When Deacon Hayes and his wife Kim sat down to discuss their finances, the newlyweds discovered they had $52,000 in debt, including $18,000 in car loans, $27,000 in students loans, and $7,000 in outstanding credit card balances. That jarring realization prompted the Phoenix couple to spend the next 18 months paying it off through a combination of cutting back their spending, selling their belongings online, and taking on a second job.
Based on what he learned from his experience with debt, Hayes started the blog WellKeptWallet.com to help people manage their finances by keeping expenses low, finding successful people to emulate, and developing creative ways to earn extra money. He also teaches an eight-week class for Arizonians who want to learn personal finance basics. U.S. News recently spoke with Hayes about his journey out of debt and his tips for couples who want to organize their finances. Excerpts:
Four years ago, you were $52,000 in debt. What was the catalyst for you to turn things around?
When my wife Kim and I got married, we decided to combine our finances and we created what I call a financial "game plan," a very simple version of it where we put all of our financial data on one page. It was the most eye-opening experience because I was able to see how bad our situation really was. Before having all of our data in one place, we had no idea [how bad things were]. We knew we had a car loan over here and she had student loans and I had student loans and we had credit card debt. [But] once we put all of our data in one place, it was apparent to us that we needed to make a change.
What strategies did you use to recover your finances?
Tracking your finances is key--doing it on a weekly, biweekly, or a monthly basis. We were comfortable with doing it once a month. The second thing that we implemented was the debt snowball that was made famous by Dave Ramsey, where you list your debt smallest to largest, regardless of the interest rate. And the reason why that was so impactful for us was it gave us a strategy to build momentum. Once we paid off a small debt of, say, $200, we felt like we were getting somewhere. It was a psychological thing. Once we organized all of our debt smallest to largest, we were able to [gain momentum.]
Did you focus on cutting your spending, boosting your income, or both?
Both. I was actually in a 100-percent commission-based job, where I was able to work harder and get paid more. But on top of working full-time, I decided I would also get a part-time job delivering pizzas to give us more cash flow to pay down our debt.
What adjustments did you make on the spending side?
We went through our financial game plan and we went line by line and we said, "How can we make this line smaller?" By giving that focus to each area that we spend our money, we were able to reduce almost every service that we had, whether it was our cable, our cell phone, our insurance. I cancelled my gym membership. We decided we were going to go out to eat less, and when we went out to eat, we wouldn't order drinks. So we really tried to scale back our lifestyle dramatically to be able to have extra cash to pay down our debt.
Did you ever feel overwhelmed with the process?
We did feel overwhelmed. All at once, we went from being single, living in our own places, to combining two households and her starting her career and me starting a new job. So there was a lot of stuff going on that was causing stress and anxiety. Not having the finances in order just added an extra level of stress and really was the catalyst to say, "We need to do something about this."
How did you and your wife get on the same page financially?
One of the best things that we did was take a class called Financial Peace University by Dave Ramsey. There are other classes out there, but for us, this was an amazing class because it was 13 weeks where we sat down together, listened to information about managing money, and then we discussed it as a couple and it really brought us together and put us on the same page.
[Read: Should You Save or Pay Off Debt?]
How does the blog fit into all of this? Did that serve as an accountability tool for you?
I started it during the process of getting out of debt, but towards the end. I had some success and some experience to be able to add value to people who are trying to get out of debt. It was definitely an accountability system as well because we have people out there now that know our goals, our ambitions, and we don't want to let them down. We didn't want to let ourselves down, but we didn't want to let other people down that we're trying to encourage and inspire to do the same.
Is there anything that you would have done differently?
I believe that all of the experiences that we have happen for a reason and that those experiences can make us better. Whether they are challenges or whether they are positive experiences, I don't think I would do anything differently in the sense that what we did got us where we are today. Now I am able to help other people get from where they are to where they want to be because of those challenging times that I went through.
What are your financial goals now?
Our financial goals are to be completely debt-free in the next five years. We paid off $52,000 in 18 months. That was consumer debt, so that consisted of car loans, credit cards, student loans, etc. We do have a mortgage still, so our goal is to be in our mid-thirties and be completely debt-free.
[See 50 Smart Money Moves.]
Do you have any tips for readers on getting and staying out of debt?
The first thing I would do is stop borrowing money. I think that's what gets people into these situations. The second thing is to create a financial game plan. I have a form on my website people can use to be able to do what we did and put all their finances in one place.
[People also should] sell what they don't need. I can't tell you how much stuff we sold on Craigslist, eBay, and Amazon. There's a bunch of stuff in your cabinets--in your closets--that you can just sell that will give you cash to really give you some momentum. And lastly, be "all in." I think there's people that have one foot in the 'I want to get out of debt" boat and the other foot in the "I want to buy whatever I want" boat. You've just got to get into the "hey, I want to get out of debt" boat and start sailing.
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