My Debt-Free Journey | Part 2
My Debt-Free Journey | Part 2
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An Unexpected Reunion
I raised my son for three and a half years in New York on my own. Unexpectedly and inexplicably, his father and I reunited. My son was four and a half at the time, and we decided to start our life together as a reunited family. So back to Florida, I went. There is a small fashion industry in Miami, and I was able to find a job with a pretty sweet salary for my twenty-four-year-old self.
We rented the best apartment we could. (Gotta love Florida apartments — what you pay for a three-bedroom / two-bath with all the amenities in the world wouldn’t get you a studio in New York.) We continued adding to our credit card debt (this time together) and proceeded ignorantly going deeper into debt.
The job I had in Miami — although I enjoyed the pay — was a challenge. The environment of the company was downright awful, and I did not enjoy working for them. They weren’t that thrilled with me either — they fired me.
On the Move
Thankfully, I had great ties back in New York, and I began freelancing for my previous employer. They would fly me from FL to NY, and I would work there for two weeks at a time. This went on for quite some time until we made the natural choice to move back to the New York area.
We moved to New Jersey (a place I never thought I would live!) and settled into life in the burbs. For a few years, we lived our lives as many Americans do — celebrating raises with more expensive apartments and buying more stuff. We added to our credit card debt. Sometimes we paid it down but only to add to it later.
By this time, we had a car payment, student loan payments (which were previously in forbearance and default), and a handful of credit cards. We managed all of our payments and paid our bills on time. We were unaware that our financial problems were incubating. We felt we were fine.
Our family evolved during this time. We got married when our son was six. It was a beautiful thing; we beat the odds of teen pregnancy and became a family. A few years later, we added to our family, and I became pregnant with our second child.
And then we came down with house fever — and we had it badly. I distinctly remember driving around town pining after the homes in my neighborhood. I mean life HAD to be better in one of those homes, right? Plus, we had a baby on the way — we NEEDED a house. (Infants find apartment-living too restrictive.) So, we set off to buy a house.
You Get a House…And You Get a House. A House For Everybody!
Our decision to purchase a home did not come after careful planning and saving up for a down payment. We put virtually no money down and emptied out a 401K to cover the closing costs.
This was during 2006 when unsavory loans were being handed out like candy. And we got one too! We ended up with a first and second mortgage — the second being interest-only and the total payments representing over 40% of our net income. Note to reader: If your mortgage broker pushes you towards a particular loan and tells you, “you can always refinance in a year or two,”…RUN.
I might have had a sneaking suspicion that we were buying a house we couldn’t afford, but I certainly didn’t give it much attention. We didn’t fully understand the terms of our mortgage, but we didn’t admit that or allow that to stop us from moving forward.
We moved into our new house — now a family of four — and carried along. Our mortgage payment was so big that we did not have money to properly maintain the home or to do other things; We were house-poor.
We did not realize that we were living beyond our means.
A Growing Concern
Even with the huge mortgage payments, we paid our bills on time. We were living the American Dream! We finally bought a house, and we had all the other “typical debt”. We were normal, and we were doing just “fine”.
But then something made me start to question our situation. I began to wonder if we were okay. I began reading personal finance books, like Smart Couples Finish Rich, by David Bach, and later, The Total Money Makeover, by Dave Ramsey. I loved what I was reading and began sharing those things with my husband. I bought two copies of some of the books so that we could both read them. (WE didn’t.) I even tried to begin implementing some of what I was reading without my husband — that just doesn’t work.
We “budgeted” — meaning, we sat down and said, okay, this month we’re going to spend “X” amount of dollars here and “Y” amount of dollars there. And then we spent more than that, so out came the credit cards to save the day. In addition to our credit cards, we got an American Express card and bought into the myth that “It’s a charge card, not a credit card. You have to pay it all in full each month, so it’s okay.” We did not realize that we were living beyond our means.
We found ourselves in the vicious but oh-so-familiar cycle of using our credit cards — making the payments — not having any money after making the payments — using the cards.
My concern was growing, but not enough to do anything about it. I believe somewhere in there we added up just how much we owed. It came to $74,000 outside of our mortgage. I felt sickened — I can remember it well. We had been ignorantly moving along, oblivious to the mounting mess.
When I learned the total amount of our debt, I felt disgusted and defeated. I mean HOW were we going to get rid of it? We weren’t — that’s how. We were going to be in that mess forever. I was overwhelmed and hopeless.
Sitting down together to pay the bills each month was a painful experience. Now that we knew how much we owed, but had no plan to address it, working on the bills was just a depressing reminder of the mess we got ourselves into and the “fact” that we were never going to get out of it.
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