One of the biggest hurdles on our road to becoming debt free and turbo charging our net-worth growth wasn’t the size of our monthly payments on our cars or the interest rate on the credit cards.
It was us.
My wife and I were just on totally different wave lengths all together when it came to money.
One of us was a penny pinching saver playing the “invest instead of paying off debt” game, and the other was a spender who paid the monthly payments but pretended the debt mountain wasn’t really there.
We saved money.
It was mostly by accident.
We used credit cards.. to earn “cash back” thinking we were smart and sticking it to the man.
Little did we know we were sticking it to ourselves.
SO much waste, on student loan and car loan interest, and spending WAY too much every month on the credit cards chasing that “cash back”.
Spender vs Saver
If you are the spender and they are the saver or vise-versa no matter how hard you each may try individually you’ll end just spinning your wheels making absolutely no progress.
Not being on the same page lead to arguments and unneeded stress in our relationship. Per a 2018 study performed by Dave Ramsey we weren’t the only ones, money problems are one of the leading issues leading to failing marriages. Luckily, we had an “aha!” moment earlier this year and it happened on accident.
I stumbled upon a YouTube channel run by this guy named Dave Ramsey and a random episode was playing on our family room television when my wife came home from work. Our interests both peaked when the episode talked about a caller who had $200,000 in student and auto loan debt. We both sat there and intently listened to Dave’s recommendations.
After the episode ended it just “clicked” in both of us that we needed to get serious. It was a difficult discussion, a complete change in mindset. No more thoughts about investing and playing the game of beating out the interest rates on our loans, and both of us coming to realization of our total debt.
What We Did
We developed a Net-worth tracker spreadsheet that outlined all of our assets, liabilities, and monthly expenses. This spreadsheet gave us the “big picture” on our financial health and helped us track our progress.
We developed the 35/45/20 rule to follow. Which gave us a structure that we could both follow by giving us each an allowance that we could spend how ever we wanted while also automating our savings and investing.
We also put the credit cards away. Took them out of our wallets and switched completely to debt cards. Cash Back, Points, and/or airline mile rewards is a suckers game.
To jump start this new effort we also decided to use our emergency fund and started throwing all other income at the debt, any money left over from bills went to debt, including our tax returns.
Become an Unstoppable Team
When both partners get on the same page and understand how both effect the big picture you become unstoppable. No financial hurdle is too big.
For us, not only did we pay off both cars, and all of our student loans, we increased our net-worth growth rate by 50% year over year. For example, hypothetically if we increased our net-worth by $20k last year, we are growing at a rate of $30k this year! Getting on the same page shook up 50% more money that previously was just being wasted!
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