dollars & debts with derek @ life and my finances (1)

Dollars & Debts With Derek @ Life And My Finances

My Strategic Dollar Dollars & Debts Interview Series 0 Comments

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Today I have a guest post from Derek at LifeAndMyFinances.com. Derek has an incredible story of being in debt, getting out of debt, back in debt and married twice. Enjoy!

Dollars & Debts – Introduction

  • I’m a finance junkie – a financial analyst by day, personal finance blogger by night. I started my blog in 2010.
  • My life hasn’t been easy or straightforward – I’ve been in debt, married, divorced, back in debt, fought my way COMPLETELY out of debt (including the house), and am now remarried with a daughter, and more financially sound than ever! It’s not exactly how I would have drawn it up, but life is fantastic today.
  • I got my undergrad in finance and went back a few years ago and got my MBA in 2014

When did you start learning about money?

My parents never formally taught me about money, but they were great models of frugality. They worked mediocre jobs, but worked hard for us kids, and we all knew it. Putting five kids through private school (and college!) isn’t easy when your main job earns just $38,000 a year.

To be honest though, I’ve always been interested in money – how it’s earned, how to keep it, and how to have it work for you. I started earning my own money when I was about 12 years old by mowing lawns and building bookshelves. And about 10 years later I found myself building websites instead. 😉

What got you started on your financial independence journey?

First off, fear.

My new wife and I were living in Boca Raton, FL. We had a fancy apartment, fully equipped with a workout facility, tennis courts, and a pool. Man, that was the life…until I realized we couldn’t afford it.

I distinctly remember sitting at my computer, crunching the numbers to see if we could muster up the cash to fly home for Thanksgiving. And that’s when I realized that we were spending more than we earned each month… My stomach was in my throat. And then, to make matters even worse, my wife walked in with the mail…

Her student loans had come due. It was time to pay them back. With what money? I had absolutely no idea.

Long story short, we were gifted Financial Peace University and got ourselves out of debt. That was the start of my journey.

Just a year after that exciting debt-payoff though, my wife decided she no longer loved me. She was leaving, and oh by the way, she wanted half of our estate.

This is the second part of my financial freedom – anger.

I was pissed off at what she was doing, and I just wanted to break all the ties. This meant getting completely out of debt.

With this anger, I got rid of $21,000 in just 6 months, and then I paid off the $54,000 in less than a year.

How much debt did you have?

In total, $116,000 including the house.

The first chunk was student loans. The next bit was the $21,000 to pay off my ex. And the final portion was my house, which we borrowed $75,000 for back in 2011.

How much have you paid off? And what steps did you take to do it?

All of it!

My ex and I paid off our student loans back in February, 2011. I paid her for half the estate in May, 2013. And I paid off the last of the house in December of 2014!

It’s certainly been a wild ride, which at times I wish I had never got on…but without it I definitely wouldn’t have the impact that I have on people today.

Step #1 if you want to pay off debts is, “Know your reason why.”

If you just want to get out of debt because it’s the latest fad and your friends are doing it, you’ll never get out. You need to have a compelling reason why.

Initially, my reason was to survive and to not let my bills (that I couldn’t pay for) take me down. My second reason was to get rid of all the pain tied to my debt. Making that final payment was the start of my new, fantastic life!

Step #2 – “Pay off your debts smallest to largest.”

Don’t worry about the interest rates. Just pay off the little guys first and build up your momentum. It’s the proven way to effectively pay off your debts.

Need some help? Check out this post about the Debt Snowball and download the free tool to enter in your own debts and see when you could pay them all off.

What are your money goals for the next year and long-term?

My wife and I are 32, we have a 16-month-old child, and we are completely debt free. Isn’t that awesome?! Becoming debt-free was a surreal feeling, but we made sure not to pat ourselves on the back too long.

Goal #1 was to bring Liz home so that she could care for our child. We did that by purchasing a rental house in 2015. Check.

Goal #2 is to buy a second rental house this winter so we can pay for our child’s private education (it’s three years away, but why wait to start saving, right?).

Goal #3 is to sell our primary residence in the city and move out to the country. We figure we can sell our house for $170,000 and buy a property with acreage for around $300,000. Sooo

…we’ll be saving for a few years, but that’s okay.

After that, I imagine we’ll just keep chunking money into my 401k and put the rest toward more rental houses. It never hurts to have more passive income! 😀

dollars & debts with derek @ life and my finances

What obstacles have you ran into that you’ve had to overcome?

No matter how many rocks you hide under, life is still going to happen.

You might think you have everything together today and you feel as though you’re in complete control. But you know what? You’re not in control. Heck, you could get sick, become paralyzed, you might even die of a heart-attack tomorrow. My point is, there WILL be obstacles. You just don’t know what they are yet.

My huge one was the divorce. For a while there, my confidence was shattered. I mean, maybe I really wasn’t the man that I thought I was. Maybe this good life that I had is now gone forever.

At that pinnacle point, I really had two choices:

  • Life was over and I’d just wallow through it as best I could, or
  • Life was just beginning, and it was going to be different this time

I obviously chose #2, and life is better than I ever could have imagined.

Any words of advice for those that are afraid of starting their journey or are feeling like they aren’t making enough progress?

Would you rather be in debt, struggling to make payments for the rest of your life? Or would you rather get rid of it all, and live a carefree life without owing a soul a single penny?

Unless you’re mentally disturbed, we would all choose the carefree life, right?

Maybe you want to experience the freedom of no debts, or maybe you’d love to give generously to a non-profit that’s close to your heart, or maybe you’d like to leave a big ol’ sack of money to your children so that you can bless their lives even after you’re gone!

Whatever your reason is, just grab it and run with it. Get started. Half the battle is just taking that scary first step. I highly recommend that you do it today.

Has this message resonated with you? If you want to connect with Derek, be sure to check out his page at LifeAndMyFinances.com or shoot him an email at derek (at) lifeandmyfinances [dot] com.

 

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