Podcast: Play in new window | Download (Duration: 46:05 — 42.2MB) | Embed
Subscribe: Apple Podcasts | Google Podcasts | Spotify | Stitcher | RSS | More
On today’s episode, Cody and Justin are joined by Andy from Marriage Kids and Money. He tells us his relatable yet inspiring story of living a life with far too much spending brought on by lifestyle creep.
Lifestyle creep is when you get used to a certain way of living but then as you make more money you increase that style of living little by little until it becomes unsustainable or at least larger than you intended. Andy and his wife were spending every bit of their salaries which totaled over $100k. Reality struck when she became pregnant and they knew they needed to change their ways.
Now listen to the story and hear their remarkable turnaround and how Andy is now helping people walk in his footsteps.
- Andy and his wife go together in 2010 with a combined earning over $100,000 but they were carrying a good bit of debt and spending everything they earned
- That debt included $50k in student debt, a nice car loan and frequent use of their Home Equity Line of Credit (HELOC)
- They had a wake-up moment when he realized they were going to be having their first child
- Quickly he started pouring over podcasts, blogs, and anything to help them learn
- They’re currently living around Detroit which has shown a huge turnaround
- He bought a house right out of college in mid-2000s and realized he couldn’t afford the mortgage
- To help with the bills he ended up bringing in several roommates who paid the mortgage for him…Another house hack win!
- When he got married they realized the roommate situation wasn’t going to work so they bought a new house with the goal of paying off the new $350k house in 5 years
- He was able to get back all of his money from the first house but didn’t make anything off of it
- The first material that helped Andy really turn things around was Dave Ramsey’s Total Money Makeover
- Once a month, he and his wife would sit down and review their budget until they got it under control
- The biggest changes they had to make was cutting out entertainment like food and drinks
- He talks about how tough it was saying no to friends in family in order to pay down their debt so aggressively
- We discuss the struggles with getting your spouse on board with this new financial plan
- He said his biggest mistake was focusing on the process and numbers vs the outcomes, emotions, and the “why” behind the plan
- Once the subject went from percentages to a discussion of having more time with their kids, Andy’s wife became equally as fired up about the journey
- A powerful exercise he discusses to help with this is to just sit down with your significant other and talk through your perfect day/life if money wasn’t an issue
- Then we swap to start discussing how their life is changing now that their finances are in a good place and they’re starting to build their financial independence lifestyle
- With their kids starting school, his wife has begun a home organization business which is just another great example of how you will discover your true passions when you step away from a full-time job and those passions will probably bring you unexpected income
- We then shift the discussion back to their debt pay-down where Andy gave us the tangible steps to paying off their house in 4 years
- The first piece was a $150k down payment after a lot of aggressive savings
- That got their mortgage down to $200k
- They continued their monthly expense reviews
- Every bonus or additional dollar they received they put towards the house
- Andy’s wife actually stepped completely away from her day job to be a stay at home mom with $80k left on the mortgage
- That mortgage was completely paid off a little over a year ago
- That down payment that they had been saving up for was all in cash after some shady dealing Andy had with a financial advisor
- Andy admits that these were major financial mistakes but worth it due to the amount he learned throughout the process
- Other ways Andy recommends getting your spouse on board with financial goals is simply leading by example along with the help of the great modern FinTech tools out there such as Tiller, YNAB, or Mint
- If you’re significant other has a taste for fancy things and nice things seems like a real priority, Andy suggest simply writing out items to show what can and can’t fit and not make it just theoretical
- For him and his wife, one of these examples would be travel hacking where they turned the journey to getting these elaborate trips paid off with points into a game but also warns that credit card hacking should only be done if you’re really smart with credit cards
- We then shift gears to paying for their children’s education
- They don’t plan on providing all the money for their college expenses but between their 529, scholarships and working they believe their kids can graduate debt free
- He also admits that traditional college may not be the answer anyway and calls out the student debt epidemic in America
- Andy himself has an undergrad in communications and a masters in business but admits many people don’t need a college degree
- For the digital nomads, he thinks it can be a great idea but cautions that you should be extremely passionate about your craft because if you don’t love it, you’ll probably quit because the money won’t be there in the beginning.
- Now Andy is focusing on the next level of his journey after feeling really solid on the basics and that next piece for him will be rental properties
- He admits that the debt-free mentality makes it hard to take business ventures and loans but the plan is to buy a rental property with mostly cash savings
- His number one tip for people on their financial journey is taking time out to talk to your significant other and family about what their dreams are and what drives them in order to make a plan you can be passionate about
- Life has curve-balls: Andy and his wife were spending away without a care in the world until life happened. It’s all too familiar that some life event pushes people to adapt and overcome. We hope you’ll make the decision for positive changes before it’s forced on you.
- Find middle ground: Andy was hyper-focused on saving money, his wife still wanted to travel as we all do. They made it work via travel hacking. It would have been easy for one side to try to win but instead, they walked away both as winners.
- Know your audience: Listen, most people in this community are guilty of being way too excited about numbers but not everyone is inspired by math. If you don’t want to be on this financial journey alone, you need to find a way to talk to others and get them in lock step with you.
Call to Action
Sit down, no phones, no television. If you have a significant other, friends, or family, sit them down with you. Now, walk through a perfect day, month, etc where money isn’t a concern. Not hit the lottery style but just imagine you had the same income you do now but you weren’t working. What would your days look like? Be detailed. Write it down and reference it often.
Join the Community
We’d love to hear your comments and questions about this week’s episode. Here are some of the best ways to stay in touch and get involved in The FI Show community!
- Sign up for our exclusive newsletter
- Join our Facebook Group
- Leave us a voicemail
- Send an email to contact [at] TheFIshow [dot] com
If you like what you hear, please leave a rating/review!
Links from the show:
Our Favorite Travel Rewards Cards
Book: Total Money Makeover
Podcast: Marriage Kids and Money
Blog: Marriage Kids and Money
Facebook: Andy Hill MKM
Learn More About Your Hosts:
Fly to FI (Cody’s Blog)
Saving-Sherpa (Justin’s blog)