Happy Friday! We know it was a short week, but Johnny and I are both exhausted, like falling asleep standing up exhausted. But we’re super excited for the great interview in store for all of you today. There’s not a better way to start your day than with some good ol’ debt-slaying inspiration, which is exactly what you’re about to read all about with Megan. Enjoy!
Tell us your story.
Hi everyone! My name is Megan. I am a 26-year-old RN and soon to be first-time mom living in Albuquerque, NM with my husband Miguel and our 7-year-old Florida Brown Mutt, Olliver. I’m here to tell you all about how I snagged my husband with my charm and wit, and then promptly dropped a $55,000 debt bomb on him before we got married (kidding… sort of).
Growing up, my parents were always trying to foster independence in their children. We all were expected to hold some kind of job at the age of 16, and when we left for college – that was it. As the daughter of a high school teacher and retired Home Depot employee, I knew that my college financial situation would be largely up to me, as it had been for my older brothers and sisters. I graduated from high school near the top (ish) of my class with SAT scores good enough to earn me a tuition scholarship to the University of Florida, thanks to the Florida Bright Future Scholarship Program. This scholarship was terrific – but it didn’t cover the extra expenses associate with college, like books, lab fees, room and board, food, cell phone bill, car payments, car insurance, etc. At this point, I made my first very big mistake. I took out student loans (not the mistake part) — big, ugly, private student loans with astronomical interest rates (see where I’m going?). Despite my tuition scholarship and a slew of part time jobs (including but not limited to working as a PPS [professional poop scooper] at a doggy day care, teaching little kids how to swim, and personal training), I still ended up with close to $60,000 in student loan debt by the time I graduated.
$55k! What’s the secret to your awesome debt slaying? How have you made it happen?
Enter stage left – my husband, Miguel. We began dating when I was a junior in college and got married just before I graduated from nursing school. Miguel brought far more financial sense to our relationship, which surprised me, considering he had never had to worry about money. His parents were able to set up a full college fund for him, so he never had student loans. We discussed money frequently, and he was especially interested in the student loan debt he would inherit with me when we got married. I was ashamed to admit that I didn’t actually know how much or how many student loans I had taken out. Before we got married, we sat down one weekend and hunted down all my student loan information. I promptly spent the remainder of the weekend curled up in the fetal position, rocking back and forth. (Kidding, again. That was Miguel who did that.)
We decided that weekend that paying off our student loans would be the big goal, one we would work toward daily, monthly, and annually, until it happened. From this point on, we made a conscious decision to live our life in a way that would allow us to make some dent in that debt — no matter how small.
While we were still finishing school, there were obviously no enormous debt payments being made. We did, however, make small payments every month. I shopped grocery sales, used coupons, stopped going to a $100+ hair stylist, and began “hindsight” budgeting, as I call it. We didn’t plan our specific budget, but became more aware of where our money was going at the end of every month. Daily, small choices eventually enabled us to not only pay off about $3,000 worth of debt, but also to throw a pretty rocking wedding — all on the budget of a couple of college kids.
Once Miguel got his first real-life job, we found ourselves driving from sunny Florida to sunny New Mexico. Instead of renting a 2 bedroom, 2 bath condo like I wanted (we had REAL money now! A Salary! We were RICH!), we agreed upon a 1/1 that although small, I still considered a lifestyle step up from our college apartment.
Other than a better apartment, our lifestyle never really changed — and this is probably the biggest reason we have succeeded. We didn’t suddenly go out to eat more because we could afford to. We didn’t buy fancier cuts of meat at the grocery store or go spend $50 on date nights three times a week. We kept to our routine, and found that we were able to almost quadruple our monthly loan payments.
Did we get some flak from friends and family? Of course. They said we were “cheap” and “frugal” and weren’t having “fun” like we were supposed to. But to us, our priority was paying off those student loans, and little by little, we did it. I graduated from college in December of 2012, and Miguel in May 2013. Between August of 2012 and January of 2015, we got married, graduated from college, moved across the country, bought our first home, and paid off $55,000 in student loan debt — all by setting our minds to a goal that, at the time, seemed nearly impossible.
What budgeting tools (apps, spreadsheets, strategies, etc.) are you using?
Once we got settled in New Mexico, we heard about a program called You Need A Budget. At this point, we didn’t always see eye-to-eye on finances. My husband was a saver — never spent money on anything that wasn’t absolutely necessary. I won’t say I’m a born spender, but I definitely had a looser attitude about money. I think that growing up in a happy household with far less money taught me that it can be done, and plenty of people do it with fewer financial advantages than us.
I resisted YNAB with every ounce of my being. To me, this would just be a maniacal way for Miguel to perfect our budget and make sure we never stepped a penny out of line. I thought it would mean even fewer than our once-a-month dates and me saying goodbye to my (admittedly unhealthy) soda drinking habit. We argued and argued about the benefits of this budgeting program, and I finally relented and agreed to try it.
I can honestly say that YNAB changed our life and our marriage. Once we were able to map everything out each month and generally give every dollar a purpose (to borrow words from Dave Ramsay), we were able to get a much better grasp on our financial situation. I became much more conscious of my personal spending, and Miguel actually became MORE lenient with money! It was as though seeing that we were meeting all of our retirement/savings/student loans goals with money left over allowed him to relax and enjoy the fact that we could now go out to eat every other week without feeling guilty or pinching pennies.
Using YNAB has been liberating, but that doesn’t mean we’ve stopped making our sacrifices. At this point, we have transitioned from a student loan debt focus to more of a home renovation and retirement savings focus. Our final student loan is currently less than $10,000 and accumulating interest at a rate that is less than our mortgage interest, so we are happy to make minimum payments on that for right now.
How has preparing for a baby (congrats!) affected your financial outlook?
Preparing for a baby (and I may be publicly shamed for this) really hasn’t had a huge impact on our day-to-day finances. We sat down early in pregnancy and decided on the ways our budget categories would need to be adjusted when the baby arrives. We now need to account for childcare and supplies, as well as the cost of my school tuition (I am beginning school this summer to earn my MSN and become a Nurse Practitioner).
While we will be making some adjustments, the majority of our day-to-day spending won’t be affected. We will still have fun money, still have a vacation fund and a house project fund, and we will still be saving toward retirement. Our plan is simply to adjust our focus a bit — spend more time as a new family, and less time on big money house projects.
Any final words?
I guess if I had to sum it all up in a few words, I would say this: Getting out of debt has not always been fun or easy. We have made sacrifices and not lived the typical life of 20-something newlyweds. We don’t go out to bars or fancy restaurants and we don’t buy new cars just because we can. But every day, we made small, conscious choices to make our dream a reality, and in just a few years we got it — the dream. We own our dream home, we are on our way to retiring at age 50, we are pursuing our career goals and are about to welcome our first baby. Coming up on our 3rd wedding anniversary, we are happy, healthy, and debt free. That feels pretty darn good. ☺
We love hearing and sharing stories like this. I don’t know about you, but after reading that, I’m feeling more motivated to stick to our budget. Thanks for the incredible story and great words of advice, Megan! If you have any thoughts or questions for Megan, feel free to share them in the comments below.