Debt Free interview #5: Jeff of Debt Free Squad

 This week's debt free interview is from Jeff of the Debt-free squad blog and vlog. He and is wife paid off more than six-figures worth of debt in a relatively short period of time.

1.      How did you get into debt?  Robin and I were spending $1.22 for every dollar we made and slowly but surely we added an average of $5,000 of debt a year over a 30 year period.  I was a school teacher and my wife worked part-time and we always seemed to run out of month at the end of the money.  We had two kids and we wanted to keep up with the Joneses. (Later we found out they were broke too)  We had a smorgasbord of debt. (car payments, credit cards, Heloc, loan from our retirement account, appliances 90 days same as cash, etc.)  We never really had an emergency fund because we felt that was what credit cards and home equity lines of credit were for. When an emergency came up like tires for the car, Christmas or Vacations we used credit. (None of those are emergencies)  We were brainwashed with the commercial telling us to relax we have MasterCard.  I had an addiction for car lots and the smell of leather as in our 1^st 25 years of marriage we had 37 cars.  At one point we had 4 car payments and were paying insurance on all cars.  We wanted our kids to have the best.  I liken this to my weight – I only put on ONE lb. per year since high school but I had been out of high school 40 years..  It sometimes sneaks up on you.

  

2.     How deeply in debt were you at the worst point?  What did it feel like?  At the age of 55 I realized we were over $150,000 in consumer debt and this was not including our mortgage.  For many years we paid our bills each month and put food on the table.  We were all flash and no cash.  As we were approaching retirement and realized we may be working forever if we did not get our act together it was a pretty embarrassing situation that a couple who was making over $100,000 a year could ever let this happen. 

3.      When did you decide to get out of debt and why?   We finally realized we could not continue to get credit after we had refinanced our home for the 4^th time.  When we moved from California to Colorado in 1999 I had a new Toyota Camry.  Robin had a little Toyota Paseo.  In 2004 we purchased a New Ford Explorer and realized that every time we purchased a new vehicle even though the payments were the same we were increasing the amount of debt we had.  We decided then that we would drive these two cars until they died.  We are still driving these two cars today.  The Camry is now 15 years old and still running and the Ford Explorer is 10 years old.  Both cars have over 145,000 miles on them.  I read the Total Money Makeover by Dave Ramsey in one day and then asked Robin to read it.  It gave us both hope and we immediately started the 7 baby steps.  Step one was to get $1000 emergency fund in place.  We did that rather quickly.  We cut up our credit cards and stopped charging.  We then started Baby Step 2 which was the Debt Snowball.  We started with our smallest debt which was a credit card.  We paid minimum on everything else and put everything we could on that 1^st debt.  Once that was paid off we started on the next card until all of our credit cards were paid off.  We then attacked the smorgasbord of debt from smallest to largest.  We  attended Financial Peace University and we then started to teach the class.  Our debt destruction plan was in full motion.

4.      How long did it take you to get completely debt free?  I would say we seriously started to get out of debt when I was age 55 and Robin was 54.  We were completely out of debt, including our mortgage December of 2012 which put me at 60 years old.  So a total of 5 years to be completely debt free.  During the last 3 years Robin lost her job and I had a $40,000 pay cut.  If this had happened when I was 55 we would have had to file for bankruptcy.  But because we were at a point with our finances that we were living on 50% of what we brought home and giving, investing and saving the other 50% we were able to handle the tremendous loss of income.

5.     What advice would you give to someone trying to become debt free?  I would have them visit the Debt Free Squad Website and start our Free 40-Week Video Series on Becoming Debt Free, God’s way.  We also do one on one coaching and have a 60-Day Budget Boot Camp.  They will actually feel like they gave themselves a raise.  Our 1^st step is to work on attitude and especially if they are married.  They need to be on the same page with their finances.  Our 2^nd step is to get organized and to start with the home office so they can actually find the bills.  Our 3^rd step is to get that Emergency Fund in place and cut up the credit cards.  Maybe they can put one on ice.  We also have a 30-day Budget challenge which will help them set up a REAL Budget.  A real budget actually gives you permission to spend money.  Setting up what we call a Spend Every Penny Budget is our 4^th step.   I would also highly recommend they purchase Dave Ramsey’s Total Money Makeover and read it.  

Thank you Jeff (and Robin by default) for sharing your debt free journey.