The Brooks’ Story: How We Got Out of Debt, Saved, and Are Working Our Way Towards Financial Independence

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Financial IndependenceThis post has been written by Sarah Brooks, a freelance writer fighting for financial independence within this world of materialism and consumption. Take a look at her awesome story below and her discoveries from her journey so far.

As a consumer living in America, we are surrounded by debt. Whether we’re adding to it, maintaining it or trying to claw our way out, debt is everywhere we turn. Debt is also a necessary evil—you have to have it in order to build your credit, but how much is too much?

When my now-husband and I met, the last thing we really cared about was our finances (just like everyone else, right?). We went on awesome vacations, purchased new computers and televisions, decorated our new apartment and didn’t think twice about going out to the bars a few times per week. Even though I majored in finance, being young and in love I didn’t really understand the financial burden we were getting ourselves into.

Fast-forward one year into our relationship. I had a $4,800 credit card balance and a $15,000 car loan, my husband had a $15,000 student loan in default plus $3,000 in credit cards and we had nothing in savings. We wanted to get married and start a family and we were both fully aware that we couldn’t do that with all of our debt. It was time to get serious.

We began telling every dime we earned where to go. If it wasn’t in the budget, we didn’t buy it. Though this was difficult at first (no more Starbucks everyday on the way to work), once we started making $1,000 payments each towards our debt every month, it was worth it. Within five months, we no longer had any credit card debt (!!).

Around that time, my husband and I got married and three months later, found out we were expecting our first baby. We were making the minimum payments on the car loan and student loan ($250 per month each) and weren’t too concerned with paying those off since the interest rates were low. Instead, we decided to focus on saving so we could have a down payment for our house. Within six months, we saved close to $20,000. The way we did this so quickly, in addition to cutting expenses, was having my husband pay for almost everything so we could save all of my money. And you can sure bet he worked longer hours and took on side jobs to make ends meet!

Where are we now?

Our “baby” is 2 ½ and we added another one to the mix, we added to our savings account, we paid off my car and his loan, we sold our house and made a decent-sized profit, and we moved across the country from Arizona to North Carolina. Currently, I work from home as a freelance writer and editor and am just getting into the world of personal finance blogging. My husband just started his own business and is doing very well so far.

Also please note, we by no means make a lot of money. In fact, we are just slightly above the national average household income of $46,000 per year.

Our plan for the future is to become financially independent by creating multiple passive streams of income. Once we reach that goal, we will continue pursuing what we love (for money or not for money) and live each day doing as we please. Why wait until you’re older to do what you love when you can do it now in your youth? Hard work and commitment pay off, and while there will be struggles along the way, it’s worth it in the end.

For those just starting out:

CREATE A BUDGET. I cannot stress the importance of this enough. If you don’t tell your money where to go (bills, savings, food money, etc.) it will sit in your account and disappear right before your eyes (we’ve all seen this happen).

THINK LONG-TERM. It’s easy to want to give up when you see something you ‘have to have’ or don’t feel like you’re making even a dent in your debt. But, every penny counts and it’s important to focus on your long-term goals each and every day. No joke, I wake up every morning and tell myself that I’m going to be a millionaire one day. This helps me stay focused on my goals.

ALLOW FOR FUN MONEY. Sometimes, your fun money may only be $20 for the month. That month, try to find free things to do in your area. Go on walks, visit free museums, go to the library or book store. You can still have fun even if your budget is low. By getting out and doing things, you don’t feel like you’re missing out—even if they’re free!

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Get Out of Debt Retirement Save Money

Derek

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

3 Comments

  1. Way to go on turning your life around before you found yourself with two kids, living paycheck to paycheck. One huge thing that has helped us is to always think about the future. I am OK to spend money, but it needs to add value to my life in some way. Mindless spending just because you can only robs you of your future.
    Kim recently posted..Family Trip To Europe With Points and Miles

  2. Congratulations on getting out of the debt cycle so early, Sarah! Many people in the PF community haven’t been so lucky, and they’ve managed to rack up some serious debts before realising they were in too deep. It’s fantastic that you realised there was a problem before it got too much out of hand, and now you’re on top of it, I’m sure you’ll stay on top.
    Myles Money recently posted..Leftover Lunch | #FrugalFriday


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