Debt. Ugh. That single word is such a burden, a looming cloud casting a shadow over every other thought. The chain keeping you from doing the things you really want to do. We are fighting hard to break that chain but it is a constant battle and a frustrating one. Everyone has a different strategy for fighting that battle and sometimes our looks exceptionally…ineffective to others.
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Remember how I once told you that my husband and I are as opposite as opposite can be except for where it matters? Well, that might not be made more clear than in the views on money we brought to our marriage. I am a saver and as frugal as can be. If I can ever remotely get away with not spending money, I will find a way. I will re-use and re-purpose and save and go without in order to avoid debt at all costs. When I met my husband, I was set to graduate from a private college with a grand total of $15,000 in debt and my goal was to have that paid off in 2 years or less. My husband, on the other hand, was an impulse spender and he would buy things he thought he needed and had no problem spending money on things he wanted. He had $100,000 in school loans plus a balance on his credit card when we were married. We were both unhealthily on completely opposite ends of the spectrum
Needless to say, it was a huge adjustment for us to learn to manage our finances together. I have helped him learn how to make wise decisions about our purchases and look at the big picture and he has helped me enjoy and have some fun with our money. We really do make a great team and balance each other out well. Not just in finances but all around.
Anyway, we obviously needed a game plan. As newly weds with me still in school and Brandon working multiple jobs, we had to find a way to make ends meet. We had a cute little two bedroom apartment with a great landlord that we were able to rent for an amazing price. I continued working on the side while finishing out my senior year and Brandon had a long-term sub position at a school an hour away and then managed the campus’s snack shop at night. I was doing my student teaching so we didn’t see much of each other that first semester. I would do my lesson planning, grading, and studies at a booth in the snack shop just so we could chat a bit if there ever happened to be a lull in customers and then we would head home around 2 am.
One of our wedding gifts was a copy of The Total Money Makeover by Dave Ramsey. I read this during the summer, before the craziness of school started. Most of the ideas in the book were not new to me but it did help us to figure out a specific game plan together and it’s definitely a great book to read if you need ideas on how to manage your money, create a budget, or if you’ve never really thought much about how your money flows in and out of your accounts. We slowly started whittling away at our debt by putting what little extra we had towards one loan. We didn’t really have much, or any, extra our first year but, after I graduated, we both had full time teaching jobs and we were able to get one small loan paid off that second year. And, we bought a house. We had been looking for a place to rent closer to our new jobs but we quickly discovered that a mortgage was much cheaper than rent in the area, by hundreds of dollars a month.
We found a cute little house in great shape but in need of some updating and we started knocking out a few projects here and there. We were also continuing to pay down our loans by putting a little extra each month on one loan. For two years we both had full time jobs and everything seemed to be going great. And then we found out Brandon’s position was being eliminated. You see, the Great Recession had struck just as we were entering the work force and the long-term effects were now starting to catch up. People were no longer retiring. Factories were being closed down. Positions were being cut. And people were continuing to move away to find jobs elsewhere. Less families means less students means cut budgets and less teachers needed. So, the following year, my position was cut at my school as well.
Teaching jobs became very hard to find. I was lucky enough to get a part-time position right way. Brandon continued to substitute teach for the second year in a row while also taking any other part-time jobs he could find. My part-time job turned into full-time the following year with the departure of another teacher in my department. Brandon obtained his class A CDL as another means of income. He was working 4 different part-time jobs. We were doing everything we could to make ends meet and had started building up a balance on our once paid off credit card. It was extremely stressful. And then, after two years teaching full time again, I was unemployed. We had discussed moving multiple times before but we loved the area we were in and didn’t want to leave our friends. We really hoped and thought that the economy would start turning around and we would eventually find full-time employment if we just waited a little longer.
When I lost my job, Brandon was driving truck or working in his family’s vineyard (an hour and half away) in his “spare time” when he was not working his part-time 911 dispatching job which was a night shift. We would go days without seeing each other and it took a toll on us. I knew, without a full-time job for myself, we would have to move. Still, we looked and looked for jobs, any type, in our area.
In a moment of grace, Brandon heard about, applied for, interviewed for, and accepted a full-time job hauling custom-built pontoons, all in a two-week time period. Suddenly, we were going to be moving from western New York all the way to central Michigan and Brandon was supposed to start in two weeks! Now, we had a 2 year old and an infant at the time and there was no way we were going to be able to pack up, list, and sell our house in less than two weeks. So, Brandon helped me with as much as could while finishing out his two weeks at dispatch and then he moved out to Michigan while I stayed behind with the kids for the next three months to pack up our house and work on a few projects to get our house ready to sell.
I would spend two or so weeks in NY and then load up the kids and the car and head to Michigan for a week or so to bring some of our stuff out and just have some time to be together as a family. So, really, the girls and I were kind of living in two places at once for three months. Oh, and a month after Brandon left to start his new job we found out we were expecting baby #3. Surprise!!! Nothing quite like chasing two toddlers around while attempting to pack up and entire house by yourself, all while battling extreme morning (aka, all day) sickness. Fun times!
Well, we finally got everything moved out and the house listed. Unfortunately (or fortunately, depending on how you look at it), the housing market was awful for sellers at the time due to the recession and everyone moving out of instead of into the area and so the house sat…and sat…and sat. For a whole year. During that year, we had all sorts of people approach us about renting our house but we didn’t know anything about being landlords and we really didn’t want to rent a house out from 10+ hours away and we didn’t want to take it off the market if we were to rent it out because our ultimate goal was to sell. And people didn’t want to rent out a house that was still listed for sale.
Towards the end of that year, though, Brandon’s cousin loaned him a book called Rich Dad, Poor Dad by Robert Kiyosaki. You see, Brandon was an over-the-road trucker which meant he was gone for weeks at a time and traveled all over the country. He would often visit family during his breaks if they were near by and one of his most frequent routes took him right past this cousin who had started a rental property business after reading this book and she thought we should rent out our house in NY instead of just having it sit there empty while we continued to make payments on it. Well, Brandon isn’t much of a reader and the title intrigued me (I didn’t know what it was about or where it had come from. I just saw it sitting there since he had left it between trips) so, I picked it up and finished it in less than a week which is pretty impressive for having two toddlers and a newborn to care for. It was a completely new way of thinking about finances, income, and expenses and why to consider self-employment of some sort. I explained the basic concepts of the book to Brandon and then read the entire book out loud to him while we were on a long road trip to visit family. It completely revolutionized our view of money and income and we developed and entirely new strategy for becoming debt free and took our house off the market. We were able to find great tenants immediately and have been renting the house out ever since.
We are still working on paying off our debts but we have a better game plan now. One that involved increasing our passive income and creating multiple sources of income. Right now, we are focusing on passive income through rental properties. It was easy to acquire our first rental property since we had an empty house sitting in NY. We don’t make much from that property but we no longer have an empty house we are making mortgage payments on. Instead, the rent covers the mortgage, insurance, property taxes, and helps us pay a couple of our smaller bills. And, we now have an established history of rental income on that property which set us up to get approval for another mortgage. So, now we own two houses, one in NY and one in MI, but we don’t live in either of them. This is where we start to get a lot of funny looks from other people 😉 The income from the two properties is paying for our rent for the house we currently live in and we are close to having an established rental history on the second property which will allow us to get a new loan. With this next loan, we will purchase a house for our family to move into. The mortgage will be cheaper than renting which will allow us to more quickly pay down some debt and then save up for another down payment. After a few years, we will buy a different house to move into and rent out the other house.
Besides our mortgages, our only other debt is Brandon’s school loans. We just payed off my school loan about a month ago! Yay!!! We were able to get a little creative in order to reduce our debt which had begun piling up through our transitions and some unexpected medical expenses which has helped us pay down our balances more quickly. Our hope is to increase our passive income to the point that we can have his school loans (current total balance is roughly $72,000) paid off in the next five-ish years but that could take longer or happen a lot sooner depending on what opportunities present themselves. Then, our next goal will be to start paying off our mortgages to decrease the expenses on the properties we already have. After we have a few rental properties under our belt, we will start looking at other options for passive income in order to become completely debt free and self-employed.
If you’re not sure what the difference is between passive and active income, or you’re curious about how our opinion on being landlords took a sudden 180, you should definitely check out Rich Dad, Poor Dad. It revolutionized the way both Brandon and I (extreme opposites, remember?) view money and we really enjoy figuring out how we will invest in and acquire assets now. Instead of a point of stress and dread, this topic has now become our hobby.
What about you? What is something that has caused your views on money/investment/etc to change?