How We Paid off $66K of Debt in 32 Months — Part 3: Debt Free & Pursuing Financial Freedom

This is part three of a three-part series on how we got out of debt and began the path to financial freedom. You can read read part 1 here and part 2 here.

2017: Year Two of Paying Off Debt

By this time, we had eliminated the majority of our expenses with the move to California (rent, internet, utilities, etc.), which meant we could throw a lot more at debt even without John’s salary. But, we kept working to reduce expenses even further, such as figuring out how to “stretch” ground meats using a 1:1 mix of sprouted lentils, and going to a prepaid plan with T-Mobile that saved us $20 a month. We also avoided driving as much as possible, opting to walk or ride bikes instead when feasible. We had already halved our grocery bill from $1,200 to $600, and we decided to see if we could halve it again to $300. Which we did!

When my bad-ass boss at Biotics NW got hired as the new Executive Director at the Nutritional Therapy Association (where John had been working previously), I also applied to work there (albeit still working remotely). Not only was I thrilled to work for the school, but as an added bonus, the new position entailed an increase in salary from $40K to $50K.

In early March, we FINALLY paid off the last of our credit cards, standing at a desk in a hotel room at a conference we were attending, pressing “Send” on a payment from John’s laptop. We held hands and jumped up and down and giggled like kids. After that, we celebrated every debt payment with a happy dance, and it’s the BEST. It’s a reward in itself, and gives you something to look forward to with the next debt payment! 

After they were all paid off, John closed all of the credit cards, and we have not used any credit since. We know lots of people love to game the credit card system with travel hacking, but, that’s just not for us. We know ourselves too well. It’s like having a chocolate bar in the cupboard, tempting you constantly until you finally give in and snarf the whole thing down in three bites. We are both what Gretchen Rubin calls “Abstainers” in her great book Better Than Before, who find it easier to completely abstain from something instead of trying to moderate. But we are well aware that many are the opposite type (“Moderators”) who find it easier to have a little than none at all.

After credit cards, we had just the interest-free family loans to go. The temptation was to let up on the “gas” a little bit since they were interest free, but in my mind these were still part of our debt emergency, and a mental and emotional burden on ourselves and our relationships with that family. We decided to not lose momentum and pay off the family loans at the same rate. The math would say pay down interest-free debt more slowly and invest the money instead for the compounding interest, but for us, returning that money to family and being debt free was the right thing to do.

Any unexpected income, all of it, went towards debt. We didn’t allow ourselves to fall into the trap of spending just part of it. It was easier to “decide NOT to decide,” another Gretchen gem from Better Than Before.

Big positive changes at our company prompted John’s decision to return, making us dual-income once again. And coworkers to boot!

The time had come for us to move back to Washington State from California. We moved into a $1,600/month condo in Vancouver, WA to be closer to our work (for occasional in-person meetings) and have our own place again. Vancouver was a perfect solution since we could live in Washington and pay no state income tax, but shop just across the river in Portland, Oregon where we paid no sales tax! Serendipitously, our place in Vancouver was a fifteen minute walk down the street from the hotel where the class was held where we first met!

Lessons learned:

• Know yourself. What works really well for some people may not work well for you (and vice versa!)
• Values > math.

2018: Year Three of Paying Off Debt

At the beginning of 2018, we found the Financial Independence (FI) movement, which helped us shape a “why” for our money habits – not just getting debt free, but buying our own time back. Buying our freedom!

We took a course on Financial Freedom together from PUGS (Portland Underground Graduate School), found the Choose FI podcast, books like The Simple Path to Wealth, The Millionaire Next Door, Your Money or Your Life, The Year of Less, and The Automatic Millionaire. We started attending FI meet ups, where we met people who gave us advice and encouragement.

Our small, incremental changes that we had been making over time were really adding up. 

• John and I started holding weekly meetings that we called “Open Loops,” where we would discuss our budget, financial goals, and the upcoming week. These helped us stay on the same page about financial and other matters. We also did our first “Board Meeting” for “Fotheringham, Inc,” which is really just our dreaming and planning for the long-term together.
• I moved all my investments from mutual funds to low-fee index funds (Vanguard’s Total Stock Market Index Fund).
• We started doing Intermittent Fasting (IF) together, doing just dinner on some days and just lunch and dinner on others. IF saved us money on groceries, but also time for cooking and cleanup.
• We bought bicycles so we didn’t have to use the car as much, and realized we had so much fun riding our bikes together.
• We switched our phone plans from T-Mobile to Google Fi once they rolled it out for the iPhone, which cut our phone bill in half.
• I signed up for my work’s retirement program to get the 3% match.
• We started tracking our net worth with Personal Capital, which allowed us to see the value of our bank and investment accounts, plus our loans, in one place.
• We decided not to have any alcohol for all of 2018, as a way of saving money but also resetting some habits we had formed around our consumption of wine. Again, we’re “Abstainers” who find it easier to have no wine than “just a glass.”

In the spring, I wrote another ebook, Eat Your Sunscreen, spoke at an event, and taught another sugar detox class in summer, bringing in a few hundred more dollars in extra side-hustle income. That money, and any other extra income or bonuses at work, immediately went to debt. No. Matter. What.

Unfortunately, John’s work situation was again turning sour and taking a toll on him. We were mulling over ways we could reduce our expenses so that he could once again go back to focusing on his website and podcast on language learning, Language Mastery. We had unwisely chosen to live in another place that required both salaries. We knew we would need to find another living situation if he were going to quit…

Almost like magic, I heard an interview with a couple who did petsitting / housesitting on the Choose FI podcast and I knew right away this was how we could eliminate our biggest expense (housing) and still pay down debt at the same rate, even if we were down to one salary plus the side hustle income again. We were uniquely positioned to do this. We had always intentionally built a lot of flexibility into our lives. We didn’t have a mortgage, kids, or pets of our own, and we worked from our computers. So we signed up for Trusted Housesitters, John went back to working for himself full-time, we put most of our things into storage, and did full-time housesitting for 6 months. It was an incredible adventure, meeting so many new friends, enjoying new places, and falling in love with the animals, and allowing us to spend more time with family and friends who let us stay with them in between sits. In other words, it was a win-win-win-win-win!

We spent all of 2018 paying off the biggest family loan to John’s parents, completing it right before Christmas! While we were focused paying off debt, I was contributing 3% to my company’s SIMPLE IRA plan throughout the year to get the 3% match. I also asked for, and got, a 3% raise towards the end of the year, bringing my salary to $51,500.

Lessons learned:

• Surrounding yourself with people that are on the same path you are is invaluable.
• There’s always a solution to a problem, you might just have to be a little creative about how you solve it.
• Prove your value to the company and then ask for a raise; it’s not just going to come automatically.

2019: Debt Free at Last!

With our debt snowball moving fast, we made the last couple payments to the last family loan. We did an extra large last debt payment of $1,835 (and ate a lot of canned sardines in the week that followed). 

And so, after nearly three years of making debt payments, we became debt-free on January 18, 2019!

We decided it was time to go back to having our own space again, so we found a house to rent in my hometown where much of my family still lives.

In September, I decided to leave my job to work on Flourish Fundamentals full time, combining our love of food and personal finance, and teaching people in the FI community how to optimize their health just as much as they optimize their finances.

Lessons learned:

• We can do anything hard together as a team.
• It’s worth it to us to spend a little more money on rent than we would in other places so we can be closer to family.

Summary

Here’s a summary of all the small changes we made that added up to big change over time:

• Set up a $1,000 emergency fund (we keep ours in a protected savings account in Simple to earn 2.02%)
• Did various living situations to accommodate changes in income: rented, lived with family, and did full-time housesitting (and absolutely did NOT buy a house!)
• Paid off and closed all credit cards (bye bye, interest rates!)
• Cooked at home instead of going out to eat (we offered to cook for friends at our place rather than going out to a restaurant)
• Shopped at cheaper places and bought in bulk. This allowed us to halve our grocery bill from $1,200 (when we weren’t paying attention) to $600, then halve it again to $300
• Implemented Intermittent Fasting to improve our mental focus and save on grocery costs
• Drove just one car with good gas mileage rather than buying a second
• Negotiated working from home, reducing the need to drive to and from an office
• Bought bicycles to ride within town, which helps reduce the gas bill and provides free entertainment
• Took vacations to close-by destinations or explored our own city rather than traveling far to expensive places
• Increased income from our side hustles: sales of ebooks and teaching classes
• Made the switch from T-Mobile to Google FI, reducing our phone bill costs by 50%
• Created budgets and tracked our spending through Simple, our online bank, and Personal Capital, which allows us to keep track of our net worth (investments, accounts, loans) all in one place
• Met every week for an “Open Loops” meeting, where we review our budget and the upcoming week
• Met at the beginning of the year for a “Board Meeting” of what we lovingly refer to as “Fotheringham, Inc.” to map out personal and financial goals for the year
• Moved from high-fee mutual funds to low-fee index funds with Vanguard
• Quit shopping out of boredom for clothes or home goods — we buy most clothes secondhand, if possible
• Canceled Netflix, Hulu, HBO, and Amazon Prime
• Took advantage of work’s retirement plans
• Asked for and got a 3% raise at work
• Used the library for books and movies rather than buying them new
• Watched movies snuggled up on the couch at home with our homemade fancy popcorn (grass-fed butter and truffle oil, YUMMM) rather than going out to the movie theater 
• Gave ourselves each $40 “fun money” each month that we could spend on whatever we wanted (coffee at a cafe, movie, new book) so we didn’t feel deprived
• Gave homemade gifts like herb salts, hot chocolate mix, or homemade spice blends for Christmas
• Started doing “Wednesday Adventures” on Wednesday late afternoons where we would go out for a bike ride, or go to the library, or walk on a new trail, or visit a nearby town
• Did a dry 2018 to save money by not buying alcohol
• Cut our hair ourselves at home
• Do at-home manicures and pedicures
• Washed the car at home instead of taking it to a car wash

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Photo by Christine Roy on Unsplash