At my site, Prudence Debtfree, I posted last weekend about the milestone we had just reached in our journey out of debt: Except for the mortgage, we are now debt-free! It’s a bit odd to be interviewing myself, but Laurie thought it was a good idea : ) So here it is … our debt success story.
Fruclassity: Tell us about your debt situation and how it started.
Prudence: If I take the broad view, it started when I was a teenager and always spent my month’s clothing allowance well before the next month had started. I would whine and complain to my parents until they gave me an advance allowance … and then I’d spend it all too soon again … and whine and complain … and the cycle continued.
If I take the more immediate view, it started when DH (Dear Husband) became a casualty of the high tech bust at the turn of the millennium. He had been an engineer and the main breadwinner of the family. Then in 1998 he found himself on what would be a five-year employment roller-coaster as one high tech company after another went under. In 2003, after going to 12 interviews for one position (at a company which also soon went under) and then not getting it, he lost heart and got off the ride. For six years, he was under/unemployed, and his income took a staggering plunge. I had worked as a teacher part-time for 10 years and had recently resigned to be a stay-at-home mom after the birth of our third daughter. All of a sudden, I needed to go back to work full time. Absolutely heart-breaking.
Fruclassity: When did you realize your debt had become a problem?
Prudence: DH found a new career path in self-employment, and the business he launched in 2009 required a significant loan. It turned out to be the right move, and before too long, we felt the profound relief of having a solid household income again. We relaxed in our lifestyle, going back to our old habits after years of forced frugality. Restaurant meals, new car, some travel, house cleaners every two weeks … but it didn’t feel right. We had this nagging sense that we were playing a dangerous game; we just couldn’t identify it. I know that sounds incredibly blind. But we were blind.
I would occasionally hear or read sound money advice, but for some reason, it didn’t stick. Maybe it reminded me of my parents, and my inner-rebellious teen was too stubborn to listen. Wise money management sounded boring. So in the spring of 2012 when a friend of mine brought over a CD-book entitled The Total Money Makeover, I let it sit on the table by the front door for a several weeks. Out of a slightly irritated sense of obligation, I finally brought it with me in the car for my drive to work one day in May. It was on that commute to work that I first realized exactly what our problem was: Debt.
Fruclassity: What’s your debt payoff goal date?
Prudence: We just paid off all non-mortgage debt last week! 3 years and 2 weeks after beginning our journey out of debt in June 2012 – a HUGE milestone! Our total debt had included over $21,000 in consumer debt and almost $81,000 in business debt. Besides making our regular mortgage payments, we have paid off an average of $2,700 per month to bring both consumer and business debts to $0. We had been making monthly payments against our debts before June 2012, but it was an unfocused effort. Once we started in earnest, our rate of debt-repayment increased by over 300%. That increase cannot be explained by a dramatic pay raise. DH’s successful new business had already been earning a good income for two years. It can only be explained by the gazelle intensity with which we have focused upon eliminating our debts.
We’re left with a mortgage of $128,000, and we hope to have it paid off by June of 2019. There are no guarantees – especially with DH’s home business – but that’s our goal date.
Fruclassity: What challenges have tempted you to give up on your goal of debt freedom?
Prudence: In our first year of debt-reduction, DH went through two consecutive months of extremely slow business. We could put nothing against the debt, and I felt seriously down. One thing I’ve come to realize about my own character through this effort is that I’m far too swayed by circumstances. Any long term effort is going to include both ups and downs, and if you capitulate with the first downswing, you’re not giving the future “ups” a chance. Fortunately, we didn’t give up. We didn’t give up during our second year either – when an unbelievable series of expenses hit us, one right after the other. A new roof for $10,000. A dangerously rotted tree right by our house that needed to be cut down for $2,000. Our dog’s bladder stones and a series of vet bills that added up to $4,500. Ouch! That second year, we paid off far less debt than we had our first year. It was frustrating, and there were times we felt, “What’s the point?”
It is possible that our biggest temptation to give up will come now. After all, “everyone” has a mortgage, right? Our desire to pay off consumer and business debt was easily understood by the people around us after DH’s years of low income and uncertain career. But a desire to pay off the mortgage? 59% of Canadians enter their retirement years still carrying debt. Mortgage debt especially is so normalized that we might have to work against a sense of complacency – a sense that the focused intensity which has brought us this far is no longer called for.
Fruclassity: What resources have helped you to be successful in your debt payoff efforts?
Prudence: We never would have started our debt payoff efforts if we hadn’t read Dave Ramsey’s The Total Money Makeover. I can’t adequately convey the significance of that book’s power in yanking my head out of the sand, giving me a vision of financial freedom, and a strategy to get there.
Equally important to me has been my participation in the PF (personal finance) blogging community. There is a day-to-day-to-day support in PF blogs that I would not be able to find in real life – where a taboo against money talk is so prevalent. Furthermore, writing my own blog keeps me accountable and mindful.
Fruclassity: How has your debt affected your relationships with your husband and children?
Prudence: DH and I used to inhabit two separate worlds when it came to our personal finances. Mine was a head-in-the-sand world. His was an ineffective world of worry. That day in May 2012 when I listened to Ramsey’s CD-book, I came home and listened to it again with DH. Equally psyched by a vision of debt-freedom, for the first time in our marriage we got into the same world and onto the same page for our personal finances. We still struggle a lot to find the time and desire to create monthly budgets and to review weekly expenses. But the drudge aspects of our money management have had a ripple effect that we were not even aware of. Other people have told us that our marriage seems stronger since we’ve been working our way out of debt.
DH and I have 3 daughters who range in age from 16-26. Each one is at such a different stage of life that I can’t make many sweeping statements about how our relationships with them have been impacted by our debt. I can say that our years of financial stress were not happy. DD1 (Dear first daughter) went through her teens with a growing conviction that she would never get into debt. Not a bad response to our financial mess, right? But I don’t want to see her manage her finances around a negative, and I have tried to impart to her the positive of frugality-for-freedom these past three years. Not that I’ve needed to. She graduated debt-free with a masters degree two years ago, has been working since – saving while living the life – and is very independent. I do find myself feeling a guilt about not having been more essential to her success. She really has found it on her own and is now cheering us on our way to ours. Somehow, I don’t think that’s the way it’s supposed to be.
DD2 responded in a radically different way to our debt. She was strong-willed and rebellious. It was unfair that she couldn’t have what her friends had! What was the matter with us?! It’s been a painful transition for DD2. Her normally jellyfish mother has developed a backbone, and there has been forced learning in how to manage with financial limits. But the great thing is, she has learned, and as she enters her young adult years, DH and I believe in her.
DD3 is a teenager still in high school, and it’s hard to say how our debt has impacted our relationship with her. By the time she had reached the age of early financial decision-making, DH and I had already established our new money philosophy. There hasn’t been the angst and the negative that were there for her older sisters. I hope that our stronger financial sense will provide for her a solid base from which to develop her own money management.
Fruclassity: What jobs have you held during your debt payoff process?
Prudence: I continue to work as a teacher in a high school, and DH continues with his home business. Since 2012, I have taken on summer school for added income.
Fruclassity: What words of encouragement do you have for those who want to become debt free?
Prudence: It can be done! Every single step you take towards debt-freedom, no matter how small, is more effective than it seems. And it’s about way more than money! As you work on your finances, you will discover character flaws that perhaps you’d rather not admit to, but that’s a good thing! Allow yourself to mature and grow, and you’ll find it’s easier to reach those financial goals. The positive ripple effects will reach your relationships as well as your money. Don’t give up, and don’t keep your struggles to yourself. Get involved in the PF community. Comment on blog posts. Put yourself out there and gain the support and accountability that comes with allowing yourself to be vulnerable and transparent. Debt is a widespread problem in society – much like smoking was in the 60s and 70s. You’re not alone, and your debt is not a dirty secret. Together, we can create the force towards a tipping point in our culture – away from the bondage of debt from which so many of us want to be free.