Extreme Savers: From Owing $25K to Being Debt-Free in 2 Years

Written by Sarah Cocchimiglio

The second time was the charm for Randy Buckman, who had to learn twice that living paycheck to paycheck and racking up credit card bills to maintain a lifestyle wasn’t worth the stress.

At 25, he was still living at home with his parents, with credit card debt, a car loan and no savings account. Buckman wasn’t born a saver, but he realized his financial future was uncertain if he continued spending more than he was earning.  

“I thought to myself one day, ‘If this is the way I am living while I live with my parents, how is it going to be when I am on my own with a family to take care of?’” he said.

This realization inspired Buckman, of Rochester, Mich., to start teaching himself about personal finance, saving a little bit of money and paying off some credit cards. Two years later, he was engaged and househunting. He and his fiancee found a 1,700-square foot foreclosure on two acres and bought it for $60,000 less than it had been worth the previous year.

“We patted ourselves on the back as we signed our income away for the next 30 years,” Buckman said.

Despite his newly learned financial lessons, Buckman and his future wife went through their savings and started to rack up credit card debt fixing and updating their new home. “We were wearing out the magnetic strips on our numerous cards,” he said.

Finally, still reading about personal finance and looking for “that one thing, that one piece of advice, that one tip that we just weren’t doing,” Buckman, now 32, said he came across a book, Dave Ramsey’s The Total Money Makeover, that told him to cut up the credit cards and quit borrowing money of any kind, and to live off a written monthly budget every month.

“Prior to that, we had been saving and paying extra toward debt when we could, but it wasn’t a priority,” Buckman said. “If ‘life’ happened, we would use our savings and if that wasn’t enough, we would use debt to catch the remainder, then start the cycle over of trying to save and pay off debt. Not only did we not have a plan for the unknowns of everyday life, but we didn’t have a plan for the knowns either.”

The couple then committed to acting like borrowing money was illegal. It changed the way they viewed their income and expenditures; they vowed to pay off all of their non-mortgage debt—from car and student loans to credit cards—in two years.

Nine months later, they had paid off $25,000 using money from their wedding, a pay increase Buckman’s wife received when she took a new job, and money Buckman earned working overtime at his first job as a firefighter and paramedic, and by taking on a second job. The couple even accumulated six months' worth of living expenses in savings.

Eventually, they decided to downsize, selling their house at a loss for a 750 square foot apartment closer to work. This way, when kids came along, the Buckmans could afford to live on one income so that Buckman’s wife could stay home with the kids.

“We don’t plan on remaining in an apartment forever, but when we do buy a house, it will be more well thought out and fit our lifestyle,” Buckman said.

Here are some lessons Buckman learned along the way to financial stability:

• Start at the bottom. Pay off balances starting with the smallest amount, irrespective of interest rates. After you pay off the smallest debt, apply the monthly payment you were making to the next smallest debt plus the minimum payment. You won’t feel any out-of-pocket loss and your debt will start to disappear.  
• Buy used. The Buckmans save money by shopping at thrift stores, Craigslist and mom-to-mom sales, especially for clothing and kids’ items. If you must buy new, try to buy refurbished items or floor models.
• Spend some to save some. If diaper bills have you in a budget crunch, consider going cloth. Buckman and his wife laid out $200 up front for cloth diapers and wipes, but ended up saving thousands because they didn’t buy disposable diapers.
• DIY. Buckman makes his own laundry detergent, makes almost all meals at home from scratch and uses baking soda and vinegar for almost all of his household cleaning.
• Plan for the unknown. To break the cycle of having to deplete their savings account for unexpected expenses, the Buckmans initially saved $1,000 in an account to cover the “what ifs” of life before they started their debt-busting. “Once we had that money in place and used it properly, it was much easier to concentrate on not only getting out of debt, but staying out of debt,” Buckman said. “We didn’t have to stay in the cycle of paying off debt, just to go back into debt when the car broke.”