Momentum Series: Financial Pilgrimage – Journey To Financial Freedom
This marks the first feature in the new Momentum Series – an interview series to share the stories of bloggers from across the personal finance community.
The goal is to showcase their story, the wins, the losses and the actionable advice and tips that others can take value from. Whether that be conquering debt, maximizing their career earnings, their own road to financial independence or health & wellness strategies that keep them on the right path.
Everyone has a unique background and story to highlight how they got to where they are now. The diversity of those paths is what really intrigues me. And hopefully you enjoy them.
Our blogger today, in the initial Momentum Series voyage, is Financial Pilgrimage.
A big thanks to him for taking the time to share his story and touch on his family’s debt repayment, pursuit of financial freedom, strategies for success, favorite resources, his Financial Pilgrimage blog and a bunch more.
If you’d like to connect with Financial Pilgrimage:
Without further ado, ladies and gentlemen let’s meet the man behind the keyboard at Financial Pilgrimage.
My family and I are on a journey to pay off nearly $200,000 in debt since 2011. I am 36 years old and married, and we have a three year old boy and newborn baby girl. My wife and I are both born and raised in St. Louis, MO.
I started Financial Pilgrimage in November 2017. The primary reason was to document the story of our journey (or pilgrimage) to financial independence. What I didn’t know at the time was there was an amazing community of bloggers writing about financial independence already.
Writing a blog has helped us to stay focused on our short term goal of paying down our mortgage. I hope to reach others through our story to influence others to consider the path to reduce debt and then financial independence.
I have my Bachelor’s degree in Financial Management and a Master of Science degree in Economics and Finance.
My first two years of college were spent in community college. My passion out of high school was baseball and I went to the only school to offer me a scholarship, which happened to be a local community college. After two years of community college, I ended up getting another scholarship last minute to a small state school in Missouri to play baseball. Again, it was the only school to offer a scholarship. Even though it wasn’t the best school, I couldn’t turn down free schooling and the opportunity to play ball.
I wasn’t very focused on school at that point. When class registration came around my junior year, my coach enrolled me in a bunch of business classes since my major was undeclared. I really enjoyed an intro level finance course and decided to make that my major mid way through my junior year.
After graduating with my Bachelor’s I had a hard time finding a job, mostly because of my lack of professional experience. Playing baseball was like a full-time job while in college and I didn’t take the initiative to get an internship over the summer. I made money during college by playing online poker and reselling items from garage sales and dollar stores on eBay.
I went to another small state school for graduate school where I was able to get an internship that paid for my schooling and provided a few hundred dollars to live on per month. By working as a bartender on the weekends I was able to live on my own with roomates. So that’s the story of how I went to college for six and a half years without paying hardly any tuition and with minimal support from my parents.
I have been at the same organization for 11 years now, starting the week of my final exams in graduate school. I started as an entry level budget analyst and have been in a management role now for about four years.
My wife is a public school teacher. While we now make a six figure income, our combined income isn’t much more than average salaries for our education level. When we started our debt paydown journey back in 2011 I was still early in my career and my wife was finishing up school, so we were still accruing debt. Even though I didn’t have any student loans, my wife had about $50,000.
In 2011, your overall debt had reached almost $200K, what were the sources of this debt?
The majority was mortgage debt (about $100,000). We also had about $50,000 in student loans, $15,000 in car loans, and about $5,000 in other miscellaneous debt such as credit cards, phones, etc. Along the way we also relapsed and purchased two nearly new cars in 2015 and 2016, taking out loans in the process in the amount of roughly $25,000. Therefore, starting out we were around $170,000, and when you add in the cars purchased later in our journey it brought the total to right around $200,000.
Did you have an aha moment that made eliminating debt your primary focus?
Absolutely. We were sitting in the lobby in Bank of America in 2011 after applying for a home equity line of credit. With little savings in the bank and continually growing debt, both of our bathrooms started leaking into our basement.
That was the reason why we were sitting in that Bank of America. We ended up scraping enough money together to fix one of our bathrooms so that we could take a shower without it leaking into the basement. However, that was the point where we realized we were on this debt hamster wheel that was speeding up every day. If we didn’t slow it down at that point, next would have come the bigger home, the nicer cars, and other toys.
Our situation was far better than a lot of people. Most of our debt was “good” debt in mortgage and student loans. Thankfully we came to this realization early in our lives and started the slow journey to turn the ship around.
Can you explain your journey with that debt from 2011 until the present day?
It has been a windy road. Once my wife got her first teaching job in 2012 we basically used her salary to pay down the student loans. Once we paid down roughly half of the student loans, we refinanced the remaining balance into the mortgage.
I wouldn’t recommend refinancing non mortgage debt into your mortgage. We were planning to refinance anyway to get into a better interest rate and decided to take the remaining $25,000 or so in student loans and include it with the mortgage.
At the time we were on the fence about paying down our mortgage. We were throwing a little bit extra towards the mortgage every month, but the majority was going into a savings account. The plan was to start investing in real estate. I was involved as a silent investor in a two house deal back in 2014 that went okay. We made a few hundred dollars in profit and didn’t have to do any work, though it took way too long to get our money back.
Then, in 2016 we had a rental property under contract. We had planned to purchase the property with “cash” using a home equity line of credit. When the inspection came back there were a few issues that raised concern. I also started to freak out about using home equity to purchase the property. If something were to go wrong it could mean losing our personal residence.
It was at that point in 2016 where we decided to go all in to pay down the remaining $92,000 balance on our mortgage. We immediately pulled $30,000 out of our savings an applied it to the mortgage and have been paying a few thousand dollars extra every month ever since.
What were some of the biggest successes you had with that debt? Any breakthroughs or major lifestyle changes that made conquering it feasible?
The one thing we’ve been really good at during this entire process has been minimizing lifestyle inflation. When my wife started working as a public school teacher, we applied the majority of her salary towards student loans. As I’ve been promoted at work, the majority income increases have gone towards savings or paying down debt.
Typically with any increases in income, about 80 percent has gone towards savings or debt paydown and only 20 percent to lifestyle. Most lifestyle inflation has come with now having children. When our son was born, that first year was tight with paying for daycare, increased insurance premiums, formula, diapers, clothes, etc.
How has the Dave Ramsey Plan shaped your approach to your finances and becoming debt free? Are there elements of the Ramsey Plan you didn’t follow or don’t agree with?
We have mostly used Dave Ramsey’s baby steps as guide to getting completely out of debt, though we haven’t followed all of his principles. The backbone of Dave’s teachings include a zero-based budget, and I’m somewhat embarrassed to say that we’ve never done one until very recently as an experiment. My wife and I also keep our bank accounts separate, we have credit cards, try to keep a strong credit rating, and we’ve always made retirement contributions up to the company match.
For budgeting, we use the pay ourselves first method. As soon as we get paid we immediately put money in savings or pay down debt, pay any bills for those two weeks, and make any charitable contributions. Any money left over is ours to spend on whatever we want. Personal finance blogger and podcaster Paula Pant has used the term “anti budget” for this approach, which I like. I’m sure we could reduce spending by being on a more detailed budget, but we have chosen to take a more simple approach.
If you could give someone in a similar situation to you in 2011 advice, what would that advice be?
Be more focused and set clear goals to get debt paid off sooner. If we weren’t distracted with getting involved with real estate, taking out loans for cars, and contributing to the lake house we probably would have had the mortgage paid years earlier.
After you zero out that debt balance (targeting this summer of 2018), what’s next?
Our first step will be to increase tax exempt retirement contributions up to the yearly maximums. I’m definitely going to do this with my 401(k) and will likely open up an IRA as well for me and my wife. I recently came across a blog post by Andy Hill which basically outlines the approach we plan to take after reaching baby step 7.
The next step will be making long overdue improvements to our personal residence. The house we have lived in for almost 10 years now was a fixer upper when we bought it. While we have the majority of the house updated, the one big item remaining is the kitchen. It really is an ugly kitchen to the point where it is somewhat embarrassing to have company over. Just one of the sacrifices we’ve decided to make to get our debt paid off.
What are your short-term financial goals? Are you doing anything specific or making any changes to achieve these?
After maxing out retirement accounts and fixing up our current home, our plan is to take another shot at real estate investing. We live in an area where cash flowing properties can still be had even in a hot market.
We are undecided on if we want to go back into debt to purchase rental properties. Dave Ramsey would say “don’t do it!”. However, getting a loans on a few properties and then starting to pay them down could allow us to get into real estate sooner. Regardless, our goal is to have three to five mortgage-free rental properties in 5 years, which will bring us closer to our goal of becoming financially independent.
Another goal is to buy our dream home with all cash. This will likely need to be a fixer upper again. The house we’re in has been a great starter home, though it would be tight raising two teenagers in this house and the school district isn’t the best. We will likely stay put for a few more years, but at some point we’re going to want to upgrade when we have the opportunity to buy with all cash.
What are your long-term financial goals? How are you going to achieve these goals?
My wife and I are really fortunate to have careers that we enjoy. Even if we became financially independent tomorrow, I wouldn’t quit my job. I have a job that has good work/life balance, is challenging, and has a mission I believe in. My wife also loves being a teacher though we are talking about her taking a few years off to take care of our young children.
I also know that things can change quickly with any job. Even though I enjoy my job today, that could change in the future. Plus there are circumstances outside of my control like layoffs that I want to protect against. There is real power in choosing to go to work instead of feeling like you have to.
If you could give financial advice to anyone beginning their personal finance journey, what would that be?
Start saving for retirement as early as you possibly can. Even if you plan to retire early, nothing can replace the compounding effects of building your retirement nest egg early.
Also, get out of debt as soon as possible. Paying off the mortgage may not be for everyone, but at least dig yourself out of any credit cards, car payments, and student loans as soon as you can. I don’t care if the interest rates are low. The psychological benefit of being debt free is something you can’t put a price on.
Are there any specific tools or resources you use to manage your money?
Honestly, the most effective tool has been a whiteboard on the refrigerator that we have to look at every day with our high level debt goals. Any time I’m tempted by a big purchase I know I’ll have to answer to that whiteboard. It sounds silly but has most been effective. It was painful having to update the board after our vehicle purchases in 2015 and 2016.
Since we don’t really budget, outside of occasionally estimating monthly expenses in an Excel workbook, we don’t use any specific tools or resources to manage our money. When I get paid I immediately go into my bank account and pay the mortgage and any other bills that aren’t automated. All of our charitable giving is automated and so are a few of our bills. I then keep track of remaining money for the pay period using my bank’s mobile application.
One other note, even though my wife and I keep our finances separate, we are aligned on our goals. Our agreements are to always discuss purchases of more than $250 and never carry a balance on our credit cards that can’t be paid within a month. I pay for all of the big expenses and she pays for all of the smaller expenses. She pays for groceries, utilities, cable, phone, clothing, and other smaller recurring bills. My income goes towards savings and debt paydown, childcare, and any other larger expenditures such as vacations, car repairs, and fixing up the house. Even though my salary is higher than hers, it works out to where we have roughly the same amount of extra spending money after paying the bills and charitable contributions.
What are the biggest sacrifices you’ve made to make your financial goals a reality?
Probably the biggest sacrifice is not fixing up our personal residence. Again, our kitchen is really ugly and there are a few other rooms that need work as well.
Besides that it’s resisting the urge to keep up with the Joneses. We still go out to eat occasionally, take a few weekend trips and maybe one bigger vacation, go out with friends, and do the things we like to do. We have not been deprived through this process all that much. When you’re able to keep housing and transportation costs low in an already low cost city while making decent money, you don’t have to be so frugal in other areas.
What are some of the biggest lifestyle or financial mistakes you see others in similar living situations to you making?
We’re at the point where many of our friends are buying the nice, big houses. Some can probably afford them, but others are becoming house poor.
It’s challenging not to give into the temptation of going into more debt to buy a nicer home. However, we keep imagining the day when we will be able to buy a home just a nice with cash.
What are some of the most influential resources that have shaped your mindset towards life and finances?
Starting out a few of the most influential books included:
- Total Money Makeover by Dave Ramsey
- The Millionaire Next Door by Thomas J. Stanley
- Lifeonaire by Steve Cook & Shaun McCloskey
- Rich Dad, Poor Dad by Robert T. Kiyosaki
Also, a few podcasts I’ve subscribed to over the years include:
Since stumbling upon the FI community I also now subscribe to:
If you could do it all over, what would you change or do differently to live a happier and healthier life?
On the financial side, my answer would be similar to most. Start early. We didn’t start taking our finances seriously until I was almost 30. It pains me to think about how much money I wasted in my early to mid 20s.
Despite a few of the money mistakes mentioned above, one aspect I’ve worked on more recently is my spiritual side. A few years back I started meditating somewhat regularly, which was a huge help to managing stress and anxiety.
Also, we’ve recently found a local church that we absolutely love after barely stepping foot inside a church for almost 15 years. I have grown a lot spiritually during the past three years which has spilled over to all aspects of life.
Are there any things your “splurge” on or hold sacred that you are more than happy to spend on given the personal fulfillment or enjoyment it brings?
My wife and I still go out to eat a few times a month. We find that this is a great way for us to stay connected, especially with kids now at home. Sometimes we are not alone, though we try to make it just the two of us when we can. Thankfully we have grandparents close that make this possible.
We also like to travel when we can (this gets tougher with kids). We take a few weekend trips every year and try to take one low cost week long vacation every year. I travel occasionally for work and we have benefited from travel miles that have resulted in cheap vacations.
What’s one piece of advice you’d give on avoiding lifestyle inflation?
Focus on the big ticket items to the extent possible, which include housing, transportation, entertainment, and food. If you make a decent income and can keep these costs relatively low, you may not have to be as strict with your budget.
How has Financial Pilgrimage helped your mindset on money and life?
It has helped us stay more focused on our goals, with the big goal in the short term to completely pay off our mortgage. It’s tough to talk to friends and family about money, so I’ve had all of these thoughts and ideas rattling around in my brain for years and it’s great to finally have an outlet.
What are the biggest enjoyments you get out of blogging? Any stresses or cons?
I really enjoy sharing my story and love interacting with others with similar goals. Before stumbling upon the personal finance community we always felt isolated. It’s great to know that so many others have the same goals and mindset.
There really haven’t been any stresses. I only post three or so times per month, so the pace is manageable. I’m also not overly concerned with trying to monetize my blog. Trying to do so could present a conflict of interest with my employer, so I have no aspirations to monetize short-term unless I were to step away from my job, which I don’t plan to do.
What are your goals with the blog? Or what are you most looking forward to?
My goal is to connect with middle to upper middle class professionals to let them know there is another way besides the typical go to school, get a job, and buy nice stuff that requires you to work more. If I can get even a few people to join me on this journey and change their approach with money, I’ll consider this blog a success. This of course requires me to continue to try to increase the reach of this blog, especially to individuals outside of the personal finance community.
I also believe at some point this blog will provide the credibility to pursue opportunities that I’m passionate about, including personal finance, financial literacy, and wealth building. It almost feels like an online resume that I’ll be able to unveil at the right time, whether it leads to a volunteer opportunity, a side hustle, or something in my day job.
If you could recommend 3 of your blog posts for Making Momentum readers to check out, what would they be?
Any final pieces of advice or recommendations?
For most of us personal finance is a slow game. Keep chipping away at the debt and increasing your savings. When we started this journey we didn’t make much above the median income level and had negative net worth. We were barely able to save any money at first and were still accumulating debt with my wife back in school. If you are someone in your early 20s and working to pay down debt, you are far ahead of where we were at that point. Your income will likely increase, especially if you are college educated, and by chipping away at your debts you’ll eventually have more money to snowball into paying off larger debts or investing.
Any special shoutouts?
I don’t want to single anyone out, so I’ll just say to the personal finance community in general. It’s amazing how the community props each other up so collectively we can get our message out there to individuals who really need to hear it. Rockstar Finance does a great job coordinating communication with personal finance bloggers so we have a home to take our shoes off and hang out.