The Man Behind The Money:
Meet my new friend Chris of DebtFreeGeek.org. When I heard his story, I instantly knew I wanted to interview him and gain some of his wisdom. He and his wife knocked out $150,000 in 3.5 years during their mid twenties. They now have two children and have learned many ways to make money work in their favor. Chris founded Debt Free Geek, a personal finance blog to share his story as well as motivate and educate people who also want to live debt free. As you can tell from his picture choice, he is an entertaining guy who understands how to not take life too seriously.
So, you had $150,000 in debt. What kind of debt did you have?
- Student Loans: $16,000
- Mortgage: $104,000
- Car1: Audi A4: $18,000
- Car2: Honda Accord: $15,000
The two cars and mortgage were mine, and the student loans were my wife’s. We actually got the Accord closer to the end of our debt-free journey which felt like a decent setback at the time. I was trying to ride my wife’s college-era classic (1992 Mitsubishi Mirage) “until the wheels fell off”. Well, we had our first daughter, and the in-laws had a sit down with me to explain that my daughter’s safety was a concern. I might have been a little over ambitious with paying off debt. So I went out and bought the Accord. We got through it OK. 😊
What was the thing that made you decide to pay it all off in 3.5 years?
I looked around and realized that most of what I had didn’t belong to me. I was doing a lot of reading at the time, two of the books which stood out were Rich Dad Poor Dad, and Total Money Makeover. Both recommended getting rid of personal debt and increasing cash flow. So overall, I would say “education” helped me decide to pay it off. I think that’s the biggest change agent for most people. Once you understand how interest, cash flow, and depreciation/appreciation works, you’re bound to take action in some part of your financial life.
How did you stay motivated? Was your wife always on board as much as you were?
I listened to podcasts while in the car, mostly to and from work. Dave Ramsey’s was pretty good for a pick-me-up, although it could get kind of repetitive. I read books and talked with a few like-minded co-workers. This was a huge daily motivator and accountability factor. Your co-workers actually know your financial habits pretty well. Things like going out to lunch, showing up in a new car, buying toys, going on expensive vacations. Those things are hard to hide from your co-workers. It helped that three of my co-workers were in a similar stage in life. We talked all the time about our plans (and successes) in becoming debt free.
My wife was 100% on board from the start. I tell a story about her dedication here. She’s the natural saver, but she just doesn’t like to plan. So she focused on getting us the best prices, from grocery shopping to clothes to Target diaper deals, etc. I’m the natural spender, but I am an uber planner. So I handled the budget, forecasting, bank automation, and monthly reporting. We combined our natural talents, and I must admit that it would not have gone as quickly or smoothly as it did if we didn’t have each other to lean on. The big take-away is that, in a relationship, both people don’t have to be good at (or enjoy) the same aspects of financial planning. Take lead on the ones each of you are naturally good at, and team up on the rest.
What was the main strategy or strategies you used to get the debt paid off?
- Create a bare-bones budget. We created a bare-bones budget that went something like: (1) 6% to 401k to take advantage of company match, (2) bills, (3) true needs like clothing/groceries/car maintenance, (4) debt, debt, debt, (5) wants such as Netflix/Fun Money/etc. We only gave ourselves $25 each to spend per month, and we had a date night budget of anywhere from $25-75 each month (we tried different amounts).
- Automate. We set up a bunch of accounts with our bank and used automatic transfers to route all money to the accounts to simulate an envelope system. Decently high upkeep here with all the transfers, but I loved it. I don’t think many others would, I could be wrong. The two-fold purpose here: (1) automation ensures it gets done consistently, (2) envelope system, once the money is gone, it’s gone. This helps control spending levels.
- Create a debt forecast. We used spreadsheets to forecast and constantly re-work our strategy based on job changes or side hustle income. The conversation went something like, “well, if we made X amount in these three months, would Y loan be paid by June?” etc. The ultimate goal was to move our debt-free date earlier in the timeline. Sometimes we were able to move the date by one month, and that always felt like a victory in itself!
- Increase the income. We constantly tried to find ways of making more money or by getting salary increases and bonuses at our primary jobs. For my job, I took on more responsibilities and grew myself as a leader. Because I was a top performer, my company paid for my MBA. Once that was completed, I was a shoe-in for the next promotion, which I did get. My wife worked part-time at Walgreens, but she bumped her salary by $2/hour by getting a job in the pharmacy. Once she finished school, she began working for a local non-profit. I did some IT consulting on the side, and she did some non-profit grant writing on the side. So our gross income increased from around $80,000 to about $130,000 in those few years.
- Downsize the cars. Just after paying off my Audi, I sold it for $18,000. I used $7,000 to buy my wife a Honda Element, and put the other $11,000 straight to the mortgage. Best feeling ever! I drove her college-era car, 1992 Mitsubishi Mirage, for a year or so before her parents cornered me about driving an “unsafe car”. For more info, I recently wrote a quick post about how to avoid car payments forever.
What would you say was your biggest challenge during that time period?
My two biggest challenges were having the patience needed to wait on a 3-4 year plan and not being able to spend as much money on things as I typically like, such as electronics or just going out to a nice dinner whenever we wanted. It’s not something we need to do all the time, but when you go months without it, it can wear you down.
You recently started sharing your net worth on your blog. What are you currently worth?
I’m currently worth $410,848. I expect this year to be our biggest year of growth, and we should cross $500K. I post monthly updates on my site.
How are you currently building wealth?
- We are investing 8% of my pay in my company’s 401K plan.
- We are fully funding Roth IRAs for both my wife and myself.
- We are investing $3,300 per month into index funds, with plans to use these funds to make our first real estate investment purchase in 2017.
If you could offer one piece of advice to someone just starting to pay off a large debt, what would it be?
Set yourself a schedule and figure out your debt-free date. Always try to improve that date. Get started, hit the gas, and don’t let up. Picture yourself deep inside a cave, in a pool of water. The only way out is to swim down, under the rock and up 30-40 feet to the surface. Once you start, there’s no turning back, so keep pushing. When you come out on the surface, your life will never be the same again.
My Personal After Interview Takeaways:
I’m so glad I got to chat with Chris and hear his success story. The main things I took away from the interview were:
- That in order to succeed you need to stay motivated and get around like minded people.
- If you’re trying to pay off debt with a significant other, focus on their strengths and find ways to work as a team.
- I love when he explained what triggered him to start paying things off was realizing that his “things” didn’t actually belong to him and that educating himself thrusted him into his journey. I feel like I had a very similar experience.