A Moment of Clarity

Money money money!
Image by Matt Stratton via Flickr

Ten years ago, I buried myself in debt. There was no catastrophic emergency or long-term unemployment, just a series of bad decisions over the course of years.

We bought a (short) series of new cars, a house full of furniture, electronics, hundreds of books and movies, and so much more.   We threw a wedding on credit and financed an addition on our house.   We didn’t gamble or drink it away, we just spent indiscriminately.  We have a ton of stuff to show for it and a peeling credit card to prove it.

What changed?

In October 2007, we found out brat #3 was on the way.    Don’t misunderstand, this was entirely intentional, but our…efficiency caught us by surprise.   It took several years to get #2.   We weren’t expecting #3 to happen in just a couple of weeks.   #2 wasn’t even a year old when we found out she was going to be a big sister.  That’s two kids in diapers and three in daycare at the same time.

The technical term for this is “Oh crap”.

I spent weeks poring over our expenses, trying to find a way to make our ends meet, or at least show up in the same zip code occasionally.

I finally made my first responsible financial decision…ever.   I quit smoking. At that point, I had been smoking a pack a day or more for almost 15 years.   With the latest round of we’re-going-to-raise-the-vice-tax-to-convince-people-to-drop-their-vices-then-panic-when-people-actually-drop-their-because-we-made-them-too-expensive taxes, I was spending at least $60 per week, at least.

Interesting side story: A few years ago, Wisconsin noticed how many Minnesotans were crossing the border for cheap smokes and decided to cash in by raising their cigarette taxes.   The out-of-state market immediately dried up.  Econ 101.

So I quit, saving $250 per month.

Our expenses grew to consume that money, which we were expecting.  (Remember, we were expecting a baby!)   Unfortunately, our habits didn’t change.   We still bought too much, charged too much on our credit cards, and used our overdraft protection account every month.  At 21% interest!

Nothing else changed for another year and a half.  My wife would buy stuff I didn’t like and we’d fight about it.  I’d buy stuff she didn’t like and we’d fight about it.   When we weren’t arguing about it, we’d just silently spend it all as fast as we could.

Bankruptcy was looming. We had $30,000 on our credit cards and our overdraft protection account was almost maxed out.  Have you ever thought you’d have to sell your house quickly?

One day, while I was researching bankruptcy attorneys, I ran across Dave Ramsey.   When I got to daycare that evening to pick up the kids, I noticed they had The Total Money Makeover on the bookshelf, so I asked to borrow it.

I read the book twice, had a very frank discussion with my wife about the possibility of bankruptcy, and we set out on the path to financial freedom together.

What made you decide to handle your finances responsibly?  Or, perhaps more importantly, what’s holding you back?

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    1. I’ve had a credit card since I was a Sophmore in high school, and have acquired several more since then. I’ve never carried a balance on any of the cards; however, I have used the cards for temporary financing (within the grace period) and I have taken advantage of a couple “0% APR for 8 months” deals to acquire some rather expensive things. I’ve also played the car payment game for the last eight years, trading in every two years for something new and/or different. I also took out student loans while in college, which have been in repayment mode for two years now. Even though I didn’t have a budget, per se, I never really saw a problem with all of this because I wasn’t accruing interest on my credit cards, the interest rates on my car loans were pretty low, and my student loans were deferred while I was in school.

      All of this changed in December 2008: the month I graduated college and (the very next day) got engaged to be married. Not only were my student loans fixing to become due, but I also had a wedding that needed to be paid for. Even though her parents and my parents pitched in to cover most of the wedding expenses, there were still some very expensive items I had to cover. This put me in one of the tightest financial situations I’ve ever been in. In the midst of all this and juggling bills around, it clicked: I don’t want to live like this for the rest of my life, nor do I want my future family to have to live like this. It was at that point that I realized I needed to get a stronger grasp on my finances.

      Now, roughly two years later, one credit card is still being used, but only for the cash-back rewards, we are on a zero-based budget (using YNAB), we have an emergency fund setup, we are free from car debt (as of last month), and we will be free from our student loan debt in exactly five days. We’re also expecting our first child in January, so we feel very blessed to be in the financial position where we are in today.

    2. Definitely an inspiring story. When my now fiance and I moved in together, we realized we were going to have to make some financial changes. Now that we’re engaged, and want to buy our first home, the evidence is showing now more than ever. Yes, we’re making ends meet, but we’re also still using credit, which is holding us back from the net worth goal we have. We’re working on cutting expenses, saving money, paying off debt, making the right decisions to reap benefits, etc. We’re working hard to get financially secure

    3. When I married my husband I had no debt and was very responsible financially. I thought when I married, that was an end to having to deal with checking the bills all the time, balancing the checkbook, etc bc we decided he would. I never checked the credit card bills, and never reigned in my spending bc I thought we had enough $ considering it was now two paychecks. Ten years later and that husband long gone and me jobless, I have learned even when you have the monney, it doesnt mean you should spend it. There might be hard times down the road. Also, when you have someone else taking care of the bills administratively, you should always check them and your bank statements every month even if its just a mistake on the bank or credit cards part. It does happen! Even when you know you have enough in the bank, you should still balance the checkbook. It takes time but I am slowly learning as well.

      • I’m the one who handles our finances, but I try to make sure that my wife stays up-to-date. If I get hit by a bus, I don’t want all of our work to disappear.

    4. What a great post. Us humans can be rather silly at times but it just takes a kick up the backside or some water thrown on pur face for us to start the climb up the mountain.

      I’m pulling out of debt too, good luck.

      • I’m nearly to the peak of that mountain. My car will be paid off next month. Then, it’s just 1 card and the mortgage. The card should be paid off next year, and the mortgage the year after.


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