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March 9, 2020

How Being Honest in my Marriage Helped us Pay Off $61,000 of Debt – with Michael Lacy


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Being in debt can cause mental stress, physical stress and marital stress.

Michael Lacy and his wife Taylor were under marital stress when their debt caused them more problems than they were prepared for. After some honest discussions and hardcore planning, they managed to pay off all their debt and come out stronger as a couple.

Michael now helps other couples find common ground and work together on their finances through Winning to Wealth and podcast Wealthy Neighbors.

Today, we talk about how they first accumulated $61,000 of consumer debt, how they worked through their marital problems and what they’re doing with their money now that they are debt-free.

How They Accumulated Their Debt

Michael and Taylor met in high school. When they first started living together, they were earning a solid income together at $120,000 per year. However, their money management had no structure and they had no real vision for the future. 

Their finances first took a hit when Michael went on a road trip and found himself with a car emergency. He swiped his credit card to pay and soon started getting statements in the mail. Next thing he knew, he was using his credit card for other “emergencies”, like a new TV. Both Michael and Taylor bought new cars, and soon found themselves with $20,000 of consumer debt and $40,000 of car loan debt. 

The debt kept piling up until they got married and went on their honeymoon. The trip included a luxury hotel and expensive activities planned. Michael wanted the best for his wife, but he knew they couldn’t afford this trip. A canceled snorkeling activity led to a discussion about money, which turned into their first marital fight. 

When Honesty in Marriage Pays

Michael knew that after their honeymoon, they would be coming back to a pile of bills and responsibilities. After their first fight, Michael decided to open up and be honest with Taylor. They had a new house, two car payments, and credit card debt and he needed a plan to get out of this mess.

The first time Michael put together a plan to tackle this debt with his wife, he came with a budget, spreadsheet and big ideas. Taylor’s first reaction was to turn it all down: she wasn’t willing to give it all up to be debt-free.  

This is when Michael realized he needed to show his human side so they could work together. He needed to show Taylor how he felt, what he needed and what he wanted. By showing his human side, Taylor was more empathetic and they were both able to find common ground to work on together. This honesty paid off. 

Michael Lacy and Family

Trouble on the Road to Debt Freedom

The first step they took as a couple was to set a budget every month. Michael was willing to be flexible and meet her 70% of the way, and add those things that she valued into the budget. 

The main thing they changed was the spending plan; they were spending more on food than on rent, and so Michael knew he had to cut down the restaurant outings. Finding stuff around the house to sell became a common habit for them. And they cut their cable and did small actions here and there to keep freeing up more money to pay off debt. They decided to keep their cars since they both needed them for work. 

But 8 months into their debt-free journey, Michael lost his job. He was one of the top salesmen in his company earning a good salary. This job loss affected his ego, and of course, his family finances. The stress affected his wife's health too, and she ended up having to take some time off of work. The accumulation of everything meant their finances took a hit, and they had to reevaluate their debt payoff plan. 

They eventually got back on their feet: Michael kept finding things to sell in the house, he started working for a delivery service, and they both worked hard to put everything extra towards their emergency fund and debt payments. They eventually bounced back and Michael got a great job earning double the salary he was earning before. 

How Their Marriage Partnership Crushed the Debt

By this time, Taylor was fully on board. They were both pushing towards debt freedom and kept picking each other up in difficult times. Their progress kept them moving forward, and by leaning on each other and having real conversations, they became more unified than ever. 

Exactly 16 months after their wedding day, Michael and Taylor had paid off all their debt. Everything they earned was now 100% theirs, and they no longer had to commit $4,000 per month toward debt.

Related Article: How We Paid off $50,000 of Debt in 1 Year

What To Do With Money After Debt Freedom

Their first priority after getting rid of their debt was building a 9-month emergency fund. Taylor has an autoimmune disease, which means they both need the comfort of knowing they can survive several months without earning a paycheck if Taylor isn’t able to go back to work. 

What do they do with their money now? They invest in index funds. First, they match their 401ks and 403b, and then distribute the money to traditional IRAs and regular investment accounts. Having all this money in investments gives Michael the peace of mind that he can easily walk away from a toxic job if he wants to.

He went through a couple of career changes and having that buffer meant he was much more flexible and was easily able to walk away when he didn’t feel the job matched his expectations. He explains that when you have money saved up, you’re able to have much more control over your life and decisions. 

They now save 40-45% of their income and they plan to reach financial independence by the age of 40 by drawing down on their index fund investments. Having said that, they are still focusing on enjoying the journey and spending as much time as they can with their daughter.

Related Interview: How Becoming a Parent Helped Me Retire at 41 – with Chris Mamula

Advice For Others

Michael admits that not everyone can do what he and his wife did since it mainly depends on your debt to income ratio. Theirs was 2:1 ($120,000 income, $60,000 debt) – depending on your ratio, it may be easier or more difficult to pay off their debt. 

The first tip Michael offers is to start by laying out all your finances and being fully aware of your situation. He says it’s incredibly important to understand where you’re starting from and look at the specific details. From there, it’s easier to create a plan with a goal in mind. 

When it comes to talking to your spouse about money, he says the best thing to do is to be human. Your spouse may not care about budgets or spreadsheets, but they do care about you as a person and about how you feel. By showing them your feelings and your wants, it’s easier for them to understand your point of view and be willing to meet you halfway. He agrees that sometimes it’s better to be 70% on board with your spouse and to be flexible when necessary. 

Michael Lacy and his wife Taylor on their wedding day

Michael’s story shows us that being honest in a marriage is the key to building a healthy financial plan together, whether that’s a plan to pay off debt, invest in the stock market or build an emergency fund. Your spouse is the person who will help you through tough times and keep you motivated with your progress, so you want to have them on board from the beginning.

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Carpe Diem Quote

“What counts in making a happy marriage is not so much how compatible you are, but how you deal with incompatibility.”

Leo Tolstoy

Are you working with your spouse to pay off your debt?

Please let us know in the comments below.

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Andy Hill

Andy Hill, AFC® is the award-winning family finance coach behind Marriage Kids and Money - a platform dedicated to helping families build wealth and happiness. With millions of podcast downloads and video views, Andy’s message of family financial empowerment has resonated with listeners, readers and viewers across the world. When he's not "talking money", Andy enjoys being a Soccer Dad, singing karaoke with his wife and relaxing on his hammock.

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The Marriage Kids and Money Podcast is dedicated to helping young families build wealth and happiness.

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