He and his wife realized they weren't rich, they were broke.

When Andy from Marriage, Kids and Money and his wife married in 2010, they earned a combined six-figure salary. He told me that at the time, they thought they were rich.

He says, “We spent what we wanted, when we wanted. As long as we paid off the balance on our credit cards each month, we thought we were being responsible. After all, that’s what ‘everyone else’ was doing, right?”

But one night while channel surfing, they came across a program about finances. The show was entitled “How am I Doing?” Andy says, “A personal finance guru analyzed someone’s money situation and let them know how financially fit they were. One of the main indicators of their financial fitness was net worth.”

Andy and his wife didn’t know much about this net worth thing, so they decided to investigate it more. They also decided they’d figure out their own net worth.

“After doing the calculations, we realized that we weren’t rich. We were freaking broke!” remembers Andy. “Our net worth was minus $50,000. We owed more than we owned. Our debt (big mortgage, cars, home equity lines of credit and student loans) and our lack of assets made our net worth look pitiful.”

That’s when Andy and his wife realized they were done with debt.

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But how did it get this bad in the first place? Andy says, “restaurants, concerts and vacations were our three main expensive guilty pleasures.” He even charged his wife’s wedding ring. “I absolutely bought the symbol of my lifelong commitment to my wife on credit.”

He also revealed the three main bad financial habits that he and his wife shared:

  1. We did not track our spending. We didn’t even know what a budget was. There was no way for us to improve because we weren’t measuring anything. Now, we meet every month for our “budget party.”
  2. Our investing was lackluster. We barely contributed to our office 401ks. I had a Roth IRA but I wasn’t contributing enough to really make it grow.
  3. Our definition of “good debt” was very broad. A house, two luxury cars, an MBA program, an engagement ring, our wedding… we could not afford them all. We ended up borrowing and borrowing until we saw the “net worth light.”
Andy’s wife owed $20,908 on her car and he owed $27,124 on student loans for a grand total of $48,132. But after becoming inspired by their “net worth” shocker, they paid it off in one year — by budgeting, developing a debt elimination strategy, (they used the debt avalanche strategy where you pay off the debt with the largest interest rate first), and sticking to their plan.
They also plan on paying off their mortgage by the end of 2017. As Andy learned more about financial strategy and responsibility, he thought sharing his new-found knowledge would be a great idea. So, in 2016, he started his blog.

“I wanted to share my mistakes and my successes with other like-minded folks,” says Andy. “My goal is to help other parents learn the simple steps for creating financial freedom for their families. I want to be a resource to help people succeed and give their families the lives they deserve.”

I asked Andy if he would provide a few tips that helped him succeed. He happily offered these:

  1. Invest early, keep it simple with index funds, and automate it. If you need help, consult a fee-only certified financial planner professional. Whatever you do, just start … the sooner the better.
  2. You can achieve your dreams a lot sooner without debt. Start by eliminating your highest interest debt first and keep pressing until they are all gone. You’ll never get ahead paying 18 percent interest to the credit card company.
  3. It is never too early to consider additional sources of income. We won’t become millionaires through our salaries alone. Real estate, small businesses and investing are all excellent options.

I found Andy’s love for family and his commitment to provide a stable financial future for them inspiring. Read his blog and you too will be inspired.

Budgeting & Saving, Family, News

401k, eliminate debt, Financial Profiling, IRA, save money

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Article last modified on October 3, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: The Day Andy Decided He Was Done With Debt - AMP.