Illustration by Dave van Patten

Into the Black: My Wife and I Went from $110,000 in Debt to a $250,000 Net Worth

Air Force captain and personal finance blogger Spencer Reese is on a mission to be financially independent by 40

This is the latest installment in our series Into the Black, where we hear from people who escaped the burden of unpaid bills and loans through sacrifice and ingenuity. This week we talk to Spencer Reese, a U.S. airman who went from indebted college grad to personal finance guru.

Spencer Reese, 29, New Jersey

Past debt: $110,000
Source: Student loans ($60,000 of it Spencer’s, the rest his wife Julia’s)
Past jobs: Spencer, Air Force lieutenant; Julia: pharmaceutical sales representative
Past salaries: $35,000; Julia: $50,000
Current jobs: Spencer, Air Force captain; Julia: regulatory affairs director at pharmaceuticals startup
Current salaries: Spencer, $100,000; Julia: $35,000
Net worth: $250,000

Welcome to real world

I graduated from Boston University in 2010 with a degree in economics and about $60,000 in student loan debt.

I felt overwhelmed by my debt. It just seemed like so much of my paycheck was going toward repaying this debt, and it still wasn’t going down. And I couldn’t spend any money on things I actually wanted.

I was a member of the Air Force ROTC in college and was stationed in San Antonio afterward to complete my training to become an officer. Meanwhile, my girlfriend Julia (now my wife) was working in pharmaceutical sales in New Zealand, where she’s from.

We met in West Palm Beach, Florida, one Christmas while I was still in college. We bumped into each other at a party, and stayed in touch ever since.

Julia had a much easier time than me paying off her debt. She had about $50,000 in student loans, and paid off 90 percent of it in a year.

It was like she was playing a video game on cheat mode. Her company provided her a car, a laptop and a cell phone. She traveled for work two weeks a month, during which her company covered all her expenses. She was living with her parents, so she didn’t have to pay rent.

In New Zealand, student loans have zero percent interest as long you stay in the country, so she didn’t want to move to the U.S. right away. It wasn’t easy. We only saw each other twice a year. We depended on Skype, email and Facebook to stay in touch. But the times we were together, we made them special. Why didn’t it fizzle? I’m not sure. I guess when you find the one, you just know.

Barely scraping by

Meanwhile I was in Texas, making the $500 minimum monthly payment on my loans and not making any progress on the principal. I just couldn’t afford any more than that between all my other expenses.

I was living in a military dorm at the time. It wasn’t great — just a studio with a kitchen, bathroom and living room — but I was focused on getting through training. I didn’t pay rent, and spent $100 a week on groceries and $50 a week on non-essential entertainment. In between bar tabs, gas and my cell phone bill, it went pretty fast.

Six months after graduating, my Sallie Mae loans kicked in. My minimum payments jumped to $700 a month and I was saving even less money.

I had been reading a few personal finance blogs, but I didn’t have a great grasp of the subject. I know you should contribute to your IRA, spend less than you earn and not let credit card debt pile up, but I didn’t know why it was important to do those things.

Christmas 2010, I proposed. We got engaged after seeing each other in person just four times over two years.

Both us were in debt, but we weren’t worried about money. From early on in our relationship, we talked about money. Money was important to me, and it was important that my partner have the same money values as me. That came from my parents. My dad had had a rough go employment-wise. He graduated in 1984, when the job market was in a slump, and was laid off in 2008 amid the recession. It gave him a sense that you have to look out for yourself and save, which he instilled in me at a young age.

Julia and I talked, and discovered our ultimate goal was financial independence — getting to a point where our accumulated assets would support our lifestyle without us having to work.

Merging our finances

We got married in October 2011. We got married in October 2011. She wanted to elope in Vegas, but I convinced her to have a modest wedding in my hometown in Connecticut with 75 people. All told, it cost $5,000.

After we got married, I also tore through every personal finance book I could find. The Millionaire Next Door, Personal Finance in Your 20s for Dummies and I Will Teach You to Be Rich were especially helpful. I moved out of the military dorm and was given a $850 monthly housing allowance. We found a one-bedroom apartment for $750, so we were able to bank the remaining $100.

But I still wasn’t making progress on my loans. So for the first time, we sat down and wrote our first formal budget, with paying off my debt as the top priority (hers was all but gone at this point). Until that point, I hadn’t really tracked my money closely.

She looked at our expenditures and found places to make cuts, and I made sure we were putting enough toward debt and savings. (We joke that Julia watches the pennies, while I take care of the dollars.) I increased my monthly debt payment to $1,000 because of the efficiencies she made.

Newlywed life (on a budget)

Money was tight once we set the budget. I got paid on the 1st and 15th of every month. When that first paycheck came in, we would put aside money for the essentials (rent, gas, cell phone and internet), leaving us just $20 a person for entertainment.

We completely cut out going out for dinner or drinks. I started bringing a lunch to work each day; we rented a lot of $1 movies at Redbox. We’d hang out at friends’ houses and bring a six-pack. And we were newlyweds, so we found other ways to entertain ourselves.

One time, Julia had planned this big weekend away for us in Big Bend National Park. She found a cabin to rent, and the entire trip cost just $80. But I looked at our budget and said, “I don’t think we can afford this,” and we didn’t go. There were tears, but we were determined to meet our goals.

In April 2012, I started a personal finance blog, Military Money Manual. I was doing a lot of research on personal finance, and was reading a few military personal finance blogs, and thought I could do this.

The next month, I got a $12,000 annual raise, and we decided to put $500 a month toward a down payment on a house. I was getting re-stationed to Washington State soon, and we wanted to buy something there.

Julia was unemployed after we got married, because she had to leave her job in New Zealand. Military spouses have a hard time in their careers because they have to move so often, so we always planned to live off one income. But Julia did work part-time at a bank in 2012, and was able to contribute $6,000 to the down payment.

Home ownership

June 2012, we moved to Tacoma, Washington, and bought a one-bedroom condo for $155,000, with a 10 percent down payment. It was listed for twice as much in 2008 before the housing collapse.

At this point, I was $43,000 in debt, and making about $50,000 a year including my housing allowance. In March 2013, I had my first overseas deployment. I was gone for a month and received additional, tax-free hazard pay for being in a combat zone. My wife went back to New Zealand to visit family, so we rented our place on Airbnb. We paid $7,000 toward my student loans that month, paying off one loan completely and dropping my minimum monthly payment to $200.

We ended up selling our house last October for $190,000, and we used the profit to pay off the remainder of our debt. My last student loan payment was $21,400. We didn’t buy a new house. Instead, we rent one floor of a three-story home in New Jersey. The rent is $1,000 below my housing allowance, which is additional income for us.

Building our wealth

Getting debt-free was pretty underwhelming, actually. We might have gone out for a celebration dinner, but it wasn’t memorable. We were focused on achieving our larger goals.

I got my third raise in October 2016 (my second was in 2014), and my salary is now $100,000. Julia now works at a pharmaceuticals startup, and while the pay isn’t good (just $30,000 a year), she has equity in the company that might result in a huge payoff down the road. Plus, they let her work remotely, so she won’t have to change jobs when we move again.

We now invest 50 percent of all our after-tax income. First we max out my Thrift Savings Plan (the military version of a 401(k)), then our Roth IRAs, then put money toward our post-tax investment accounts. Our net worth is now $250,000.

One thing I learned through all this is the importance of automation. If you have to make a choice to save every time you get a paycheck, it’s tough. But if you set up automatic payments to your debt, your 401(k) and your savings accounts, you don’t have to worry about it.

But there’s an important relationship lesson, as well, which is you have to learn to communicate about money like you would anything else. Sit down and ask yourselves, “What are our goals?” It’s something you need to talk about if you’re going to be in a serious relationship, probably as early as the second or third date.

Because it’s not easy spending having just $20 a month in spending money. But we got through it because we had each other.