Getting out of Debt: A Staff Writer’s Story
Hello, Debt Roundup readers! I thought that for my second post here as staff writer, I would give you all a little introduction into my life and The Frugal Farmer family, for those of you who don’t yet know our full story. One of the reasons Grayson thought it would work out well to have me as a staff writer is that we are currently in the process of paying off debt – and lots of it.
It’s important for Grayson to be able to provide his reading audience with a wide variety of tips for people in all walks of their financial life. Grayson and his family are done paying off consumer debt and now on to the wealth-building and investing aspects of their walk toward financial freedom, but Grayson remembers well what it’s like to be in the throes of paying off a large amount of debt, and he wanted to make sure he could still offer his readers who are working toward getting out of debt – or considering getting debt free – a fresh perspective and real-time encouragement for their debt payoff journeys. I’m honored to have been chosen as that person, and believe me – I’ve got lots to share in that area. So, on with our story.
Our Journey to Debt Mountain
My husband Rick and I are in our mid-forties and have been married for nearly 18 years. When we got married in 1996, we were in our twenties and carefree. Rick and I both came from broken homes, and were excited to begin a solid, stable family of our own. That, of course, included all of the material items that “successful” people had. For the first 16 or so years of our marriage, we did all of the things that “normal” people do: We bought a townhouse, bought cars, and traded in and bought more cars, and financed every bit of this stuff with little down. After our first child came along, we wanted our “forever” house, so in 2001, we bought a bigger house – for almost double of the price of our townhome – in the affluent suburb where we lived. Ahh, we were living the good life. I was working at a good job, and Rick wasn’t doing too badly either. In 2003 we welcomed our second child, and at the end of 2003, I was laid off due to declining business at my former company, which was fine by me because I wanted to be home with the kids anyway.
What followed for the next 7 years were 2 more kids and a life of spending, spending and more spending. We would occasionally pay off our debt, or refinance it into the mortgage (I know – YIKES!), but we’d always wrack up more debt again.
In the beginning of 2010, Rick called me at home one afternoon. “I got the pink slip today”, he said. His company hadn’t been doing well, so we knew this call would come eventually, but we did nothing to prepare for it financially, still telling ourselves the old lie that “everything would be just fine”. At this point we had “only” a few thousand in credit card debt. We weathered through Rick’s 7-month unemployment hiatus okay, but then he took a new job – at 80% of his prior salary. The way we handled this was to continue living on what we viewed as a strict budget, and charged everything over and above his income on credit cards. We figured that eventually he’d catch up income-wise and we’d be able to pay cash for everything.
In 2012, we had had enough of our keeping up with the Joneses’ life and traded in our mini-mansion for a small but more expensive hobby farm. The payment was the same, we told ourselves, so it would be okay. By that time, the credit card balances had gotten pretty high, and we brought them with us to the new house. We also added another $4600 in credit card debt for purchasing things we “needed” to live in the country.
The Wake-Up Call
It was after this purchase, in the beginning of November 2012, that we finally woke up to the mess we had created. We sat down, figured out the numbers, and faced up to the fact that we were in deep – real deep. Along with the debt numbers, I figured out our debt-to-income ratio, and it came in at a whopping 65%. Yeah, it was bad. Add that to the fact that we were only 20 years away from retirement, and we got scared real quick.
I’d never done much in the way of visiting blogs before, but I was now in a place where I realized what a desperate situation we were in, so I started Google searching terms like “how to get out of debt.” Through Debt Roundup and some other great blogs, I found stories of people who had been deep in debt like we were, yet, by various means and plans, had managed to work their way out. When I read stories like Grayson’s , I knew we could – and had to – get our financial life together. So we made a plan. In January of 2013, we wrote out our first real budget, started tracking every dime we spent, and set limits for the first time in our lives about how much we would spend in each area every month.
Thirteen months later we’re still going strong. Due to the sheer amount of debt we have and the high debt-to-income ratio we had when we started, it’s been going slow, but it is going. We’ve learned of and settled the reasons why we spent like we did, and are now on our way to debt free, and eventually, to financial freedom.
The reason I wanted to share this all with you is to let you know that, no matter how deep in debt you are right now, you can find a way out. There are so many different plans and options, and you can find one that fits you and your particular situation. No matter how “hopeless” your situation may seem, know that there is a plan that will work for you, and that you do have support in this wonderful world of personal finance bloggers and readers, even if you don’t have support anywhere else. I hope that our story, along with Grayson’s story, will inspire you today to work to reach your own financial dreams, whatever they are.
What are your financial dreams? Have you taken any steps to reach them yet?