View Part 1 of the series on how I become debt free here
A Debt Free in December?
We paid off the first student loan very quickly. It took a few months to pay off the Jeep, and it felt so great to eliminate two payments per month. Then we had the two huge loans next.
We decided to pay off the home equity loan first, A because it had an adjustable interest rate, and the student loan was fixed at 2%. Even though we were putting a ton of money each month towards it, the loan was so high it felt like it took forever. Sometimes I would put money on it weekly to try to keep up my motivation by seeing the balance go down.
We eventually paid everything off but the student loan, but I didn’t want to pay it off. We started putting all of the money into our savings. If we did put all of our money to that debt we would have no cash if there was an issue with the pregnancy. I wanted to make sure we had the money in case we needed it for medical bills.
A Don’t know what to do? Call Dave Ramsey!
So I called Dave Ramsey and asked him what to do. I finally got through and asked him my question about paying off the student loan and becoming debt free or keeping it until the baby was born. He actually said to keep it. He suggested we wait until the baby was born, and until all of the medical bills came in. Then we could pay off the medical bills and the student loan right after.
We didn’t hit our goal. We weren’t going to be debt free when my son was born. We weren’t technically debt free but we had $23,000 in the bank in case anything went wrong. That was a great place to be.
I can’t imagine where we would have been if we didn’t start our debt free journey!
The Next Financial Problem of Quitting my Job
The problem was, even if we paid off ALL of our debt, my husband’s income didn’t cover the bills. I wanted to quit my job but I couldn’t if we couldn’t pay our bills. Cutting our income more than 2/3rds was more than hard. It seemed impossible.
The new goal became to stay home with my son for the first year. Even if I had to go back after that, the first year home to me was very important. I knew I couldn’t keep my current job traveling around the country but if I had to go back to work after a year I could find a job closer to home if need be.
That $23,000 became the safety net. I could use that money, instead of paying off my student loan to pay for bills within that first year if we had to. I called it the baby fund. It would make it possible for me to stay at home. We wouldn’t be debt free, but I would be able to hit my goal of staying home with my son, even if only for a short period of time.
I had a healthy baby boy on December 11th. I was paid 60% of my salary for 6 weeks, and I took 12 weeks off. I figured out that if I went back to work for 2 and a half months then I would be able to pay off the student loan and still have a large enough baby fund to last a year. While it was a very hard decision to leave my three-month-old son, I was able to have my husband with him most of the time.
So I decided I would go back to work and hope that I wouldn’t have to travel for the first few months.
A Debt Free and Quitting My Job!
It’s amazing how things can work out beautifully. I went back to work for a little over two months and did not travel at all. We received our tax refund back. My husband started to book more work than he had in the past.
It turned out that as of April ’07 when my son was 4 months old, we became debt free. We paid off my student loan and still had $23,000 in the bank. The other amazing news was that we had about $6,000 over that sum. Which we then used to upgrade our Jeep Cherokee that kept breaking down. We sold the Jeep outright for $6500, added our $6,000 and was able to get a ’05 Pontiac Vibe with cash.
We were debt free, I was a stay at home mom to a beautiful boy, and we had our family car again. It gives me chills now realizing how everything worked out.
Stay Tuned for the final post How I Quit and Now Live My Passion