March 13, 2013

Debt


"I sincerely believe that banking establishments are more dangerous than standing armies." 


We just bought a mattress. It wasn't a big deal because the one we had was older and my pregnant self needs all the padding I can get. It was a big deal because we didn't put it on a credit card, or finance it for 24 months. I walked into the store, handed them my debit card, and didn't feel that sick-to-my-stomach feeling when I have to buy something I know we "need" but can't afford. I slept wonderfully on that bed last night, and the biggest part of that was knowing it wasn't bought with borrowed money. We did it.

Sky and I are nearly out of debt completely. We started this year the way we have started so many others- with a hefty credit card payment, military debt, and Sky's student loan. We had a small savings started from last year's tax refund, but Sky's pay issues with this school wiped that out in a heartbeat.

I always hated when the experts tell you how simple it all is. Just cut out that daily Starbucks! Go out to eat less! Get a cheaper car! If that's where someone is at in life, then those are all great suggestions. But when Starbucks is a once or twice a year treat- not daily- and we rarely went out to eat, and the older, small car Sky paid cash for after deployment couldn't get any cheaper, then those things just don't apply to our circumstances. Cutting out our landline? Um...I haven't had a landline since circa 2002. Take lunches to work? Sky works weird shifts so he doesn't even eat at work most of the time, and Millie and I are at home. I'm not knocking the experts- I know there are a thousand financial gurus out there who are very wise, but their advice was a little out of reach for our family.

What works for us to save money are these things: we make our own laundry soap. We don't have cable, and either watch local TV with an antenna, or watch things online (and there are so many shows available online, I'm not sure that cable is really worth it). Every time our internet bill goes up (and it randomly does about once a year), I call the company and explain to their retention department we could pay less elsewhere, so they need to figure out if they want our business (I just did this with Comcast- they raised our bill to over $70 a month, but lowered it to $29 a month when I called). We eat leftovers, we cook more, and on the rare occasions we do go out, we can save a significant amount just by ordering water to drink. We shop at Goodwill, Salvation Army, and garage sales for clothes and some household things, and have a pretty nice, name brand wardrobe for pennies of what it would cost at the original stores. We use microfiber towels to clean instead of paper towels. I don't feel like we are unwise with our money, honestly. These are things that we could easily do in our situation, and they make a big difference when added up.

 I closed the credit card years ago, but it paid for a major change in my life when my first marriage ended and I found myself moving back to Illinois. Moving is expensive. Getting a new job with business clothes when my former job required scrubs was expensive but needed. I don't see any of those things as a wild, fun shopping spree on shoes, but as something necessary because I didn't have the savings. We paid the minimum on our credit card- although, a higher minimum that we worked out with the credit card company to keep our interest from raising. We paid on Sky's military debt because it's automatic, so there was no option. All his drill pay, minus about the cost of gas money to drive to the armory, went straight to debt before we ever saw it- and had he not been in school and getting active duty pay during this time, it would have taken us several years to pay it off. We paid on his student loan because it's a very small monthly payment. And like millions of others, we lived paycheck to paycheck, and sometimes barely that. There was no 'snowballing' our debt because we didn't have the choice but to pay on all of them at once. If we would have had the choice, there is no way I would have chosen the smallest debt to feel like I accomplished something. I wanted it all gone, and fast, and I wanted to pay those companies as little interest as possible.

And now, armed with our tax refund, we have paid off the credit card completely. We'll have also paid off his military debt completely on his next paycheck. At one point- even at this time last year-, these things combined were not just $1000 or $2000- we were a good ways into double digit territory. It may not seem like a big deal to send that final payment in for some people, but it felt insurmountable to us, so it was huge.

Most of our tax money has gone straight to debt since we've been married. It's a very un-fun way to use it, but we knew it was the only way for us to climb out of the hole, and now we're almost there. Our hope is to keep using refunds in a similar way- to build up our savings so when we need a new(er) car, our loan will be smaller or nothing. We're not starting out with this baby with much more income, but we are starting out with nearly no debt compared to when we had Millie, and that makes me feel like we've accomplished something important.

I know we're not supposed to talk about money, but it's a huge problem for many of us, so I wrote this to encourage everyone who is in our shoes. When you barely break even, sending in extra payments or going without things you never had to begin with just aren't possible. It's been a years-long process for us, and it's put a lot of stress on our family, so I know how impossible it can feel. I think people get into debt for various reasons- medical bills, emergencies, and even 50 unnecessary trips to Target- but circumstances are so different that there isn't a one-size-fits-all solution, in my opinion. Maybe you pay it off slowly but surely. Maybe you pay it off in large chunks. I think the point should be paying it off as quickly as possible, not the road it takes to get there. And I'm proof that you really can get there.

10 kind comments from you:

Jen said...

I think what you are doing is awesome! I also think that some financial gurus miss the mark with some of their tips. Not everyone is in the same situation and different things work for different people. We are close to having our only debt be the mortgage on our house. Congrats on such wonderful accomplishments! :)

applesandglue said...

Well said, and congratulations on getting out of debt. Very inspiring! :)

Chantal said...

Every step out of debt is a good step! We've been out of debt for nearly a year now and it's been great, though now we worry about making sure we save enough money.

Kaylee said...

When we pay off Max's student loan debt (it's really big, like really big and a LOT of our paycheck goes towards it, making everything else really tight for us...), I want to have a party. Now, that may not be for years, with how big it is, but who cares! It is going to be a BIG day, and a freeing one - my point is that it is huge deal that you don't have debt - and I am celebrating with you!! Way to go!!!

And I think we all SHOULD talk more about money, and about how we manage it, or mismanage it - I think it's such a problem/hold-up for so many people, and if we were more open, maybe it wouldn't have such a stronghold on so many of us?! I don't know. I get that's it a personal thing, but I also feel like that gives it so much power over us, if we let you it.

Anyways, congrats and good for you!!

Karen said...

Money is such a taboo topic that everyone is SO afraid of but we all struggle with. I definitely think that it's ok to talk about it with others because then we don't all feel so alone in it. I know that for the longest time we just kind of ignored talking about it. But now we sit down every month and talk about our budget and make things work so we can afford the little things like Starbucks every once in awhile - it's nice. Good for you guys for paying off so much! And yay for paying debit for your new bed!!

Michelle said...

I am so happy for you guys! James and I were in that exact spot when we were first married. I mean that exact spot. We had a hefty credit card balance because we didn't even have enough money to cover our bills and groceries. And it was also the only way we could afford to move to Ohio when I got a job, and you're right, moving is outrageously expensive. When we paid it off it was one of the best feelings in the world. We would go online just to look at the $0 balance for months. I still do it sometimes!

Erin said...

I'm right there with you. Our relationship has big one big project in debt management. We'd make significant progress only to have a setback. We still don't have a dependable income, so we've never really budgeted. Selling both of our motorcycles was a huge step, and I end up working to bring in extra money whenever I get the chance (like with my extra AF work during the summer). We're "snowballing," but not in a strict sense. I've never been able to do the rollover into a bigger/massive payment every month - something always comes up. The GOOD thing is that we've managed to buy a house along the way, even with our debt, so I'm still managing to meet financial goals and milestones that make me feel accomplished.

Mrs. Duh said...

That's awesome! I agree with other posters that debt is something that needs to be addressed, since so many are dealing with debt!

Jenn said...

Thank you for this. I have a huge cloud of debt over my head and it is an awful feeling wondering if it will ever go away. I was never taught the importance of balancing money. I don't have a role model to show me how to handle bills. Everything has been learned the hard way. I know one day I won't have creditors calling but holy cow it sometimes feels like that day won't ever come.
Your post helps me see the light at the end of the tunnel.
:)

Kim said...

So happy for you and your family! This past year has been very hard on our family and with the weight of money and debt on our shoulders its been so stressful. I know we'll get there, just like you! :)

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