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Offbeat One Couple’s Journey From Debt to $1.5 Million in Savings

18:26  04 july  2018
18:26  04 july  2018 Source:   nerdwallet.com

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Now they're debt free and have about $ 1 . 5 million in savings , despite the fact that their income was essentially cut in half for a while, after Al lost his Lesia is an engineer who works in IT, and Al worked at a pharmaceutical company. The couple doesn’t have kids. “ When you lose a 16-year job but you

Al and Lesia Riddick went from 0,000 in debt to about $ 1 . 5 million in savings in 16 years. How did they do it? A big part of their success has been Over those five years living in Cincinnati, their annual household income averaged about 9,000. Lesia is an engineer who works in IT, and Al worked at

a man sitting on a bench next to a body of water: Al and Lesia Riddick in Isla Mujeres, Mexico. (Courtesy of Al Riddick) © NerdWallet Al and Lesia Riddick in Isla Mujeres, Mexico. (Courtesy of Al Riddick) When Al and Lesia Riddick got married 16 years ago, they had about $150,000 in debt, including a student loan, a car loan and a mortgage.

Now they’re debt free and have about $1.5 million in savings, despite the fact that their income was essentially cut in half for a while, after Al lost his job in 2010.

How did they do it? In addition to the obvious — cutting expenses — a big part of their success has been careful planning.

Tackling debt — and a new career

About two weeks after Lesia and Al met, Lesia bought a new car. “I was so excited. ‘I got a car!’ He just looked at me like, ‘You already had a car. Why did you need a new car? That’s just more debt,’” she says. “So I brought a car note into the relationship, but we paid it off and I’m still driving that car.”

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Now they’re debt free and have about $ 1 . 5 million in savings , despite the fact that their income was essentially cut in half for a while, after Al lost his job in 2010. Over those five years living in Cincinnati, their annual household income averaged about 9,000.

Now they’re debt free and have about $ 1 . 5 million in savings , despite the fact that their income was essentially cut in half for a while, after Al lost his job in 2010. How did they do it? In addition to the obvious — cutting expenses — a big part of their success has been careful planning.

The car wasn’t the only thing they paid off. Soon after they married in 2002, Al and Lesia started to focus on tackling their debts. They trimmed expenses, including ending a tendency to frequent high-end restaurants. They paid off all of their debt, including their mortgage, by the end of 2007.

» MORE: Should you pay off debt or save for retirement? Here’s our advice.

Over those five years living in Cincinnati, their annual household income averaged about $149,000. Lesia is an engineer who works in IT, and Al worked at a pharmaceutical company. The couple doesn’t have kids.

In 2010, Al got laid off. Still, he says, “When you lose a 16-year job but you have no debt whatsoever, it allows more options in life. Option A was to get another job, and option B was to follow my passion and purpose to help other people become more financially fit, so that’s what I did.”

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Now they’re debt free and have about $ 1 . 5 million in savings , despite the fact that their income was essentially cut in half for a while, after Al lost his job in 2010. How did they do it? In addition to the obvious — cutting expenses — a big part of their success has been careful planning.

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Al then launched Game Time Budgeting, a company that offers educational seminars to help people become financially fit. He also wrote “The Uncommon Millionaire,” a book about his money philosophy.

» MORE: 3-step guide to paying off debt

Talking money in monthly meetings

Al and Lesia, both 43, have always made a point of deciding each month where their money will go the following month.

“When we sit down and have our monthly meetings, we become broke on purpose,” Al says. “Every dollar of income that’s coming into the house, we spend it virtually first, before we ever get it.”

That is, they allocate their income to groceries, savings, philanthropy — any and all of their expenses. That includes travel. The Riddicks take three international trips a year, in addition to smaller weekend trips.

Q&A with Al and Lesia

How did you pay down your debt?

Al: We paid down our debt from smallest to largest: student loan, Lesia’s car, and the house. [The Riddicks started paying off their debts in September 2002 and by April 2004 had paid off the student loan and the car loan.]

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Paying down debt : Couples that pay together, actually stay together. The biggest fights are likelier to spring up when someone blows the budget or hidden debt comes to light in relationships. More: One couple ’ s journey from debt to $ 1 . 5 million in savings .

More: One couple ’ s journey from debt to $ 1 . 5 million in savings . What is your next goal? Josh: Our endgame is financial independence. Debt payoff was just one step in that process. We are “ saving to buy our freedom.” We want to have freedom to make choices not based on money.

During our annual review at the end of 2006, we set a goal to pay off the house the following year. This is what I’d call a stretch goal. By Dec. 21, 2007, we paid off the remaining balance of $106,354. Not bad for 12 months.

» MORE: Should you pay off your mortgage?

As you can imagine, any extra money went toward paying down this debt. Thankfully, this was a good sales year at my job, so bonus checks went toward debt elimination as well. We cut back on everything in 2007. … We also lowered our retirement contributions that year to generate additional cash flow. They went back up to the max in January of 2008.

a person standing posing for the camera: Al and Lesia at a fundraising gala (Photo courtesy of Al Riddick) © NerdWallet Al and Lesia at a fundraising gala (Photo courtesy of Al Riddick)

Some of our friends think we’re kind of weird, but we don’t think we’re weird. … Sometimes people expect you to live in a bigger home and drive big fancy cars that cost a lot of money, but we just choose to live a different lifestyle. At the end of the day, it’s really all about choice.

Lesia: A lot of times people say, ‘You’re still driving that old Toyota?’ … I’m like, “This is why we can go on vacation, because we choose not to spend money on cars.” … I love couponing. We go to the matinee for movies. So we find other things we save on, but a lot of that money goes to our vacations. That’s what we like to prioritize.

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One Couple ’ s Journey From Debt to $ 1 . 5 Million in Savings . We started this journey because we realized if we sacrificed for a short period of time, we would never have to sacrifice again. If we could tell our money where to go, rather than wondering where it went, we could create a bright future for

How they did it: One couple ’ s journey from debt to $ 1 . 5 million in savings . Depending on what sort of cost-of-living adjustments or raises you’ll be given by your employer, you will earn somewhere between .2 million and .6 million over the next twenty years.

How do you handle money together?

Al: We are rarely surprised from a financial point of view as far as the decisions we make throughout the month. Every month, the last week, we sit down and have a finance meeting [that lasts about half an hour] and at the end of every year we have a year-end review. … That meeting is about two hours.

Lesia: It’s kind of a celebration, too. We go through everything we’ve accomplished, even small things, like the first time we went to see this or traveled here. … It’s even things like accomplishments at work, or accomplishments that Al has at his business. Everything we want to highlight for the year.

Al: Once you reach the end of a year, you’ll shock yourself to see how many fun things you’ve done throughout the year. And then we talk about some of the vacations that we might want to take for the next year, and we just go from there.

Lesia: We also have our own allowances. … So that allows for the spontaneous spending. … It’s your personal money. You always get the same amount every month. So you can have fun as well.

Al: And the agreement we have with each other is neither can comment on how the other spends their allowance.

Lesia: What really makes it work is that we have a partnership. We trust each other.

» MORE: On track for retirement? Check a retirement calculator to find out.

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One Couple ’ s Journey From Debt to $ 1 . 5 Million in Savings . We started this journey because we realized if we sacrificed for a short period of time, we would never have to sacrifice again. If we could tell our money where to go, rather than wondering where it went, we could create a bright future for

my savings journey and quickly realized that making ,000 after taxes was going to be enough to get me to $ 1 million in 19 years at a 50% savings Let’ s take a big step up and look at the impact of savings rates on years to $ 1 million at the 0,000 after-tax income level. If you are making at least

Do you plan to retire early?

Al: Right now we’re in what I call the wealth accumulation phase. We just want to continue to live well below our means to create options in the future. It’s not like either of us is going to stop working tomorrow, because we like what we do, but we want [to retire to] an island in the Caribbean.

Leisa: Definitely. … I want to be in a position where we can make the decision to retire when we’re ready and not have to wait. A lot of people say they have to wait on stock prices, or paying off bills. … I want to be at a point when we say, “Hey, it’s time,” we’re ready to do it.

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Andrea Coombes is a writer at NerdWallet. Email: acoombes@nerdwallet.com. Twitter: @andreacoombes.


Could you get by on the average retirement income? .
The average household led by a retiree makes $48,000 annually before taxes and spends roughly $46,000 a year. That’s according to the Bureau of Labor Statistics’ (BLS) measure of the…The average household led by a retiree makes $48,000 annually before taxes and spends roughly $46,000 a year.

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