|
|
|
June 30th, 2009
09:20 am - Debt-Free¹
Today, I come to you from a wonderful place: completely debt-free. I dug myself out of the minor hole that I was in in just under six months as a result of a promotion, keeping naked cats in my attic for nearly a year, and being absolutely, downright miserly over the past year.
My dad would be so proud of the way I've handled money and opportunity recently. Actually, I know he is.
No matter what the debt is, it has a way of looking like it's way, way too big to overcome, especially when you're sitting under what looks like a mountain of it. I know the statistics, and I know that I wasn't anywhere close to the "average" debt people carry on their credit cards alone (the mean credit card debt was around $9,000 last I heard, with the median being closer to $2,000; it's probably higher now), but even the small sum I had seemed insurmountable less than a year ago.
Heck, there were times when I thought it was hopeless while I was in the middle of paying the damn thing down. . . even as recently as last month, I was terrified that I wouldn't be able to meet the expectations I had set for myself, that I would be unable to make it to the end of the month, and that I would end up spending even more time in debt than I had originally planned.
I found myself religiously checking my bank balances, my credit card statements, and adding up every penny I spent. I didn't buy anything I didn't need unless I was positive that I could manage to meet the expectations I had of myself, and I went without a lot of things in order to ensure that I was staying within budget.
I'd originally gone into light debt when I bought the house in 2002: there, I was making enough, but didn't have enough cash on hand for repairs, improvements, and painting. It's said that the average home-buyer pours an additional $5,000 into a house in the first year of ownership, and I probably did about that. Then my car finally died, and I had a car payment that was completely unexpected on top of my new mortgage.
There was a time when I figured it up, and I was spending a few dollars more each month than I was actually making at the time.
So things ballooned a bit, no matter how careful I tried to be. Soon, I was finding that even my modest debt was looking entirely uncontrollable. I didn't see any light at the end of the tunnel, and I didn't know that I would ever be able to pay it off. I quickly understood (and understand even better in hindsight) just how frightening debt can be, and how amazingly stupid it can make you feel. I now understand how people carry such balances for so long: there comes a point where you accept debt, and where you feel you will always live with it; and it comes fast and out of nowhere.
It wasn't until the car payments were complete this past December that I was able to start paying the debt down in a significant way. Then I picked up my promotion. Then I scrimped and saved and put everything I had into getting out of debt, buckling down at work and making things happen. And here, with planning and work, I stand now: debt free and finally really proud of myself.
Now I just need to make it to the end of the month without a relapse, and my next paycheck will become a cushion, not a "make ends meet" sort of thing. Given that I'm in better shape this month than I was last month (and have been seeing that trend since January), I think a relapse is very unlikely.
There's a light at the end of the debt tunnel: I'm living proof. While my debt wasn't grossly enormous, it also wasn't actually manageable. I carried it for nearly six years until the cards fell right. I'm not one to say that "anyone can do this if they just work harder. . ." I know, because I did work harder, and sometimes that's not enough. But I am one to say that it can be done, with a little luck, a little faith in yourself, and a lot of work and discipline over a long haul.
To all those who helped me out when I needed it, thank you. I promise to pay it forward.
¹ - except, of course, for the house. But the elimination of other debt makes my mortgage entirely affordable.
Current Location: Southeast of Disorder
Current Mood: ![[mood icon]](http://l-stat.livejournal.com/img/mood/classic/smile.gif) jubilant
Current Music: "Spending Money", -JB
|
Comments:
Congrats! Great feeling, isn't it?
Except for the mortgage, in about 5 months I'll be debt-free as well, since my student loans will come to an end, and I already pay off my credit cards as soon as possible
Congrats to you as well, then! :)
It is a good feeling. I find myself very pleased to hear of all my other friends who have managed or are managing it right now, particularly with the economy as it is.
I'm disappointed that I didn't know you bought a house.
But congratulations! I'm very proud of you, you have accomplished what I've been working towards and you will be a shining example to other people that debt is not a way of life.
Epically awesome.
I did, back in 2002, so it was actually before you and I were ever talking. . . that may be why: I don't talk about the actual ownership as much as I occasionally talk about the shit I gotta fix in it.
I'd also like to say that you are a shining example yourself. I read about your own saga of becoming debt free with interest and intent: your methods are very different than mine are (and the pressures on you are very different), but I know that each path will lead both of us to the same place. I'm proud of you as well.
I'm looking forward to seeing you make a similar post one of these days.
Interest accruing debt besides the house will be gone in October. But Will and Caryn loaned me money for the down payment so I'd like to pay them back and then I will be debt free next year (again, sides the house).
I know you're getting there. It makes me very happy to watch!
Curious, how do you see our methods of becoming debt-free different? I'm curious to see if you have some methods that might be better for me as well. Since I'm fairly vocal about mine on my blog, and you don't seem to be, I don't really know too many details on the journey of your accomplishment. :)
I have this impression that mine relied greatly on luck and patience rather than skill: I landed a job, the car payments disappeared, and I finally reached a point where I was making more than I was spending in bills. I also found additional sources of income when I truly needed them, selling some crafty things like runes and rune dice and taking in the naked cats.
You actually managed to reduce your spending, while mine was already almost non-existent by early 2007, and you've shown a good run of frugality that I can't even hope to touch. I haven't seen you talk about expanding your income much.
At its heart, my strategy relied almost entirely on timing and an increase in income, and I have the impression that your strategy has been mostly an increase in savings. I admit to jealousy over your ability to manage that :) I consider myself "lucky" and consider you "skilled" :)
Edited at 2009-06-30 05:31 pm (UTC)
Well, I did get a second job at the end of May that has brought in an additional $1100 so far, but I don't know if I talked about that much on LJ, mostly twitter and facebook (I'll have to remedy that).
But I consider myself lucky too, ironically enough :) I think you've had more discipline than I have during the process, which I admire very much.
Clearly, we need a shouting match over who is actually more disciplined, since we both seem to think the other is.
I think I did miss the additional job being mentioned (then again, I'm not joking when I say my LJ retention rate is about 10%). Good for you!
Congratulations! That must be a great feeling, and is a significant accomplishment.
It is a great feeling, better that I know that I can do what I say at the end: pay the generosity of friends forward a bit in the future.
Congratulations. I paid off 20K in debt (I was ill and unemployed for a long time at one point) 8 years ago and other than mortgage, which will be paid off in 12 years, I am debt free as well.
My own mortgage will be another 22 years or so until it's paid off, but I'm not overly worried about that. I hope to start increasing what I pay in principle and seeing if I can't pay it off a tad sooner. . . or at least a tad more cheaply.
![[User Picture]](http://l-userpic.livejournal.com/7821993/26423) | | From: | ![[info]](http://l-stat.livejournal.com/img/userinfo.gif) zylch |
|---|
| Date: | June 30th, 2009 02:56 pm (UTC) |
|---|
| | | (Link) |
|
Put it all on Kevin's card, do you? {/teasing]
In seriousness, it's good to know that several of my friends are doing well. I've built up a little debt (nowhere near the national average) on my credit card, plus the student loans from being in England. But now that I'm employed again, I expect to pay off the card fairly quickly. And the student loans should be gone by the end of the year if all goes well.
![[User Picture]](http://l-userpic.livejournal.com/2462762/422838) | | From: | myrch |
|---|
| Date: | June 30th, 2009 03:13 pm (UTC) |
|---|
| | | (Link) |
|
it's a great feeling, fo sho.
I can't tell you how much this inspires me and how timely your post is. I've been waking up WWWAAAAAAAYYYY early in absolute terror about money. So far, I'm staying afloat, but I have no cushion, and I really can't afford all the debt I have. In order to enter the debt management plan to get my credit card debt paid off, I had to get rid of the only credit card I have. Add to that the fact that I have less than $300 in savings, and I'm VERY nervous. Um... I probably should blog about this myself... watch for a post later this morning.
Way to go, dude!!!
I ended last month with a total balance of $11.77. A few months ago I ended the month with something like $6. I have no savings. I understand the "no cushion" bit all too well.
I know you can make it: as tools become more available to help with things like student loan debt and as restrictions are put on credit cards (39.99% interest, really?), I think relief is on the way.
And if you look through the comments, you'll find something far more inspiring than me getting out of debt: all the other people who are managing it, too.
I'm rooting for you, for sure. :)
Edited at 2009-06-30 03:36 pm (UTC)
| | From: | zylch |
|---|
| Date: | June 30th, 2009 03:47 pm (UTC) |
|---|
| | | (Link) |
|
...wow. That is a far higher tolerance for risk than I have. I could easily pay off my credit card, but I'm paranoid enough that I don't want to have less than $2000 in instantly-available (checking+savings) emergency money. Too many people around me are losing jobs for me to comfortable with less than a few month's of expenses on hand.
That is, I hope, where I'll end up in a couple of months. But the prospect of being "under the thumb" of debt for much longer was problematic, mostly because debt of even $1,000 can double in a matter of months if you're not careful about it (and you have a crappy credit card rate. . . I'd had mine lowered when I started paying mine off). Plus, I've been secure in my job for a while: I'm in academia and I'm pretty sure I'm doin' it right. :)
| | From: | zylch |
|---|
| Date: | June 30th, 2009 04:02 pm (UTC) |
|---|
| | | (Link) |
|
being in a mortgage vs renting situation probably makes a difference as well. Although I don't plan to move out in the next couple of months, and I'm pretty sure that my landlords aren't going to kick me out, I like to have a deposit plus a couple months of rent on hand just in case I suddenly need to move (say a perfect job opportunity comes up elsewhere). It's too hard to get out of the renting-by-the-week trap once you're in it, but it's hard to avoid if you don't have a deposit+first month available.
True, I was also able to occasionally push off the mortgage by a day or two or three and not need to worry about the landlord getting all pissy at me, and once you understand the billing cycles you know which payments you can put off with no detriment :)
The serious stability of my job goes a long way, I tend to think, toward being able to risk it all from month to month, which I've been doing now for roughly two years (I remember once dropping to under $2 in my account last year at one point, before payday).
![[User Picture]](http://l-userpic.livejournal.com/90788600/1111909) | | From: | wcm |
|---|
| Date: | June 30th, 2009 04:07 pm (UTC) |
|---|
| | | (Link) |
|
That's pretty awesome!
I know! I'm very pleased!
![[User Picture]](http://l-userpic.livejournal.com/58670651/8083825) | | From: | snaegl |
|---|
| Date: | June 30th, 2009 05:19 pm (UTC) |
|---|
| | | (Link) |
|
A fantastic and honorable accomplishment! Congratulations!
Congrats!
Paul and I will be there by this time next year, then onto my ten year plan (pay off the house)!
ummm ... naked cats?
Thanks!
ummm ... naked cats?
Yep! Naked cats lived in my attic for the better part of a year. I was keeping them for a friend who had moved to Japan. It was cheaper to pay me to take care of them than it was to pay to board them, by far. . . and without the money from that, I'd still be in debt.
Ah, I was wondering how they played into your debt situation as well. I had images of money rituals involving cat hair; I couldn't figure out the restriction to the attic, though. Congratulations!
Congrats! I would love to know the feeling of being debt-free. perhaps now I can keep hope that I will get that feeling eventually. :)
It's a good feeling. . . but it'll be a better feeling when I pay my bills next month and find that I still have money left over, I think!
![[User Picture]](http://l-userpic.livejournal.com/86239248/3002167) | | From: | chiska |
|---|
| Date: | June 30th, 2009 08:45 pm (UTC) |
|---|
| | | (Link) |
|
Awesome job! I aspire to be debt free and you are a great inspiration. :) Of course, there is the mortgage and the student loans which will be coming up soon enough (I graduate next May).
*sigh* It seems so hopeless sometimes, though.
Student loans are being "fixed" some now, too, so that they're more manageable. I don't know if you've seen this yet, but it's worth looking at. Getting out of debt can be done. I remember the hopelessness. . . like I said, even in the middle of paying it down, when I was 100% positive that I could be out of debt by the end of June, it seemed hopeless. Even last month, I was terrified I wouldn't be able to make that last payment. But I did it. I managed it. It can be done.
![[User Picture]](http://l-userpic.livejournal.com/95442171/8029978) | | From: | tanwyn |
|---|
| Date: | June 30th, 2009 11:02 pm (UTC) |
|---|
| | | (Link) |
|
Woot! Congrats
Congrats! Yeah, I've been lucky and frugal enough to be able to build a big emergency cushion that I've held for some time, which made losing my job earlier this year not really a problem at all. I am kicking myself a little bit for not going off to Europe for 3 months to backpack but was getting a good response from employers so didn't want to waste it I guess. I will do everything I can to find a way to take 3 weeks off for a Europe visit in the next 3 years though.
Do you think if you hadn't bought the house you would've avoided debt? Do you think having your house will make you better off in the long run? Like if I were to buy a house in 10 years after renting for 15 would our situations reverse?
Way to go bro!
I think that I would have avoided debt, yes. I was, perhaps, trying a little too early to get a jump start on building my life: I really wasn't prepared for some of the additional expenses that come/came with a house.
The kicker, though, was the car, something I simply hadn't budgeted for. The car + the house + car insurance made up approximately 75% of my total monthly income, with 19% more coming from a normal month where bills were about $300, leaving only 5% for groceries, around-the-house improvements, and general expenditures.
I sort of subsisted there for nearly 5 years, I guess, finding other ways to make money (including renting to Tina at well below what I ought to have been charging: lesson: always charge the person what their share is worth, not what they're worth to you).
Now, with my promotion, my mortgage is only about 30% of my total income. That was the way to go, I have to admit :) Plus, I'm at a point where I can start making payments on the principle on my mortgage now, which should allow me to pay it off faster.
Also, I had $0 down on my house: a healthy down payment will go a long way toward keeping you out of debt, as well. Look for about 25% down on the house you want. It's worth it in the long run.
Renting really is "throwing money away" to some extent, especially given the cost of houses now, but getting foreclosed on is "taking money to the furnace and dumping it in by the shovelful," so don't buy now if you're not secure in your ability to a) keep your job, and b) manage the cost of the house.
Congrats. I did the same thing this year, and it makes it much easier to start socking money away. Its also nice to be a part of that 15% increase in US savings rate statistic.
I know. I've been hearing a lot of dire warnings about the economy and how we need to spend. I'm pleased, though, to see us starting to really save. The lessons of the depression have been, to some extent, re-learned, I think.
The savings rate gives me a bit of hope here.
Well done sir. That must quite the relief after that long.
Indeed it is, and thank you! |
|
