Our 1st Year of Debt Freedom: We Made Some Mistakes

Our "debt free scream" with Dave Ramsey

Our “debt free scream” with Dave Ramsey

Today is the one year anniversary of our debt freedom! We celebrated one year ago today by driving out to Tennessee to the Dave Ramsey headquarters to tell our story live on the radio and scream to the world, “We’re Debt Free!”

That moment was something we had looked forward to for nearly three years as we struggled to pay off over $60,000 in debt. Becoming debt-free was exhilarating and, looking back, I think we got a little “drunk” off the feeling and made some poor choices. We share this with you in hopes that you can side-step these mistakes on your journey to debt freedom.

Mistake #1: Not having a fully-funded emergency fund. 

Step Three of Dave’s baby steps prescribes you save up three to six months living expenses for emergencies. We were so excited to FINALLY be free from debt that we minimized this crucial step in the program. Immediately following becoming debt-free, we purchased our truck and RV… And two months later we were on the road!

Looking back, we should have waited until we had at least $10,000 in the bank before we did anything else. But that’s not what we wanted to hear at the time. We had just scrimped and scraped our way out of debt and we wanted to celebrate. Understandable. But as Dave always says, without a full-funded emergency fund as your rainy day umbrella, you are just inviting trouble.

And trouble is what we got. This last year has been fraught with the unexpected; little “emergencies” that have constantly derailed our progress. The timing belt went out in our car, the transmission went out on our truck, we’ve had to buy 10 new tires and replace the motor in our slide-out. And that’s just the big things.

We are still working on completing baby step three. I would advise anyone who is newly debt-free to continue with intensity until you have completed this critical step.

Mistake #2: Not sticking to a budget while traveling. 

We spent three months on the road after becoming debt-free. During this time we lived within our means, but we did not live on a budget. I think we wanted to cut loose and have some fun after being so tight for so many years. Looking back, I wish we would have settled on a budget for our trip, which included extra money for fun but also allowed for some continued saving.

Since we basically spent every penny during those three months, we were left hanging when our transmission went out mid-trip. We had to borrow $5,000 from Caleb’s dad just to get it fixed. That debt hung over our head for the remainder of the trip and made all our indulgence seem much less sweet.

Mistake #3: Continuing to use a credit card. 

I know, I know… True Dave Ramsey followers cut up all their credit cards. Well, truth be told, Caleb was in love with our REI Rewards Visa and was reluctant to let it go. We were really good about using for budgeted monthly expenses and paying it off every single month… For a while.

Recently, we have slacked off and forgotten to make our payments on time, which has caused us to be charged interest and late fees. Ouch! I think we are finding out the hard way that credit cards just aren’t working for us. We plan on cancelling our beloved REI card posthaste.

I hope what we’ve learned will help you on your journey to debt freedom. We certainly have learned the hard way! We are staying parked this summer (even though we have an itch to travel) because we really want to buckle down and get that $10,000 in the bank. It’s going to take a while, but the piece of mind will be so worth it.

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