This article is part of our highlight May Money Stories series. This month we are featuring guest bloggers who will share their own true money stories and their personal journeys to overcoming debt. Please check back to our blog every Tuesday of this month to read our latest guest feature.
We wanted to take some time out and share our debt free story with you. We both lead two different lives when it came to handling our finances. When we got married almost 10 years ago, we had to learn how to merge our two lives together physically and monetarily. It was no easy journey by far, but it was well worth it.
His Story – Talaat
I guess the debt started with me and I’m the debtor. I grew up in a household where my parents were very frugal and money conscious, but they never really explained to me what frugality was all about. As a young child, I always saw it as being cheap and an unwise viewpoint of money. I somehow built up resentment, and when I left the house and enlisted in the army at 17, I went out and lived on my own. I was making a level of money that I’d never had before because I was so young and unfortunately, I was not very wise with my money at all. I took out every loan you could possibly take and had credit card debt, car payments, and furniture payments. I created a downright mess for myself financially because I didn’t know what I was doing. It just got out of control and when I finally woke up, I was well over $30,000 in debt.
I really had no reason to be drowning in debt other than the fact that I was a reckless spender. Most of it was just not having a plan, not having a budget and not having a focus. So I began to just dive headlong into researching information to figure out how to become a better manager of my money. I started reading a bunch of books and formulating a plan. The fact that I was about to get married exhilarated my desire to figure things out quickly. I didn’t want my soon-to-be wife to know that I was not good with money. I wanted to come into the marriage with a financially clean slate.
Getting married? See How to Successfully Merge Finances with Your Spouse >>
Her Story – Tai
I come from a family of five children and I have an identical twin sister. We grew up in a frugal home and both parents worked outside the home. They didn’t buy lavish things for us. On an average day, we didn’t just go to the store and buy a toy or even an outfit. Christmas was big because that’s when all the gift giving was done. I grew up always thinking my parents just didn’t have the money, but in actuality, they were just being wise. Growing up, it was a little difficult as a child because we didn’t have everything that everybody else had, but at the same time, it was my normal. I can remember being a sophomore in high school thinking I wanted to go to college, but I didn’t want to go into debt to do it. I didn’t want a student loan. I remember feeling that either you’re going to have a hard time and struggle a little bit figuring out ways to pay down this debt while you’re in college or you’re going to have a hard time trying to figure out how to pay it down after when you’re married with children, a mortgage, and all the other responsibilities.
Let’s fast forward to when I was 18 years old. I can remember my parents always saying, “If you guys want a car, we’re not going to co-sign.” I never asked them to co-sign, as there was a standard in our home. I went out one day and purchased a car on my own when I was 18 or 19. I remember coming home saying, “Mom, come outside and look at my car.” I remember her face when she said, “Car? You bought that?” She was shocked; my car was about $13,000. I paid it off at the age of 19 while in college. I worked part-time and with every dime from working, apart from tuition and books, I would pay off that car so I wouldn’t have debt.
My parents did help along the way, but the responsibility for my college life was mine. I knew I would go into marriage with someone like-minded. Needless to say, I had no idea what was going on with my soon-to-be husband. We would talk about it, but he never gave me any indication that he was in trouble. When it finally came out before we got married, I said, “Does this mean he’s not worthy of spending my life with him?” I had a little fear that his debt would now be my debt. I graduated from college with a degree in finance and I was also working for one of the premier financial institutions in the world. I knew full well what the effects of someone’s debt could have on the person that they married. But unsurprisingly, he treated me well. I loved all the great qualities he possessed and didn’t want this debt to be something that was going to hold us back from spending the rest of our lives together. Hence, we came up with a plan to figure it out together.
When you talk about getting married and spending a life together, this includes the debt that one spouse has built up. It is no longer my debt, it becomes our debt, and we tackle the debt together.
When the market crashed in 2008, a lot of information started to come out about being better and wiser with money. However, we’re talking 2004, 2005 and 2006 when there wasn’t a lot of information other than books at the library which we began to read together. Even though she had a good solid knowledge with her finance degree and worked in financial services, we started researching and learning about how to get out of debt successfully.
We were doing this even before we got married and up until the day we wed. We would sit down and watch CNN and Oprah specials about families deep in debt. We were reading and talking and it was fun because we now had a plan. When we got married and walked down the aisle, it was easy at that point. I felt like we could do it because we both were on the same page.
From this point on, we both started tackling debt together. We paid it all off less than a year into our marriage. We worked very hard, and every dime we could squeeze out of our budget was put towards that debt. But that’s not how the story ends. Part of our story is the fact that after we got out of debt, we were still trying to learn about money. We were still young and newly married and we wanted to be smart. We started learning about investing and bought stocks and assets of that nature. One of the ways we decided to invest was through real estate.
At that time in 2007, we elected to give it a shot and took out a $25,000 line of credit to use toward purchases in real estate. We didn’t consider this to be debt because it was equity in our home. In our minds, we had no doubt that we were going to turn around and flip this house real fast to pay up. This goes to show where we were because we had just gone to this seminar about how to succeed in the real estate investment game. They distinguished good debt versus bad debt and we jumped right in. We did a lot of homework and due diligence, and we had a great plan. Taking out the equity line of credit was, for us, an investment. We would have this thing paid off in less than three months we believed, and we would get to pocket the profit. We bought the house, fixed it up, and listed it just in time for the housing market to crash. We were stuck with an additional house at about 28 years of age. By us having our primary residence and now this “investment” property, we were now saddled with two mortgages, two tax bills, and two of everything else. It took us an additional year from what we planned to be able to unload that house. In the end, we ended up losing money instead of making it. However, in time, we recovered and once again became debt free.
We didn’t have children at the time, so we didn’t purposely adopt the mindset of getting out of debt before having children. We wanted to enjoy our marriage a little bit first in the beginning. We wanted to travel and do certain things, and that’s what we did during the first three years. Not having children right away was the result of wanting to build the marriage part as husband and wife before becoming mom and dad. It had nothing to do with our debt. I don’t think you should decide on having children based on the amount of debt you have incurred. You can still have children and work around your debt at the same time. For some people, this may be your story and that’s okay, but the key here is to have a plan.
This is our debt story and we have been debt free for the last nine plus years. We’re here to help you do the same.