In 2010, my fiancé and I were living the blissful “normal” life. We were dual income, renting an apartment, putting away maybe 3% into 401ks and thinking we were doing things right. I also had a student loan still hanging around, credit cards, vehicle payments and no real savings to speak of.
Then I fell in love with a foreclosure, a huge old farmhouse on 5+ acres. We went to look at it and I knew it was “the one” as we drove in the driveway.
After a long process of negotiating with the bank and waiting for our mortgage to go through, we finally closed on our house in January of 2011. There were about three days of happiness followed by a blind panic as we found the pipes leaked, it cost $300+ per month to heat the house and the finances were TIGHT. We put very little down on the house and rolled some expenses into the closing, leaving us with a mortgage of $178,000 on a house we bought for $162,000. We had taken out a 30 year mortgage at 4.75% and 30 years of payments was starting to feel what I imagined drowning to feel like.
At the same time we were trying to plan a wedding and were lost about how to stay on top of all the bills. We were using credit cards to get the house livable and wondering how in debt we were going to be after a wedding too.
I found myself in front of a computer and typing in “how do I pay off my debt?” into google. And then came Dave Ramsey.
I poured through the website, I devoured the baby steps and I started listening to the show daily on my drive to work. Mr. poniesandFIRE thought I lost my mind, I was so hooked. I ordered the FPU home study and Mr. poniesandFIRE agreed to watch the DVDs and follow the plan.
What came next was cash flowing a wedding in the end of 2011 and then going full tilt on baby step 2 in 2012. We paid off three or four small credit cards, my student loan and then the vehicles. Mr. poniesandFIRE worked a ton of overtime and I started a side business. It felt like nothing got done on our house that year, but so much got cleaned up on our finances.
1. Budgeting – we always had a general plan for our money, but it wasn’t always accurate and we got off track on things like groceries. We got serious on tracking our spending and as soon as we got paid, we sent payments to debt rather than wait and watch the money disappear elsewhere.
2. Working together – doing this year one of our marriage really built a team between us in terms of our finances. We had the normal disagreements, but having a common goal made all those disagreements easier to get through. It was “us versus the problem” rather than me versus Mr. poniesandFIRE.
3. Things got streamlined. It was like minimalism for our finances. Small monthly expenses were cut, such as subscriptions we barely used. Each debt that was paid off was one less bill to pay each month. It seemed like just having less bills to manage was weight off our shoulders.
Where We Are Now
In 2017, we decided we needed to refinance our house. The 30 year term still felt overwhelming to us. Paying off a house early is a touchy subject in the FIRE community, but for us, it feels like something we wanted to do sooner rather than later. We refinanced with a local credit union to a 10 year 3.25% fixed rate and currently owe $136k. Each monthly payment now makes so much more headway than the 30 year did, even after being six + years in and making some extra principal payments.
During the process we had an appraisal done on the house and its current value has grown to around $249k. That gives us a positive equity of around $112k to date.
We have one used paid in full vehicle (Subaru) and a 2016 diesel truck that is financed with positive equity at 1%. The truck earns an income as part of my side business, which partially justifies the payment, but at the same time, it is hanging over our head and likely will be up for conversation soon on if we pay it off sooner. Obviously purchasing the truck after paying off all our debt was a step away from Dave Ramsey, but personal finance, is, above all else, personal.
The intention is to keep this truck as long as possible. There will be no trading it in for something newer and no more vehicle payments after this one.
I am putting 13% into my 401k with a 4% match. Mr. poniesandFIRE is putting away 10% with a 3% match. Current combined values is around $170k.
We just started a 529 for our son, with under $1,000 currently.
We have a fully funded emergency fund at $10,000 and additional cash saved for some small home improvement projects.
Current net worth (includes vehicles and equipment, pony, real estate equity, investments, cash) = $370k