It seemed insurmountable.
When we tallied it up in February of 2010 we had no idea how or when we would pay off $82,174 in debt.
The thing is, we could have put off writing our debts down forever. We weren’t living pay check to pay check and we paid all of our bills on time. We had available lines of credit and investments we could cash out if we ever got in a real bind. While our debt number was big our day to day checking account was always healthy and we never really felt a crunch.
But the numbers didn’t lie. There was a lot to pay off and we weren’t even sure where to start. At the time I was on maternity leave and Chris was self-employed. I received some maternity benefits, a little less than half of what I made at my job, and Chris had a very good, if erratic, income. We had some challenges in front of us.
Here is a breakdown of our former debt totals and monthly payments:
|credit card||2000||*0% interest|
|line of credit||10000||35|
|line of credit||15767||250|
How did we get there? A big move, my lingering student loans and continuing to live just a bit above our means. I could go into more detail but the long list of ways got there don’t matter. How we got out of it, and how we are continuing to improve our financial habits, is what really matters.
I will also say this: don’t judge your friends that are in debt. They don’t need it. They go to bed worrying at night and feel bad about every purchase. What they need is encouragement and a non-judgmental ear. They need support. They need to know there is a way out.
How did we get out of $82174 in debt? Day by day. Luck. Trying a lot of budgeting/financial tracking tools until we found one that works for both of us. Encouraging each other and talking to each other a lot. In the beginning Chris and I held financial meetings every Tuesday night. We tried to project cash flow and expenses and we prioritized debts. We reviewed our weekly spending and thought up strategies to do more with less money. We gave each other high fives and congratulatory text messages when a credit card was paid off.
We started a conversation about spending and our finances.
And the conversation hasn’t stopped.
Big purchases are discussed and debated. As I’ve mostly gotten over my emotional spending habits we can have pleasant conversations about who needs new wellies or if we have money in our household budget that month for an extra date night. There aren’t arguments about someone unexpectedly making a large purchase without telling the other.
We’re a team in this.
One of the greatest things to come from tackling this debt is a new level of connection with my husband. We’ve faced some daunting odds and supported each other on what seemed like a never ending road. On the other side of this debt we now have the fun task of discussing savings plans and strategies. What we once thought of as dreams are now goals.
I’ve had a lot of interest in our debt story and I want to point out that you can read all of our financial posts here in the financial section of the archives. I’m considering collecting the posts and writing a more in-depth guide to our debt, how we paid it off and strategies we used. That’s on my someday list for now as I am putting the final touches on The Minimalist Mom’s Guide to Baby’s First Year (which is going very well!).
I’m not sure how much of our finances I feel comfortable writing about here now that we are out of debt. Mostly because we’re in a really good spot and I don’t want to brag about that. We’ve worked hard but we’ve also been lucky. I know there are a lot of people that are working very hard to stay ahead of debt but aren’t so lucky.
But loosely we are planning to:
- Build an Emergency Fund. This isn’t really an Emergency Fund but an International Move Fund. We know we’ll be heading back to Canada at some point and we want to have enough money for six months of living expenses and our plane tickets. Right now we’ve saved about half of what we think we will need.
- Pay down our mortgage in Canada. We’ve just upped our monthly mortgage payments by 15%. This increases that gap between rental income and what our mortgage payments and condo fees are. So we’ll likely have to start sending a bit of money home in the New Year.
- Save. For now we’re saving as much as we comfortably can. Retirement plans and projections will happen much later.
- Give. We want to give more. This blog and my upcoming guide will be part of that. I’ll share more later when the book is ready.
We’ve thought about getting some financial advice from an expert. Does it make more sense to save than put money on our mortgage? Should we be putting our savings in accounts in Canada or here? We’ve thought about it but, really, we’ll probably do just fine by continuing to save and live below our means. Nothing fancy about that but it works.
I know that much like losing weight, paying off debt does not mean you will stay debt-free forever. My hope is that our live with less strategy, coupled with good financial habits, will keep us on the path.
Anyone else out there battling debt? What strategies are you using?