Lets face it, our debt is a big part of our life and is always hanging over our heads… I feel that almost everyone has a debt story and it’s something that we all have in common. If you do not, well then you are one of the lucky ones that figured stuff out before. Please note that we are still in debt, swimming in it, but we are trying to get out of debt. Do you feel like you are swimming in debt? Please note that you are not alone and it may take years and years to undo your debt but there is always hope.
It’s really scary sharing this with everyone but I really hope this will help someone out there have hope that they can payoff their debt. Because we have paid off over $40,000 in debt within 4 years and that was by not being as tight on our budget as we should have. I know that we hear stories of people paying off lots of debt within a short amount of time, this story is not that, it took us years but we did it! And we still went on vacations and we still have debt but we are one step closer!
OUR DEBT STORY
I would like to start by saying that I am married to this really amazing guy. But like all of us he has a few flaws and his big flaw (when we got married) was that he wanted things and when he wanted things he bought them… like a mountain bike, road bike, a brand new truck, that amazing vacation, that candy, etc… I love my husband and all his flaws because guess what I have a lot too, I know sad day I am not perfect. So first thing to note, we are NOT prefect!!!
But let’s start this story out with a little back ground history. I grew up in a family were we were tot to save save save and only buy what we needed. And I did that. I purchased my first car with $2,200 cash plus had money to pay for my associates degree (I went to a community college to save money) and still had some in savings when that was all said and done.
My husband on the other hand, grew up buying whatever he wanted and he did not have any understanding about credit cards, debt, or savings because his parents paid for everything (not saying that’s a bad thing… just the not understanding money). Then he went to college and continued the same habits of spending and wanting. He had 2 brand new truck during the time he was at college (in 4 years) but he did not have the trucks at the same time. Plus other things were purchased on credit cards…
So 9 years ago, this couple got married and started this amazing life together because we do enjoy our life, we just wish we had NO debt. But guess what, we have debt. And I was oblivious when I got married because I thought everyone was like my family. I had no idea about all the debt my husband had.. . And it took him 4 months to finally show me exactly how much. And I was shocked!!! There was credit card debt, car debt, and student loans. A couple of months before we did get married, my husband did trade in his truck for a brand new car to save on gas money plus car payment. Man, was I dumb and I should have suggested a used car. But it made him happy!! Not really he was trading in his truck… As a side note: we could have just refinanced the truck and payments would have been the same as the car but we had no idea at the time about refinancing.
So we were just married and had a mountain of debt in my book. I was going to school full-time and he was working because he already had his Bachelors. But after 2 semesters, we decided I needed to stop school and go to work to help us pay some debt off. I stopped school and to this day I do not regret it… It was the best decision we made for us at the time. Because we wanted kids and we wanted me to stay-at-home with them. And going into more debt for me to get my Bachelors then not work because we wanted kids. It did not make sense to us.
Back to our debt story, when I stopped school we had my student loans now for the 2 semesters (about $10,000). Then there was between $10,000-12,000 in credit card debt, the brand new car ($19,000), and there was still my husband’s $21,000 in student loans too. A grand total of $62,000 in debt… At the time my husband was making $35,000 a year and I found a job making $10 an hour.
After I found a job, we decided to stop using credit cards, we cut them up… Everything that I made went to paying off the debt but we still put the same amount from my husbands income in also. Looking back we could have done a lot better because guess what, we did not do a food budget. And about 3 years later, I finally did one and realized we were spending about $700 on just food a month… Crazy right and that was for only 3 people.
Back to me working, I worked for 1 1/2 years before we had our first child, meaning I stopped working. At this point we had paid off all our credit cards. We thought we were doing good. About 6 months later, we decided to put Eric’s student loans into deferment. So we could apply all that we were paying there onto our car payments. Because it was a lot less in interest for that loan then the other. And we started paying things off faster. One year later, we decided my husband needed to get his master degree. So back to school we went.
At this point in our life, we had paid off everything but the car (half way paid off) & Eric’s student loans. We did go on 2 vacations to the Caribbean and we were really not on a very good budget but Eric was making more money, I think about $42,000. But he hated, hated his job and that was the biggest reason for going back to school. For a different start and that’s what we hopped. Looking back we could have paid off things a lot faster if we were on a better budget, so get on a budget and stop spending $700 on just food. Or is that just us, we have a food problem, the Costco pre-made food was a biggy…
During Eric’s masters program, he would work full-time during the day (at the job he hated) and then he went to school in the evening (I have told you how amazing he is!). We lived in a very small very old, 2 bedroom 1 bathroom apartment on campus. This was the cheapest housing we could find by the University. I watched a little girl for 2 semesters to make a little extra money, about $450 per month and it was only part-time. I also finally got on a budget!! After one year into the program, we had our second child (remember people kids cost money!). Plus, we paid off our car completely… that was a very very happy day!!! Then we started to save for a down payment on a house, for when we were done with school. So within 4 years, we paid off over $40,000 in debt.. But in hindsight, we probably could have done better.
I want to give you a little more info on how we paid off our debt. A big help was our tax returns. I don’t know if this is what the experts would suggest but it’s what we do. We always claim one less on our W-2 through work. I know some people like having the extra money now but we like the big lump sum of money at tax time. When we first got married, which was in December, the next year we got a really good tax return. We did changed our W-2 when we got married and we were claiming 2, the following years tax return was a little different and we almost had to pay, we only got $100 back. And we did not like that, the thought of having to pay scared us. Things are different now because we have 3 kids and a house (so we claim 5 or 6) and this still gives us the lump sum of money. Also if you’re a college student make sure you are getting your tax credit on that!!!
So in the fall of 2012, we started our hunt for a new job for Eric because he would have an MBA. Can I tell you how hard it was to find a job! It was hard & discouraging… We were applying everywhere but our biggest problem was experience in a manger role. In December, Eric graduated with is masters. And he also finally found a new job but not the job that paid the amazing income we were hoping for. We would be making less than we were previously making and now our student loans were a lot more (when we payoff the amount I will share)… We started to look into housing options for our new area and we found that we could rent an apartment for $950 plus utilities or buy a fixer upper with a mortgage of $750 plus utilities. Can you guess what we picked? That’s right we bought a home and got into more debt. But we still would not change that decision.
Now remember we bought a fixer upper and all the money we use to remodel our home comes from our tax returns and Eric’s work bonus. So for the past 3 years we have not been able to pay off the debt like we were doing before. During those 3 years, we purchase a used car but paid cash for it (Eric had a company car with his previous job, so he needed one). We have gone on 3 bigger vacations, most of those we only paid for food because we used Eric’s travel points. Then we decided to get a different family car because we needed more space. So now we have a car loan payment again. And that is where we are currently in our life with our debt problem…
Today, our debt is our student loans, car loan, and mortgage. We do not have credit card debt and this is an amazing feeling. So why am I writing this post about our money experience? Well I have not been on a budget again and I am ready to have control of our money again, you think we would have learned the first time… I am not spending like I was before but I want to do better.
I also recently read a book called “The Total Money Makeover” (Affiliate Link) by Dave Ramsey. Have you heard of him? I would recommend this book to anyone. It gives you hope to overcome your debt and also can give you a different look on the things you think you need. So Eric and I need to start saving money because guess what we bought a fixer upper that needs to be fixed. But at the same time we plan on paying off our car. Then after that, we will attack our student loan debt. And this is me writing down our goals for the next few years. Does anyone else need a Total Money Makeover?
Anyone else have a debt story or have tips to help pay off debt, please send me an email to share because I would love to hear your story and your advice. What would you do differently or the same? Anything would be wonderful!
Email me at [email protected] I look forward to seeing your stories!