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Ár nDraíocht Féin
Three Cranes
Chaos Matrix

June 30th, 2009

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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: jubilantjubilant
Current Music: "Spending Money", -JB

(41 comments Leave a comment)


Date:July 1st, 2009 01:00 am (UTC)
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!
[User Picture]
Date:July 1st, 2009 02:08 pm (UTC)
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.

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