by Claire
Thank you to everyone for such wonderful responses to my first blog entry! It was great to hear such specific examples from people who have been where I am or are currently struggling. I especially enjoyed those who shared the parallels in our stories–and the book suggestion. I’m always up for a new book suggestion so thanks again!
So the numbers will be going up shortly. Drumroll please. Some things I want to point out before you see them just to help complete the picture a bit. First, the auto loans you will see were just taken out in November 2011. My husband’s car literally fell out from under him (more fun details on that beloved car of his…after a little more time has passed and I can actually laugh about it). My car was costing entirely too much monthly and I was right at that point mileage wise that it was going to dramatically reduce in value and I was drowning. We don’t have luxury vehicles–Hondas actually–and we bought “gently used” and with a 2.1% interest rate. This was only the second auto loan my husband has ever taken out having paid cash for all vehicles since 1993 or so…but it was time to have something reliable.
The 13 other items are a lovely collection of lines of credit, a random personal loan from my Dad (more on that later too) and then 11 credit cards. Some of you asked what our plan is for getting out of debt. Let’s just say at this moment the plan is A) paying cash (real paper money…not the debit card) for everything…and I mean everything…to get a handle on what is being spent and B) this blog. 🙂 Thankfully my husband speaks Excel. I do not speak spreadsheets at all. This cannot be overstated–and I am so thankful for this groovy little spreadsheet he created and we have on google docs. It is literally a track of every penny coming in and every penny going out. Barf. The beauty of having it on google docs is we can look at it from our mobile devices and get a handle on exactly what is in the bank, where it needs to go…and what is (or isn’t) left over. I’ll share stories as the months and years go by with the ugly part of our story of getting to this point. Holy Toledo! Hideous as I look back. Two adults who love each other madly…emphasis on MADly…totally unable to relinquish control. Isn’t that ironic?! Holding on to what you perceive to be control when you really have NONE. As we look at the spreadsheet we can see the bottom line increasing and our plan is to tackle the lowest balance first and go from there. The snowball method I believe it is called. Input welcomed!
Last thing to share–in the coming weeks I will be posting (if my courage stays strong) on various “events” that were planned and paid for (sort of) before our commitment to debt reduction. I already have tremendous guilt about going forward with these things (trips okay..TRIPS) but I don’t want to lose the money we’ve already put toward them. One is a business trip for my husband that I am tagging along for and the other…okay well the other I can’t talk about right now! PLUS, I have vowed that even if I just sit in a hotel room and then walk around the destination cities, sit and read a book uninterrupted…I am sticking to my usual cash allowance. I’m seeing it as a challenge. More on this later. Ugh. I’m bracing myself for the comments on this topic.
Now, fasten your seatbelts…maybe even put on protective headgear…and take a look at that TEXAS size debt!!!
Born and raised in Texas. I’ve at least driven through every state in the US courtesy of a roadtrip loving Dad.
I’m single with two children and a good parenting relationship with their father.
I am a “life is just half full of funny” kinda gal. Humor is my saving grace and I am thankful for it every single day. I have a strong Catholic faith and am thankful for that foundation.
I read a lot for a living but still enjoy a good book. I love biographies but in recent years have found the need for fun fictional books–sadly, for a long time I just didn’t enjoy fiction!
I love live theatre of any kind–from local productions to Broadway.
I love to scrapbook and pride myself in my kids’ albums.
I love being a mom but also love my career. I’m blessed to have found a balance allowing me to be at everything my kids need and want me to be at–while also having a career.
Favorite Quotes: Well behaved women rarely make history.
Behold the turtle. He makes progress only when he sticks his neck out. -James Bryant Conant
I wish you the best! Hubby and I are nearing (finally!) the end of our journey of financial crisis. We are also snowballing our credit card debt. Mathmatically it doesn’t always make sense, but it feels GREAT to watch the numbers go down and send off that final payment.
Sometimes the journey really sucks, but in the end, I feel like we are much wiser, kinder, and appreciative.
Look forward to hearing your story!
Chin up, my dear! You can do it. I found blogging to be the best thing to help me with my debt. I am now consumer debt free and paying off my last debt, a car loan. Being open and honest with the reality of it all on the blog helped me be open and honest with myself and what I needed to change to have the life I wanted.
Looking forward to hearing about everything!
Best of luck in reaching your goals, it will feel awesome when your destination finally arrives. We only make about $14,000 a year so really high debt numbers are hard for me to really imagine but I can relate to tight budgets! 🙂
Does “Texas-sized” mean you are in Texas?
Looking forward to reading your journey! And don’t feel the need to preface everything, like we are all here to judge. We aren’t! We are here to watch and support your journey, never to cast judgement. 🙂
Finally saw the first number up. Not too bad. But finally a blogger in my debt range! Don’t get discouraged with the number. Hubby and I started life with 245k in debt with car and student loans. After 5 years we’ve gotten it down to 127k. Its a slow process so take all the support you can get along the way.
Angie! Thank you! This is so encouraging! You sometimes do feel you are the only one in such a mess. To see your progress is just 5 years is exactly what I needed to see today!
My husband and I are probably $235K – $100K each in student loans, and $35K in credit cards (though mine is only $2K of that). So yeah, no judgment here, just a bunch of really expensive degrees that finally yielded me an ordinary paying job 🙂
Thank you for sharing this! This isn’t a case of misery loving company but instead just relief that we are not alone. It is so cathartic to talk about it out loud!
Wow, those are some figures. Still I can say I’ve been there (and so have so many others).
Trip(s)…. Hmmm, so many schools of thought on this one. I agree it sucks to “waste” money already spent, but it’s really hard to justify spending even another dollar to “make up” for the mistake. The whole point of your journey is about not making new mistakes. My analogy here is: say you spent $200 for plane tickets. You can’t get that back, and it’s probably rolled into the debt you have listed. As long as you don’t add any new debt, you’re thinking to yourself, you’re “blessed” to make the trip.
But hold on there, any dollars you spend toward that trip, even if they are not new debt, are dollars that don’t go to repaying the debt. You’re not really fixing anything, you’re just delaying things….
The other side of me says “spend as little as possible on the trip, and find a reasonable place where you will NOT spend money in the short-term future to make up for it.”
Enjoy the trip(s) the best you can, I guess. 😀
Looks like a big chunk of your debt (43%) is car loans? Such an easy fix! Sell them and buy way less car. I know it doesn’t seem simple but it’s not a debt you cannot “fix”. Most credit card debt is unfixable (it’s not practical to find the things to return/sell to recoup the funds). But cars are not in that category!
In 2011 in the US, the average used car sale price was $11,822. It would take a fair amount of elbow grease and intestinal fortitude to part with what you have and find a car that matches this lower number, but you’d be $18K “richer” for it. That’s nearly 20% of your debt by itself.
I’d give the car situation careful consideration.
Matt–
Thanks for this well thought out response. You’ve definitely given me food for thought…but I wonder if the recent memories of unreliable transportation are still too fresh? We did when this when we married and bought a 2001 Honda Odyssey for $6,000 cash and my husband had his 1996 BMW with 275,000 miles (he bought it with 103,000 miles on it in 2004) but the cost of ownership is a big part of that debt column you see! I am just not ready to even think about buying “way less car.” Maybe it is an excuse for the time being but a family of six limits your transportation options dramatically! That was another part of our new reality that sort of surprised me! Silly. I DO refuse to drive an SUV and I DO live in Texas so that in itself is a big deal! 🙂 I’ll be interested to see if my attitude toward this changes over the course of this blog…but the memories of the Honda minivan with the window that would sporadically refuse to open and/or close, a transmission that was on its last leg, the BMW with the wiper blades that would occasionally fall off and the doors that would randomly refuse to shut are still much, much too fresh! Thanks again!
Well, I guess we better like you because I think you’ll be here for a while!
Not that I’m complaining, mind you. I’m not judging you either; I had debt problems in the past but not now. Mortgage and car loan are all I’ve got now and both are well within the budget. It’s the college expense coming up in 18 months that scares me, so even though I don’t need to pay off mounds of debt, I look forward to hearing how you conquer it and hope to learn from you.
Again, welcome and thanks for sharing your journey with us and so publicly.
Some of your biggest debts are your car loans. You could slash 20-30K immediately if you replaced them with beaters. It would be painful, no doubt, but it would really get the ball rolling.
I would also strongly consider not going on the trips (at very least, the non-business one). There may be non-refundable items (which sucks), but there are usually refundable items too and reservations that can be cancelled for no charge at all. You’re also more likely to spend money when on vacation, and all this could be put toward your debt. Symbolically, passing up the trips will show your commitment to being debt-free.
The debt-snowball seems perfect for your situation though, since you have so many small to medium sized debts. Combined with a budget and tracking your spending, we should see some of those credit cards drop like flies.
I’m really looking forward to learning more about you and your new adventure to become debt free. Good luck! We’re all rooting for you!!!!
Wow! Unfortunately, I think I still have you beat, but I am looking forward to seeing how you work through this, and hopefully work through it with you.
While I understand what Matt is trying to say about your vehicles, my husband and I have been down that road and with kids, you have to be careful to have reliable transportation. At some point, there is a decision that has to be made — replace the vehicle (and gain another monthly payment) or keep doing patchwork to fix what you can (or usually cannot) afford to fix, never knowing when that next big repair bill is going to hit.
Your debt is what it is today, and the vehicles are part of it. You’re here to move forward from this point on, so I’m anxious to see how this pans out.
Wow, you’re in my range, except the bulk of my debt are student loans. I suppose we’re both in it for the long haul! Best of luck.
I’m with Matt about the car debt.. but of course, I don’t know much about your situation yet so don’t worry- no judgement here. Just helpful suggestions. At least they’re Hondas. 🙂
You CAN do this!
Praying for your courage as you start the journey of almost 100 thousand steps (dollars?). 🙂
I’m with the others on the cars. You can buy a really nice used car that’ll give you years of safe, dependable driving for $10,000 bucks.
I know it can be hard to sell close-to-new cars, but as Dave Ramsey says, you can often get a personal loan from a credit union to cover the difference. Whatever you decide, the fact alone you are choosing to live on less than you make and cash, cash, cash only means you are moving in the right direction!
In any case, you have a bunch of small things you can knock off quickly. That alone is going to give you a big boost of accomplishment! You can do this!
I wish you luck on your journey! We are also on a debt payoff journey, and I’m excited to see you knock those numbers down!
It’s interesting what you said about having guilt about some trips that you’ve – it sounds like – prepaid for, at least to some extent. If it’ll save you money in the long run, maybe it’s a good idea to cancel the plans, even if it means losing a small(ish) percentage of what you’ve already put down?
Hang in there! That’s a lot of debt, but not more than I’ve seen before, by far. How big is your monthly snowball at this point? Do you have a debt-free date target? Sometimes calculating that can help motivate you. Mine is December, 2013. ;-D
wow just came back and saw your figures, I admire your courage of tackling your debt load, just know that it is doable, possible and YOU CAN DO THIS!
Hi Claire,
I know this isn’t very Dave of me, but I agree with the unreliable transportation. Give me a decent car and let me run it to the ground. Yes, buying beaters would reduce my debt, but repairs aren’t cheap and many beaters come with lots of repairs. And, I don’t even want to start on the challenges of being stuck in the middle of the night with a broken down car.
I know you are going on the trips…how about saving $1 bills or something similar for a little spending money? Sometimes just a few bucks can mean a little sightseeing in a new city.
Best of luck in your journey – welcome aboard!
Saw your numbers, Claire it’s not too bad 😛
No really though I love how you listed it smallest to largest. It seems like you are juggling a lot of accounts so it feels much more overwhelming.
You gotta consolidate and get rid of those tiny ones! It’ll be a breath of fresh air!
I was the same way. 3 student loans, 1 car loan and 7 credit cards.
Now that I’m down to 1 student loan and my car loan, finances get a little boring.
I also agree with LJ, you don’t have to preface too much, just go with it!
Thanks Hannah! I’ll definitely work on the “preface reduction.” But first, let me preface this reply with…just kidding.
We started our journey with 76k (CC, student loan, car, and medical). We were making progress….life happened….we are currently at 78k.
You have alot of “little” debts. I think wiping those out will go a long way in making you feel that this is doable. The $64, the $182…..wipe them out and then stomp on them. It feels good!
Welcome and good luck!
I just had to add to the car beater comment/comments. My first thought was the same thing, but you certainly don’t need to buy a beater. You can find very perfectly nice vehicles in the $10k range. (Cars that will last a couple of decades with little problems, etc.). I don’t think a beater would be terribly useful with all the debt. (I’ve had good experience with $1000 beaters – why I don’t have any debt – BUT going $10k for a car that is reliable and likely won’t need any work until I was out of debt, seems more prudent middle ground).
I don’t expect you to sell your cars today, but I would seriously start thinking about it – those cars are almost half the debt. Just remember there is middle ground between a car that is brand new and one that has 200k+ miles. 😉
Welcome Claire! I’m sure it was hard enough to face your financial state & make a plan to attack it, let alone share it with the rest of the world! I hope you will feel supported and not judged. As you’ve discovered, you’re not alone on your journey!
As for the comments about your car… I totally get your desire to have a reliable car. I am a Honda owner (lover) – bought used, have put over 110K on the car so far, and will probably keep it for at least 50K more miles, at which time I will hit 200K. It’s in great shape, and I’ve only had to do regular maintenance. And with 6 people in your family, you can’t drive an Accord for your family car, let alone a Civic!
Looking forward to sharing your struggles and successes.
Thanks Jean–this is tough! I’m excited to learn though.
I’m sure that laying all that out there was hard for you. Thanks for your honesty and I wish you the best in this journey to being debt free.
Do you really want to get out of debt (and do the hard work that’s required)??? Because it doesn’t seem that way.
1. You don’t have a real plan. It’s going to take an actual plan to change decades of bad habits that got you into this mess. As others have suggested, read The Total Money Makeover by Dave Ramsey. You need a real plan.
2. I can’t believe that newly acquired car debt. Insane. If you want to get out of debt, you need to get out of it. NO EXCUSES. No one “needs” a car that costs more than a few thousands dollars (meaning it runs and nothing else fancy). Sell both cars, take a small loss if needed. Go get each of you $1000-$2000 cars. There are plenty of ugly but reliable cars in this price range if you look on craigslist and garage/estate sales. No matter how many car repairs you have to do, it will be much, much less than the depreciation and maintenance on your current cars.
3. Cancel all of your trips. You’re supposed to be making good, frugal decisions going forward. Getting out of debt is the priority, not vacationing. You’ve already lost the money you spent, whether you go or not. Why spend even more money you can’t really afford? Be responsible and be an adult. Cancel your trips, put the money you don’t spend toward debt, and then take a vacation you’ve actually earned and will enjoy more once you’re out of debt.
I am sure that took a lot of courage to post those numbers. Good for you for taking the first step.
Dear Claire,
I loved watching Beks journey from debt to debt-free. I am a single mum with a teenage daughter and I’m hearing you on how much teenagers eat!)
I have just read Dave Ramsey’s Total Money Makeover and the debt snowball method resonates with me too.
Good luck with your journey! I look forward to reading about your successes and failures!
Great start! I am so glad that this blog is starting over again with a new blogger. I am starting my debt free journey and its great to feel like I’m not alone! I look forward to seeing how you battle down this debt, i am using Dave Ramseys total money makeover to get us out of the hole we dug ourselves in. Thanks for a great start!
For those that are recommending beater cars or $10K cars, have you shopped for used cars lately? I have – twice, due to drunk drivers who hit and totaled my PARKED cars within 4 months of each other – and, at least in my area, there are not a lot of used cars in the $10K price range without spending months looking, which was not a luxury I had. Friends took over 6 months to find one and that was with the help of friends and their mechanic checking at the auctions for them. Since we have only one car, I didn’t look at beaters because I didn’t want the repair expenses that they can bring.
Cash for Clunkers took a lot of cars off the market and in general raised the price for all used cars. If you have not bought a used car in the last 12-18 months, you might be in for a surprise when you do.
Not sure if this has already been stated, but given your massive credit card debt, you may want to look into taking out a personal loan (which will be at a much lower interest rate than a CC) and pay off the personal debt. It’ll consolidate payments, and you’ll pay less interest.
Just a thought…