The Road to Being Debt Free with Rebecca

Everyone wants to get out of debt and live debt-free. Unfortunately, only a handful of people are able to do it. It may sound incredible but Rebecca from My Fat Purse Blog, the guest on today’s episode, was able to get-out of debt and pay off $180k of student loans in just 2 years. In this episode, Rebecca talks to Kat and Lee Hughes  about how powerful budgeting is and tracking spending  together with her husband towards paying off the huge amount of debt while being able to save up a 1 year emergency fund and having a 6 figure nest egg before the age of 30.

Get inspired as she shares her story on how she and her husband make a great team effort in attacking their debt and eventually pay it off faster. Listen and learn as she gives some helpful tips on budgeting, tracking spending and avoiding lifestyle inflation in the journey towards financial independence. 

Transcript

The Road to Being Debt Free with Rebecca from My Fat Purse

Today we have Rebecca and she is very passionate about financial freedom, personal finance and her background was she was able to pay off $250,000 in student loan debt along with also saving up a 1 year emergency fund and also having a 6 figure nest egg and that is just really awesome because all of that happened before the age of 30 which is incredible. So Rebecca hello.

Hi, thanks for having me on. I really appreciate it.

Thanks for being here. So Rebecca, all of that was amazing. How did you go about doing that and what made you so passionate about financial freedom?

I definitely can’t take all the credit. My husband and I, we’re definitely a team effort. We tackle that all together. After we combined finances we got really serious about, “Okay, let’s put all our finances together. See where we’re starting. What is our net worth look like? How much debt do you have? How much debt do I have?” We also made a plan like, “Okay let's just attack this debt.” My husband had about, initially when he graduated, he had about $180,000 in student loans so that $250,000 includes all the interest, so you can see that’s a massive amount of interest being paid. When we combined finances , he had about $160,000 left and we decided, “Okay let’s just attack this and got to pay this as fast as we can '' and we got it done in under 2 years. That’s really a huge accomplishment that we were able to do together. I think by us having two incomes and being able to budget, mostly tracking our spending and just kinda squeezing every dollar that were able to get done knockout and then not just open up so many more opportunities. Suddenly, we had just a huge increase in our cash flow. We didn’t have this gigantic payments going out to the student loans anymore. And then we got really into Fire. My husband actually discovered FIRE and it just seemed like, “Okay so we’re pretty content with our lifestyle right now why don’t we just keep saving and keep investing aggressively” and then we didn’t feel like we were compromising our lifestyle because we’re already pretty content and happy. So that kind of got us started our journey.

That’s awesome.You’re in  military service too? 

Yes, so my husband and I both served in the military. He graduated college about a year before me. So, he started serving before me. And he actually also got out about a year before me.Basically, the debt was paid off by the time he got out of the military. And then, I was still in and we were kind of getting our finances all figured out. Luckily, he was able to land a really stable and awesome job. So we just continued saving aggressively. We both serve for about five years, just shifted a year, and then my husband actually, he did join the guard for about six months as well after active duty service, but decided it was just a little bit too much for kind of we wanted a slower paced lifestyle.

So you’re both in the Air Force.

Yes, we were both Air Force. So we did Air Force ROTC while we were in college, and we both commissioned as second lieutenants.

And then where did you go to school?

We both went to Rensselaer Polytechnic Institute. He's a Civil Engineer and my degree is in Math. So very technical, kind of a nerdy school. So, I was a scientist, slash mathematician analyst. Analyzing a lot of data probably also why I love personal finance ‘coz I just love crunching numbers. And my husband was an engineer in the Air Force. 

Awesome. And then with your transition, both of you went to school, obviously first, what was the motivation to get into the military? And what were some of the things that drove you to wanting to even get into paying off the debt?

I hadn't really ever considered joining the military to be honest. My senior year of high school, I had started looking at schools. I had never heard of RPI either. And I ended up getting a scholarship there. So I just went, “Okay, let me go check out this school” and I was walking around all the tables that they have and I ran into the ROTC table and started getting some information from them with the Air Force and they were telling me about all the awesome opportunities of scholarships and just you know what your career could be like in the Air Force. And it just sounded really interesting. Like it might be a good fit for me. So I went ahead and I applied to the scholarship and ended up getting it. That's how I kind of got into it in the first place and then it did end up being a very good fit for me, and I really enjoyed my time in the service. So that's how I got into the military. And then your other question was, how did we get a paying off debt? I think for me personally, I just never liked the idea of debt. I don't like owing people money. I have had car loans in the past which luckily  we were able to pay all those off as well. But I never liked the idea of owing people and it just seemed like this huge mountain of debt just seemed like this anchor holding us back. It's a little stressful when we started our marriage and we're like, “Okay, we're this deep in the hole. How can we get out of here and make a better life for ourselves?” So, that was kind of the motivation. And I don't think my husband ever really necessarily wanted me to help or for that to be my burden on his student loans. But ultimately, we're a team. We're trying to work towards financial goals so that we can live a life we want. It's not necessarily about the money. It's about what type of life we want to live. And ultimately, we want to do the same things, we want to be together. So we just decided, “Let's just combine everything and we'll talk that debt” and honestly, regardless of the debt, I think we are much farther along together than I could have been by myself or he could have been by himself. So I think, we're very fortunate to have a strong team. 





That’s awesome. What are the challenges when you guys combine debt because for our listeners, who are maybe are in a relationship and looking to be getting married and maybe one person has a huge amount of debt and the other person does not have that debt? What do you think would be the conversation prior to actually sealing the deal and getting married? And then once you're married, what are the challenges in combining those finances?

He and I never really discussed it too much, I obviously knew he had a significant amount of student loans, but we never really went into the details. Ultimately, I think we chose each other because of the types of people we are, and made a very good team together, and we didn't really think of the financial aspect of it. And to be honest, we were both just fresh out of college, never really made that much money. We had just started our careers out and things like that. We never really considered that. And we actually kept our finances separate for about the first year and a half of our marriage. And that had a little to do with the military did keep us separated for a period of time, so we both kind of had our own expenses anyways. But once we finally came together, we sat down, we got a spreadsheet out, I kind of laid out everything. And we just ultimately decided we're gonna go ahead and combine them. I guess by the time we did that I actually didn't have any debt. I had paid my car off. But like I said earlier, it's not about the money. It's not about the numbers. It's about achieving a goal together. And my husband is a very responsible person. It's not like he's out there racking up all this credit card debt. He went into a significant amount of debt to get a degree, which has certainly paid off. Granted, you could probably go to a much less expensive school and still thrive in a career. So definitely something to consider when you're looking at different colleges and going to a private university versus maybe a state school or even community college or trying to get those scholarships for sure. It was a little bit of a difficult discussion at first, but I think ultimately, now that we got on the same page and being able to accomplish so much together just makes me even more confident that it was the right decision for us.

What are the conversations that you two currently have?

That's a great question. Actually, our most recent conversation about money was my husband wants to get this topper for his truck. So basically we came down, it's about $3,000. And I'm like, “Okay, that's kind of a lot. But let's sit down. And let's see what that does to our budget.” So I'm definitely the one that's more in the weeds in the spreadsheet, but just big picture, “Okay, if we do that, it sets us back in this area by this much.” That's kind of what the conversation goes now. My husband is definitely way more big picture. You know, he just wants to know, like, big money movements, “Where's our money going?” I'm like, every dollar, I want to be knowing where it's going. But yeah, that was just an example of one of our most recent discussions about, “Okay, we're gonna make a big purchase. Let's sit down and actually talk through this.” And honestly, it doesn't happen all that often where we're making that big of a purchase.

When you are budgeting, tackling that student loan and doing all the budgeting, what were some of the maybe tips that you can share about the budgeting and also some of the sacrifices that you really had, maybe big or small sacrifices that you had to do to kind of keep at the budget?

I think one of the best things that we did was we made sure to keep giving ourselves  fun money or we call it allowances. We made sure to keep doing that, where we just each had a set amount of money, guilt free spending, we don't need to check in with each other. So that was really helpful because it was a set amount. We knew that that's how much was budgeted for that. But we didn't have to talk about the little purchases we were making. We did a lot of our cooking at home. We didn't really travel a whole lot while we were paying off debt, maybe some road trips, trying to keep it more budget friendly and things like that. But ultimately, we were able to find that this type of lifestyle is really not that bad. We weren't out buying the newest iPhone. We weren't out buying all new gadgets, things like that. But to this day, we still don't and I think, how do we not have that debt? I don't know if we would have learned those lessons where you don't need material possessions to find happiness. So I think that was a really valuable lesson that has really carried us through and has just enabled us to accelerate our net worth. 

With your husband, you guys moved from New York out to Colorado. What was that whole discussion and why Colorado of all places for you guys?

So that was a little bit out of our control. So we both graduated from school in New York. We're both from New York originally. I actually got sent to Ohio for my first assignment and he got sent to Japan. So I was being apart for a good amount of time. So he was in Japan for about two years and I was in Ohio about a year and a half. And then after we got married, the Air Force was able to find us an assignment together, which happened to be in Colorado. So that's how we ended up out here and we've been here five, six years at this point. So he got out here about six months before me.

Nice and as far as you know, once you tackled that debt, and now that you’ve eliminated the debt. I know obviously you have some extra money that now is going to the emergency savings fund, that six figure nest egg and all that. What other things that did you guys do to kind of really reach that number for your emergency fund? Any other tips that you guys may want to share on that?

I think one thing that you can do if you have a specific goal in mind, like let's say a three month emergency fund or a six month emergency fund. To kind of figure out  when do I want to have that by, and dividing up the amount of money. So let's say, “Okay, I need $10,000 in a three month emergency fund and I want to do it by the end of the year.” Maybe there's 10 months left in the year, so you can set aside $1,000 a month and maybe if you have that flexibility in your budget, maybe you set that up on an auto transfer, and you go ahead and transfer that. And something I found with our savings and our savings goals, we actually moved our savings to another bank. Part of that was to just get a better interest rate on our savings account, but it also helps us not touch that money. So that money is kind of sitting at another bank. It's a little bit of an inconvenience to go ahead and get it. And then as far as you know, increasing our nest egg for retirement and things like that is really just educating ourselves on what options are available through work for example, getting out of the Air Force, you know, we had to do a lot of learning because you have a pension and a TSP through the military, it's pretty straightforward. And then when we got out, there's IRAs, which we've had IRAs in the past, but you've got 401ks, 403bs, other types of pensions, and then healthcare is a consideration. So really educating ourselves on what all the options are out there, and then making sure to take full advantage of it. So if your employer offers any type of match, make sure to get that because that's going to really accelerate how fast you're able to save up your nest egg. 





What was the option that works best for you guys? 

I have a 403b which is essentially the same thing as a 401k through my company, and they do a 10% match. So I just went ahead and actually just maxed it out to the IRS limit, which is, I think 19,500 this year. So that makes sure I get the match. But at the minimum, if you can get that match, then that's really great. My husband has a few different options. He has a 401k, a pension program and a 457. So he works for more of a public entity. So they have a lot of options there. So he did, since we have the two incomes, and it was actually only since 2019 was our first year, we just went ahead and took advantage of all of those retirement accounts. So we're very fortunate that we were able to do that and that his company offers it.

Do you know what percentage of your income you're living off of currently?

 It's about I would say 25 to 30% of our gross.

That's amazing. So basically about 70% goes to savings and stuff like that. Maybe some goes to taxes.

Yeah, so some of those to taxes. Last year, we ended up having a very good year because we sold a home so our savings was about 75% but this year, it'll maybe be closer to 60%. 

What are your newer goals now? I mean, once you hit that number, the 1 year emergency fund and this six figure nest egg, what would be your new goals?

We're just gonna keep staying on track with all of our savings goals, pretty much everything is really automated. But one of the things that I find a growth area that I want to do more of and do better at is to give. So I want to be able to give more. By having financial freedom, you're able to maybe make a little bit more room for that. It's hard to do when you have so much debt, and I definitely think people should take care of themselves first. But that's one of the things that I wanted to write down for one of my 2020 goals, is to make sure I am giving more and being more intentional about that. 

What are the areas that you're looking to give or serve into?

I think one of them obviously, we're very passionate about is rescue animals. That's my dog that you just saw walk by. We rescued her almost four years ago now. And it's been a really rewarding experience. We rescued an adult, she was a little bit older and definitely had some anxiety and things to work through. But since we put in the work and put in that effort, just been a very rewarding experience, and just getting a little more educated on some of the real hardships that animals go through and to be able to give back to that, because a lot of dogs they end up getting euthanized, and it's really sad. That's one area and then my husband and I definitely want to sit down and talk about some other areas that we're both passionate about together and  want to get back to.

That's awesome. I love that. Do you have streams of income do you and your husband rely on or also you’re looking to invest into?

Right now, we both have salary incomes and that's pretty much it. I mean, obviously our investments are paying out dividends and things like that but they just automatically get reinvested at the moment. So right now, that is definitely an area of growth for us to look at different revenue streams of diversifying our income streams, because really, we don't have that much diversification other than we're both working, which is definitely helpful.  If one of us lose our job, we always have that other income. But one thing that we were looking into maybe getting into in the near future is some real estate investments as rental properties. We're not anywhere near buying one but we're starting the process of trying to research it because that looks like a really solid way to kind of build up passive, mostly passive income, obviously, there's some work involved in it. And we have done a rental property in the past as an Airbnb, which was quite a bit of work. So we're hoping to do something maybe a little less work than that maybe tried and true long term rentals, something we're definitely looking at.





What I love is that once you're actually ready to dive into the real estate and maybe do some buy and hold some stuff, you guys are pretty much already ready. One of the things that I always tell people who approached me and asked me like, “Hey, how'd you get into real estate? What was it like buying your first property?” and I always say, “When you buy your first property, just really make sure you have some savings because you don't ever know. Once you own a house, life gets a little bit more complicated. Once you own rental properties it gets even more complicated. A roof, it gets torn down, if it's not covered by insurance for whatever reason, you always have those insurance company commercials where all of that is covered but this particular tree, if it falls down, there's just this specific tree and it's not covered by the insurance. That's really awesome that you already have that nest egg and some emergency savings because once you get into that, like you're going to be prepared for what's to come. What is your idea of wealth now? Like what is your personal kind of definition of wealth?

I really would say that wealth is about finding where your content in life. It's not necessarily about having a lot of things. But really saving up a nest egg is really just to help enable you to do what you want to do. And a lot of that has to do with maybe getting some of your time back, or building even more wealth so that you can give more. But you know, making more money is great and writing checks and giving to organizations is great, but sometimes it's harder to give back your time. So if you can free up some time to help donate that, or a certain skill set to causes that you're passionate about, I think that can go a long way as well. So to us, we're just looking to kind of have a simpler life, have enough to sustain our needs, but also be able to build up a level of abundance where we can be generous and give to things.

I love that because I think that obviously everybody in that FI movement really want to get to that place where you hit that number where you are completely financially free. But a lot of that just has to do with wanting to have freedom of time. And to me personally, at least from my husband and I, it's always nice to be able to give financially, but there's such a difference when you're able to actually serve with your time. And so like for you rescuing dogs, that takes a lot of time to be able to figure out their temperament, their personality, what were they anxious about? What were they, what were their kind of, the things that they have gone through and to sit with them and to literally help them change, that's huge. And that takes time. And that's a really awesome way to put it, because hopefully for our listeners that they would get inspired that wealth is about really the freedom of your time to be able to hopefully help other people as well.

Yeah, absolutely and rescuing a dog, I mean, she has taken a lot of our time, but it's been a very rewarding experience. 

What's your dog's name? 

Aurora.

Does she have a tower? Is she sleeping all the time? 

No, she's named after Aurora Borealis.

What are three actionable tips that you feel you could share with everybody to help them get on this path of financial independence?

I don't want to sound super repetitive. But my first one would definitely be to avoid lifestyle inflation. Eventually, you need to find a point where you have enough, you're content with your life. And if you can't find that, then you're always going to be chasing that next thing. So finding that point and just maintaining that lifestyle and working towards “Okay, how much do I need to maintain this lifestyle?” rather than always chasing the next thing. So that's my first tip. My second tip is to invest early and invest often, even if you're just investing a very small amount of money to start, it gets you in the habit. And I also think that you should educate yourself on where you're investing. So even if that means reading a book and having a good understanding of what it takes to build wealth and let that compound interest start working for you. I do have a post where I list some of my favorite books about investing, so if you check out my website, I'll have a list there.





Albert Einstein quote, I believe you put in there to write.

I did have the Albert Einstein quote, and one of them “Compound interest is the eighth wonder of the world”. That's a good one and it's really powerful. And in a few of my posts, I show some examples like how saving a less amount of money but doing it earlier is gonna have a much bigger impact than kind of waiting and kicking that can down the road. Even if it's $50 a month, just kind of getting in that habit, and learning where that money can best work for you I think is very valuable. And then the third one is to have a plan. Know how much money you have coming in, know where it's going. That doesn't necessarily you need to be budgeting every penny. Even if you just know the big picture plan of where all of your money is going and that way when you do want to make those big financial decisions or you do want to make those big moves, you can kind of see how that fits into your plan and what those trade offs are and always knowing, “Okay if I want to take out some type of debt”, know how much you're going to be paying for that debt over the life of the loan, not just how much it's costing you every month. So actually kind of running those numbers and seeing how it fits into your plan. So those would be my three biggest tips.

Wow, that's really great tips. I think lifestyle inflation is a really good tip just because as you pursue financial freedom and all of a sudden you have a huge chunk of extra cash, it's always good to really keep just yourself and check into understand if are you really content, can you be content and all that just because, again, if you can't be content now, you're always going to be looking for next big thing. And I think nowadays too, like, I don't know if you've noticed this but with the subscription services, you can start getting into one subscription, then next subscription and next subscription and next subscription suddenly had like Amazon, everything. And you don't even use all of it because it's so overly too many. I like that, like finding out where do you cut the line. 

We are gonna go and wrap it into our quick 10 rapid fire questions. These are 10 questions we ask our guests, and some of them are related to a podcast theme and some of them are just random questions we want to know about you. Are you ready? 

Yes.

If you could choose one book to live by, what would it be?

The Millionaire Next Door by Thomas Stanley. That book light bulb just went off in my head when I read that book and I was just wow just changed the way I look at money. So highly recommended.

Awesome. Personal hero living or deceased, somebody you know or don't know.

I'm going to say my husband. We got married really young and sometimes you don't know how it's gonna work out and just every day, I'm just amazed at how great of a person he is.

The one thing you intentionally have to do every single day?

Drink coffee. Two cups.

Hobby that brings you the most joy?

I have to say blogging. I'm really enjoying writing and kind of putting my thoughts out there. 

Nice. Most rewarding thing you've done for someone in need?

I'd have to say my dog again. So sorry to bring her up. But yeah, I mean, just rescuing her and giving her a chance at life. And it definitely hasn't always been easy, and it's really hard when you rescue a dog but it's been really rewarding. 

First movie quote that comes to mind?

I'm going to say from the movie “Lincoln”. I just watched that a few months ago. I think that I don't know if it's the exact quote, but it's “If two things are equal to the same thing, they're equal to each other”. That just really resonated with me. And I think we have a long way to go in our country to have equality and I just think it's so important that everybody is equal. That quote just really resonated with me.

Last big purchase you made for yourself?

Running sneakers, just bought a pair for myself. Maybe that's not that big. I don't know. 

That’s a purchase you made. We'll take it. 

Food you cannot live without?

Pizza.

Flavor? What kind?

Just cheese.

What is your spirit animal?

I'm going to say elephant just because I really like elephants. 

Finish the sentence, “If I'm stuck on an island by myself…?”

I'm going to look for some water. Because you cannot live without water.

Thank you so much for being here. We have two more parting questions for you. One is where can our listeners find out more about you? And number two, if you were to encourage our listeners to serve, or give it to something, what would that be?

You can check out my blog. It's myfatpurse.com. I write all about our getting out of debt, provide lots of tips on saving money, budgeting, investing, building wealth. I'm also on Instagram @myfatpurse. I'm also on Facebook, My Fat Purse as well. So those are the main ones I'm active on. And then as far as giving back, I would say for each individual person, it really has to be something that's personal to you. So I don't want to say go get to this cause that I'm passionate about. I'm going to say go find what you're passionate about, and a lot of times it's going to relate back to something that's happened in your life. For me, I really like a local rescue that we have here, where they actually take in animals that are at risk of euthanasia, basically deemed on adoptable. And then they re-train them and find appropriate homes for them. So that's something that I'm really passionate about. And I love that our local community has that type of organization. 

That's awesome. Wow. Well, thank you for being with us. It's been great chatting with you.

Thank you so much for having me. I really appreciate it. 

IMPORTANT LINKS





My passion for personal finance and helping people is what led me to create my blog, My Fat Purse. My husband and I have been able to pay off $250,000 of student loan debt, save up a one-year emergency fund, and stock away a six-figure nest egg for retirement – all before age 30. I started my blog almost a year ago to inspire others and provide tools and resources to help anyone looking to improve their finances.

My husband and I have been together for nine years, married for six. We currently live in Colorado but are transplants from upstate New York. The Air Force sent us out here about five years ago and we’ve been here ever since. We’re proud and honored to have served, but we’re now enjoying life being out of the service. Our favorite pastime is hiking the Colorado Rocky Mountains with our very loved rescue dog, Aurora.