Digging out of Debt to Stay Home with Baby
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A big question that everyone has about becoming a stay at home parent is, “how could you afford that?”. Unfortunately, I don’t have a quick fix answer for you, but I can tell you how we laid the groundwork.
A few years ago, Alex and I sat down to look at our finances. We were living paycheck to paycheck, and with only 3 years of marriage under our belt by that point, that was hard on us.
We had over $100,000 in debt between student loans, credit cards, and a brand new vehicle. Think about that: our debt was the size of a normal mortgage, and we weren’t even including our house in that number! It was a daunting amount of debt sitting on our shoulders.
I felt especially horrible about it, because my student loans accounted for over 60% of our total debt. What a mess, and a mess that my poor husband had to help me clean up. Luckily, I’ve got a rockstar for a husband who faced it down with me.
I desperately searched for ways to tackle this debt. We couldn’t keep living like this and live comfortably, but paying off that much debt seemed like a massive undertaking. We didn’t even know where to start.
Dave Ramsey’s Debt Snowball
We found Dave Ramsey online and the baby steps, outlined in his bestseller, The Total Money Makeover. FINALLY, a concrete plan to help us get out of our massive hole!
We immediately starting implementing the baby steps and saved up $1,000 in our starter emergency fund (baby step 1). Then it was time to tackle the big one: all of our debt except the mortgage.
Dave Ramsey uses a principle called the “debt snowball” method.
Basically, you line up your debts from smallest to largest and make minimum payments on everything except the smallest debt. You throw every extra penny you have from every paycheck at that smallest debt.
Once you pay off the smallest debt (it’ll go quickly!), you pour all of the money you were putting into that smallest debt into the next smallest, and continue the process on up the chain.
You start losing momentum when you hit the larger debts, but by that point, you already see how great it’s working and you don’t mind as much.
Note I said “as much”.
It’s hard not going on vacation and spending money like you want, and that’s what we had to sacrifice while paying off debt. We rarely went out to eat, didn’t go on vacation, and skimmed back on as much as possible to make it happen.
Our Journey to Staying Home
In around 2 years’ time, it happened! We paid off ALL of our debt except the house! That includes all of our pesky credit cards that we are now without, IRS debts, student loans, and vehicles.
Since we worked as hard as we did to pay off debt, it made it a lot easier to be a stay at home parent and go down to one income. I really don’t think we would have been able to do it otherwise.
That’s not the complete formula for affording to stay home with our baby, but it was a huge start. Reducing our income to half, even without debt, takes a lot of planning and diligence.
It can be done! And if it’s what you want, it’s definitely doable. I’ll be sharing a lot of tips to help you along your journey, wherever you are.