Reducing our Debt

In the fall of 2008 when I learned that there was a great probability that I would be losing my job in 9 months, I came home and told my husband that I really didn’t want to look for another job. I wanted to stay home full time but on one condition. I wanted to make sure that we could afford it.

At that time we had a considerable amount of debt stemming from some credit card debt to auto loans and our mortgage to loans we had taken out to help put our son through college. After we sat down and looked at the debt and considering the time we had to prepare to go to one income and the time we had until our other son went to college (fall of 2011), it became clear that I would be able to stay home if we stuck to our financial plan. This plan became a three year plan of paying down debt to the point that the only debt we would have is a car loan and our mortgage by the fall of 2011.

In the 9 months leading up to my becoming unemployed, we buckled down and took advantage of my income and paid off the majority of the credit card debt. We also built up our savings.

Our income was reduced close to 1/3 when I lost my job. That is why I have tried hard to watch those pennies as I could see in our budget “leaks” that added up to a great amount of money. I became diligent at learning ways to run a home more economically and to make things last and to also learn to do without. This was hard for me as I was not used to doing without. I learned to coupon and to build a stockpile on less money than what I had been spending on groceries prior to becoming unemployed.

We set up rules to our financial plan. 1. We put money into my husband’s 401K plan up to what his employer matched – no matter what. 2. We put money into a college fund for our youngest son – no matter what. 3. We gave money to our church out of each paycheck – no matter what. 4. We put money into savings, albeit it was and has been a small amount – no matter what. 5. We doubled and tripled what we were paying on debt – no matter what. 6. We lived on what was left.

It takes quite a bit of faith and willpower to put numbers 1 through 5 in place and then live on what is left. Now, I don’t want to mislead you into thinking that we were putting thousands of dollars in numbers 1 through 4. It was what we could afford on one income. If we didn’t do 1 through 4 we would have been able to pay off our debt sooner, but we would have put our finances into jeopardy. You see we aren’t just paying off debt. We are also saving for our future.

When we had some extra household expenses or car expenses our savings account got very, very low to the point that the balance was less than $100. But, our bills were paid and we persevered. One time my husband told me that we only had $60 until payday, which was one week away. All our bills had been paid and I had purchased groceries so we felt victorious that we had money left.

When you are only paying a small amount on a debt, it is draining not to see progress in the balance going down. When you continually see the debt balance going down considerably it gives you the encouragement to keep doing what you’re doing.

The first year I was home was the hardest year because I had a lot to learn about cutting back on expenses. Now we’re into our second year and we have seen debts being paid off and we are coming close to getting all but 1 car loan and our mortgage paid off by the time our youngest son goes to college in the fall.

It has not been without pitfalls. I have had my share of sleepless nights worrying about if our old furnace would break down, about the old roof holding on just one more year and about other maintenance issues in our old house. And then I thank God for our old house and low mortgage payment and that we have not had too many repair issues.

When you sit down and add up your debt and you see the numbers, you may want to throw up your hands and give up. It is easier to continue on and live the lifestyle you have been living and only make minimum payments. The years it may take to cut back and sacrifice by living a frugal lifestyle to pay off debt can seem overwhelming. But, you have to begin somewhere.

Paying off debt brings independence and security. So I would encourage you to be brave and sit down and add up your debt. Look at the total of that debt. Do you want to see that same amount next year at this time? Start today to make a plan to bring your finances in order and start to pay off that debt. Take it one day, one month and one year at a time. Watch the balance go down and determine not to add to that balance. Again, you have to begin somewhere. Start today.