Debt #2 is gone

At the end of September, we were able to pay off the second to the last student loan. I think the beginning total was something like $9k. I’ll just go ahead and overshare with actual rough totals:

Debt #1 – $6k, paid off in August 2010
Debt #2 – $9k, paid off in September 2011
Debt #3 – $38k, to be paid off in 2013

It doesn’t seem all that long ago that I wrote that we’d paid off Debt #1, and it really wasn’t. How did we pay off $15k in less than 2 years? And how will we pay off $32k by 2014? By being very lucky with our jobs and living well below our means. We’re fairly average according to Dave Ramsey, with being able to get through the Debt Snowball in three years–$53k in three years doesn’t sound too shabby.

I recently heard that students shouldn’t borrow more than they will make in their first year working. After I thought, “that’s impossible,” I realized that this holds true for both my spouse and I. He made more than $15k his first year after he finished with school, and I made more than $38k. And, with not changing our lifestyles from being students to part of the full-time workforce, quickly paying off the debt and saving over $25k in interest payments has been marvelous.

First things first

My partner and I make an average amount of money. He works for a non-profit with troubled youth, and I work for a county (government, sort of) entity in an administrative position. I never thought we’d be rich doing these jobs, but we get to help a lot of people and ‘make a difference’–which means, to most people, sacrifice wealth for the good of others.

However, one of the things I learned (from Dave Ramsey, one of my heroes, as you’ll learn from my writings here) is that the best wealth building tool we have is our incomes. Dave Ramsey basically says to do what you love, do it well, and you’ll make money from it. You may not make the most money of your friends, but that’s not the point. The point is to be the best steward of your money that you can possibly be, and live well below your income. This is tough in our society, always wanting the new toy or the new outfit that will supposedly make us happier and better human beings. But we also know that’s not really true. My husband’s grandmother was a child of the depression, and my husband grew up knowing to save aluminum foil upon penalty of death. It is possible to make do with less than we’re told we should have.

In order to do this, you may have to become a bit obsessive. I use Mint.com for this purpose. It lets me see every account we have (bank accounts, IRAs, credit cards, student loans, etc.) on one screen. It’s so simple, it’s stupid. And it should be! Once I could see how much we were spending in certain categories, it made it easier to try something else. Who wants to spend 1/3 of their income on eating out? Not me! This month, I’m attempting the “cash only” envelope system for eating out, amusement, and clothes. When the money’s gone, it might hurt to say no to hanging out at the bar with friends, or maybe I’ll be able to leave $10 for the last weekend in May for that very reason.