.
Make sure to read part 2 of our debt free story where I share our $40,000+ stupid tax story, what we learned from it, and how we became 100% debt free again and plan to stay that way.
I mentioned two Dave Ramsey terms in this post, so just in case you don’t know who he is, Dave Ramsey is the author of The Total Money Makeover as well as Financial Peace University and his talk show The Dave Ramsey Show. He shares wisdom on getting out of debt and staying out of debt. You can check him out at Dave Ramsey.com.