Last year, Chad and Renate Rea were mired in debt and living beyond their financial means.
The couple and their two young children were living in a 3,200-square-foot house, driving a new hybrid car and trying to keep up with credit card bills.
They found themselves consistently $1,500 in the hole at the end of the month.
“We robbed Peter to pay Paul. We always had enough just in time,” Chad Rea, 29, said.
But the financial stress took its toll on the Reas. Chad left his job selling heavy construction equipment when business dried up. He took a job with another construction-related business that was doing better.
“Renting a $300 scissor lifter is better than a $500,000 excavator,” he said.
Renate, 28, has her own photographic portrait studio in North Lawrence, and business was down for her as well.
One day while she was home and Chad was at work, Renate remembered a book a friend had given them. Written by nationally renowned financial adviser and radio show host Dave Ramsey, it had been sitting on a bookshelf for six months, she said. Renate spent a day reading “Total Money Makeover.”
“When Chad came home I was really excited,” Renate said. “I showed him the book, and he was on board.”
The Reas started making changes in their lifestyles.
“It’s just basic common sense,” Chad said. “If you don’t have the cash, don’t buy it. It’s stuff your grandparents lived by.”
First, the Reas had to get out of debt. In September 2008 they put their home on the market. Chad called several real estate firms, but none were enthusiastic about taking on the sale, he said. The Reas decided to sell it themselves. Renate contacted some of her clients, and one couple decided to buy the house 10 days later. They got $45,000 more than what realty firms were suggesting they sell it for, they said.
The Reas now live in a smaller, 2,000-square foot home. Their monthly house payment is $800 less.
Last fall, they held garage sales to earn extra money.
The Reas also sold their car back to the dealer, and Chad bought an older vehicle from his workplace. They dropped their membership to the Lawrence Country Club and stopped taking expensive vacations. They no longer have satellite radio. The couple sold their stock shares, luckily before the market reached its steepest decline. The Reas discovered they had saved themselves $180,000 in expenses.
Changing their lifestyle wasn’t easy.
Besides following basic financial advice, the Reas also credit their faith in God and encouragement from friends for helping them get through their makeover.
“It was a complete pride-swallowing experience and very humbling, but we had to do it,” Chad said.
Even the Rea’s children noticed a difference. No longer did they get a toy or a pack of bubble gum every time they went to a store. The family doesn’t eat out as much nor go to the movie theater. Movies are rented and watched at home. Clothes are purchased at clearance sales and second-hand stores.
“Our kids, they know credit cards are evil,” Chad said.
The family also visits the Lawrence Public Library more often. Chad has taken up hiking.
“We have really cheap ways of entertaining ourselves,” Renate said.
The Reas say they have a better quality of life now, and they are a better family.
“Now I’m a better husband, and she’s a better wife,” Chad said. “Without the pressure, we have a better direction.”
The Reas said they knew they were going in the right direction the first time they prepared a budget and put a plan on paper for getting out of debt.
They aren’t done yet. Renate has her studio up for sale and they still have some credit card debt to pay off.
In two years, they will be debt-free, they said.
“It’s a lot easier and a lot more fun getting into debt than it is getting out,” Chad said.