Talking Finances

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I think it has become really uncommon for people to meet at the altar with a clean slate. Of course this is true in every sense of the word. Everyone has a past. But I'm thinking, in particular, financially.

When Cody and I were married, we joined our hands, our hearts, and our mountain of debt.

To be specific: $134,065.10

Finances seem to be such a touchy topic for some people and I fully realize that people will pass their judgments about that number. However, Cody and I don't really care about putting it all out there. I find finances interesting and really don't judge people by their financial position or care that much about money so I don't mind putting it all out there. So, full disclosure, here is how it broke down:

My student loans: Approx. $49,000
Cody's student loans: Approx. $44,000
Cody's car loan: Approx. $4,700
Personal loan: $24,000
My car loan: $12,000
(The car loan was actually just taken on in December of 2015 so we didn't have quite as much debt as soon as we got married)

You might wonder how on earth we could have incurred that much debt. Or you might not be shocked at all. The average American student that graduates with a bachelor's degree is about $29,000 in debt. In Minnesota it's over $34,000. Cody's student loans financed his bachelor's degree. I was extremely fortunate that my parents paid for my undergraduate tuition. So my student loans are from my teaching license, master's degree, and additional license after. The average American household also has over $7,000 in credit card debt. Our personal loan was actually consolidated immediately after got married and I cannot remember who had what debt exactly. I know that we both had credit card debt, Cody had debt from auto repairs, and we had wedding and honeymoon expenses.

If we paid all of these on schedule, we'd be out of debt in 2022. We also hope to be homeowners one day so that would add an enormous amount of debt. All of that is extremely depressing and discouraging. Being in debt for another 6 years is not something we're pumped about so in lieu of waiting to hit the jackpot we had to come up with a plan.

We did a pre-marriage seminar through our church. They recommended Dave Ramsey's 7 Baby Steps for your finances. They are as follows:

1. Save $1,000 for an Emergency Fund
2. Pay off All Debt Except House using the Debt Snowball
3. Establish 3-6 Months of Expenses in Savings
4. Invest 15% of Household Income in Retirement
5. College Funding for Children
6. Pay Off Your Home Early
7. Give

When we got married we had zero savings. We had bottomed that all out and then some for the wedding and honeymoon. And honestly, I don't regret that at all.

We focused first on Step #1. I can't remember how long it took us to reach $1,000 but it felt quick. I want to say, 3 months or less, but maybe it was more.

Another step we needed to take was setting a strict budget. I might do a post on how we manage that. I'm embarrassed to say that before we got married, I had no budget. Cody has been a huge help in making me more financially aware.

Step #2 is obviously gargantuan for us. We started by paying just an extra $50.00 per month toward our smallest loan. And whenever we had some extra sum of money, whether a gift or from work, we tried to put it toward than loan. We paid off our first loan in July 2015. We then took than payment amount and put it toward our next smallest loan. The payment then increased and due to some extra money from Cody's work, we paid off the next one in August 2015. As we move forward the loans get bigger but taking the payment of the previously paid off loan and putting it toward the next one causes the loans to begin to snowball and the interval between payoffs becomes shorter. We paid off our 3rd loan in January of 2016.

We have 16 student loans, 2 car loans, and a personal loan left. It definitely still feels staggering. But it can only get better from here. For the most part, our income will likely only increase. In fact Cody just got a new job with a great pay increase so a portion of that will go to increasing our loan payments.

The good news is that in our first year of marriage we paid off $18,836.22

Since then (November 2015) we have paid off another $4583.77

In total we have paid off $23,419.99.

Current balance is $107,319.04.