In 2005, John Schneider and David Auten had grown accustomed to a lifestyle they say was “fabulously gay,” replete with designer clothes, gourmet meals, weekend brunches and expensive vacations. There was only one problem: They couldn’t afford it.
“We were living beyond our means because we felt compelled to do that, either to prove to people that we were better than they thought we were, or to prove, especially to other men in the gay community, that we were worthy of being friends with,” says Auten.
It wasn’t as though the couple lacked know-how when it came to managing money. Both worked in the financial services industry.
“We were telling clients all the right things to do,” says Auten. “But it was ‘do as I say, not as I do,’ because we weren’t putting money into our 401(k)s. We weren’t saving for a down payment. We didn’t have an emergency fund.”
Instead, they had $51,000 in credit card debt and a lease on a basement apartment in Denver, Colorado. “We realized at that point that we were physically and financially living in a hole,” says Auten.
So, the couple put their financial prowess to use. Less than three years later, in 2008, they’d paid off all their debt and saved enough for a down payment on their first home.
In 2015, realizing their financial journey could help others learn about money, they started Debt Free Guys, a site through which Schneider and Auten, now 49 and 52, respectively, offer financial education in the form of a blog, a podcast and partnerships with businesses.
Since both began working on the business full time in 2018, it has generated close to half a million dollars, they say. Overall, their net worth is now north of $1 million.
Read on for the strategies that allowed the couple to climb out of debt and put themselves on the road to independent wealth.
Finding a pathway out of debt
When the couple decided to begin climbing out of debt, the first step was figuring out how they were spending. When Auten ran an analysis, several common overspending areas emerged, including dining out and clothing. But one line item proved particularly shocking: interest charges from their credit card balance.
“It turned out we were paying about $10,000 a year just to finance our debt,” says Schneider. “If your boss gave you a $10,000 raise you would be ecstatic, right? You’d go home and party. And here we were costing ourselves $10,000.”
It took the Auten-Schneiders less than three years to pay down $51,000 in credit card debt.
Courtesy of Debt Free Guys
The couple used a 0% balance transfer to eliminate interest payments and stopped using credit altogether. They set strict spending limits for gas, groceries and entertainment, and put every bill and expense they could on autopay.
They also cut their budget by eliminating what they call “superfluous” spending, including exchanging gifts with friends and family members of adult age and any travel that work wasn’t paying for.
Nearly everything they saved, they funneled toward paying down their credit card debt. Even with neither of them earning a salary north of $100,000, it took them less than three years.
Focusing on accumulation
As they tackled their debt, the Auten-Schneiders still managed to stash some money away for the future. To get a matching contribution to their 401(k) plans from their shared employer, each contributed roughly 5% of their salary.
Once the couple felt sure they wouldn’t fall back into old spending habits, they began ramping things up. “That was when we started focusing on accumulation. The same strategies and tools and tricks you use to pay off debt are the exact ones you use to build your wealth,” says Auten.
“But rather than funneling as much money as we could toward debt, we were putting as much as we could toward our investments, whether it was emergency savings, saving for a down payment on our condo or into our 401(k)s.”
The Auten-Schneiders on their wedding day. The couple married in 2017 after more than 13 years together.
Source: Studio Lemus
After the debt was paid off, the couple bumped up their 401(k) contributions to 15% and participated in their company’s stock purchasing program. They kept their emergency savings between $1,000 and $2,000, continually replenishing it as needed.
They also stashed $500 a month to put toward purchasing a home, ultimately spending $6,000 on a 3% down payment on a Denver, Colorado, condo in April 2007. They were careful, they say, to buy a property that allowed them to live within their means. The mortgage payment was roughly $900 — just about the same as what they had paid on the basement apartment.
Building independent wealth
Schneider and Auten soon realized they had a unique voice in personal finance as people with both a personal story and professional experience with money. The couple began to outline their debt payoff strategy online, but nothing coalesced until they attended personal finance conference FinCon in 2015.
“We realized that out of all of these people talking to various demographics, there was nobody talking to the LGBTQ community,” Schneider says. “It was shortly after that we launched the ‘Queer Money‘ podcast.”
It was the beginning of a three-sided wealth-building strategy the couple now refers to as the “wealth builders’ pyramid.” The first side they already had already started: investing in the stock market. The other two: “having your own small business of varying degrees, whether it’s a side gig, part-time income or something you do that turns into a full-time business, and then real estate investing.”
The goal is to grow each income stream so it could cover 50% of your living expenses. They idea, says Schneider, is if you’re having a down year in any one side of the pyramid, the other two can keep you covered without having to dip into savings or go into debt.
Schneider quit his job in 2015 to get the business off the ground, went back to work nine months later, and ultimately left for good to work on Debt Free Guys in 2017. In 2018, the couple had saved up $100,000 in cash and the business was pulling in about $60,000 a year, so Auten left his job too.
Over the next few years, the Auten-Schneiders sold their Denver home and spent time in Pennsylvania, Spain and Las Vegas, where they toughed out the beginning of the Covid-19 pandemic. In June 2022, they embarked on their real estate investing journey in Toledo, Ohio, a city they chose for its abundance of duplexes.
That’s exactly what the couple purchased, with a 20% down payment of $28,000 in June 2022. Auten and Schneider currently live in half of the duplex, with rent from their downstairs tenant covering the entire monthly mortgage payment — a strategy known as “house hacking.”
It’s a move the couple hope they can replicate over the coming years while also growing their business.
“We’re hyper-focused on trying to acquire more real estate,” says Schneider. “The lofty goal is to acquire anywhere from four to eight properties within the next three or four years using the house-hacking strategy.”
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This story originally appeared on CNBC
