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2019 Debt Freedom Plan Update

This post may contain affiliate links. That means if you sign-up for services or make a purchase after clicking on a link below, I may earn a small commission at no extra cost to you.
Also, I am not a financial advisor. I'm a blogger who LOVES to share how I manage the finances for my household.

October 18, By Kristia Leave a Comment

Our Debt Freedom Plan has been a long winding road. The journey started in 2012 when we bought an office building for our business and then found ourselves with a lot of debt and not enough cash flow.

We were trying to be responsible. We ran the numbers of the purchase and they looked great on paper, but paper doesn’t account for a new server, a roof leak, unexpected medical bills, and other calamities.

To ease my anxiety about our new loans, we took the Financial Peace University home course and it changed how we thought about debt. From what we learned in the course, we wrote our Debt Freedom Plan. We loosely based our plan on Dave Ramsey’s 7 Baby Steps, but modified them to address our needs and lifestyle.

A lot of life happened over 7 years and our plan changed slightly, but our goal remains to achieve complete freedom from debt.

Updates on our Debt Freedom Plan over the years:

  • Our Original Debt Freedom Plan  – written in March 2014
  • 1st Update in June 2014
  • 2016 & 2017 Update
  • 2018 Update
  • Our 2019 Financial Goal

Happy New Year’s 2019:

In January 2019, we were down to one final non-mortgage loan, so we created just one financial goal for the year—-to pay off that last non-mortgage debt by December.

We were mentally exhausted from the previous few years with paying off debts and medical bills, but in January 2019, I could see the home stretch and felt really comfortable that we could have this last non-mortgage loan paid off by the end of the year.

….cue the Jefferson Starship song, “Nothing’s going to stop us now”…

Fast forward to September. I turned 50…I know, I know, I don’t look a day over 30, because 50 is the new 30…

50th birthday cards

…anyway, on the last Friday of September, we sent in the very last payment to my husband’s student loan and our goal of paying off our non-mortgage debt by the end of this year is complete!

I could hardly focus on anything else on that Friday and I shed some tears. After years of scrimping and saving and not spending extra money on things, we have achieved the biggest financial goal we have ever set for ourselves in our 19 years of marriage.

We still have a mortgage, so we’re technically not DEBT-FREE, but we paid off over 6 figures of business debts and student loans since 2012 and have wiped out our NON-mortgage debt.

We can now move on to other financial goals.  We still have a mortgage, however I feel like we can switch gears to be less focused on paying off debt and more focused on saving money, building our net worth and retirement, setting up a plan for college for our girls, and having some fun.

I’ve already started thinking about revisions to our plan..

Our Debt Freedom Plan (October 2019 Update):

Exact numbers have been omitted at this time. And for context, you might want to read through the list of posts above.

1 – Save a starter Home Emergency Fund

Dave Ramsey suggests to have a starter emergency fund of $1000 while focusing on paying off non-mortgage debt. We are self-employed, so we feel the need for a much higher amount. We have definitely dipped into this fund often, so I’m glad I strayed from his advice here. When we do dip into it, we replenish as soon as possible. | DONE

2 – Increase business emergency savings. | DONE – 6/1/2014.

3 – Cash flow necessary business expenses and renovations. | DONE 2015.

4 – Pay off all Non-Mortgage Debt. | DONE September 2019!!!

Our non-mortgage debt was in the six figures when we started this plan and included 5 loans. We followed Dave Ramsey’s debt snowball method. We started with 5 loans and paid the smallest loan off first, while making the minimum payments on the other 4 loans. When the smallest loan was paid off, we put that minimum payment towards the next smallest loan. When that loan was paid off, we put that full amount towards the third loan and this continued until September 2019. It turned out that our last loan was also the loan with the smallest interest rate, so the math nerds can relax. 😉

We engaged in many strategies to find extra money to put towards the debt:

  • We cut cable TV and our land line.
  • We limited our dinners out.
  • We cut our gym memberships.
  • I menu planned consistently to keep our grocery bills under control.
  • We switched to a health sharing ministry that helped reduce our monthly premiums.
  • And as you’ll read in #7, we also stopped contributing entirely to our retirement for a few years.

What we are doing with extra money now that #4 is complete:

Now that #4 is complete, we have decided to make #5 a priority. Once that is complete, all extra money will be split between #6, 7, 8, 9….at least that is the plan for now.

5 – Cash flow a family trip to celebrate. 

We never stopped taking vacations, but our trips were mostly camping in our pop-up or renting a beach house with other families. We’re ready for a big trip to celebrate our accomplishment and we are already planning one for over the holidays.

6 – Increase our emergency funds for the home & office to 3 – 6 months worth of expenses.

We have always had more than the $1000 starter amount that Dave Ramsey suggests, but not quite 3-6 months of expenses.  We have dipped into our emergency fund so often over the years, so we will increase these funds to at least 3 months of expenses and then gradually increase to 6 months.

7 – Increase retirement contributions to at least 15% of gross income.

In 2013, we took a controversial step and stopped contributing to our retirement plans, so we could focus on steps 2-4. I had been regularly contributing to my retirement funds since I was in my mid-20’s (before marriage and children), so this was really hard for me, but we needed the funds to slash our non-mortgage debts.

The good news is that the consistency my husband and I both had prior to 2013 allowed us to build a decent amount in our retirement. The bad news is that we were in our prime earning & investing years when we stopped contributing…just more motivation to keep going with this plan.

While we don’t regret the decision to pause retirement contributions, since it’s a big reason why were able to pay off so much debt, we did start to feel uneasy.  In November 2016, we started contributing again to our retirement. We didn’t max out our contributions, but we were at least contributing something and that made us rest easy.

8 – Start college funds for our two girls.

We’re way behind on this. We have zilch set aside for our girls’ college. We’ll need to get creative.

I just started reading the book, LAUNCH: How to Get Your Kids Through College Debt-Free and Into Jobs They Love Afterward. (Amazon affiliate link) It’s a pricey book, but a friend recommended it to me and said, if the book helps us get just one scholarship, it will pay for itself.

The best time to start reading it is when your kid(s) are in middle school, which is right where we’re sitting! The book walks you through the years starting in middle school and gives you a step by step check list. I’m only on chapter 3, but I think it will be worth the purchase.

9. Start Additional Savings Accounts

We have several things that we want to start saving for, such as a car replacement fund, some home repairs/updates, a new camper, and travel.

10 – Pay Off Mortgage Debt. 

We want to put the minimum payment of our last non-mortgage loan towards our mortgage and will hopefully have our mortgage paid off by the time our oldest graduates from high school in 2024. We’ve been in our home since September 2001.

11 – Cash flow a family trip to celebrate complete debt freedom. This is a bit far away, so not sure of the location, but it will be EPIC.

12 – Breathe and see where life takes us.

Since 2012, there were days (and years) when I was frustrated that things weren’t going according to plan. It seemed like step 4 were taking FOREVER! We had to pivot many times during the years, but that’s how life rolls. For the time being, we’ll continue to live well, but frugally. It’s what got us to this place of NON-mortgage debt freedom, which feels amazing, so I can only imagine what complete debt freedom will feel like.

I hope that I don’t come across that completing #4 was easy. It was not. We said NO a lot! We held back on a lot! We cut back on a lot! I’m working on a post about all of the things we did to pay off our debt. We scrimped and saved, but we also increased our earnings from our business and side hustles.

It was a grind, but here we are, and #4 is DONE!

Additional related reading:

  • Debt Free Stories
  • How to Achieve Your Financial Goals (tips from the achievers)
  • 5 Steps to Crush Debt

Filed Under: Our Debt Freedom Plan

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