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Andrew and I sat down and added up our debt. It’s embarrassing. We were on a roll – in 2015 and 2016 we paid off almost $30,000 in debt. But we lost our focus. For the past four years, we’ve been pretending our money problems don’t exist.
And it isn’t working.
Bills keep coming in, our credit card debt isn’t getting much smaller, and we’re not living the life I want to live.
It isn’t all our fault – some of it is because life dealt us a bad hand. I call it “the year from hell,” but it was more like 18 months of nonstop medical catastrophes.
I talked about our year from hell in this post but here’s a quick review: In 2016, I had a miscarriage with complications that required an emergency blood transfusion and Andrew was diagnosed with a blood clot. In 2017, I had a second miscarriage that led to two different surgeries and Andrew spent a significant amount of time in the hospital dealing with two new blood clots.
I’m still traumatized by all the grief we endured in that short amount of time. By the grace of God, we made it through.
We lost our focus after that.
Since 2017, we’ve been pretending our money problems didn’t exist. We haven’t accumulated a ton of debt but we have made a few very poor money decisions.
We’re in quite a mess.
Here’s what went wrong and how we will fix it.
Where Did Our Money Go?
Have you ever sat back and wondered “where did my money go?” The reality is that just being alive costs a fortune.
Between housing, utilities, groceries, gas to get back and forth to work, and health insurance, you rarely have money left.
It’s no surprise that 78% of Americans are living paycheck to paycheck, according to a CareerBuilder survey.
So what happened to our money in the last two years?
A lot of medical bills. All those hospital visits from our year of hell added up big time. I have no idea how much we spent, but we had a $2,600 deductible each year we paid out of pocket and one medication Andrew was on for his blood clots was $1,500 for a 10-day supply (and that was after insurance!).
A new house.
This took our outstanding mortgage balance from a mere $43,000 to $120,000 and raised our money payment by $600 a month.
Our new house was infested with carpenter ants. After trying DIY solutions and store-bought sprays, we called an exterminator. It was $500 but all our ants are gone.
A new TV.
We didn’t need a new TV. We had two – one in the family room and one in the living room. But when the living room TV went out, we spent $300 on a new one.
A new (used) car.
I never thought buying a car could be an impulse purchase, but I’m pretty sure that’s what we did. We bought a $20k car with no money down. Dumb!
Our airfare was free thanks to a credit card signup bonus, and we saved almost $4,000 to pay for the rest of the trip. I underestimated the cost of a Disney vacation, and we added about $2,000 to our credit card debt from this trip.
Everything went wrong.
During the month of November 2018, our furnace, water heater, air conditioner, and garage door opener all stopped working. We had over $5,000 in unexpected expenses that our $1,000 baby emergency fund didn’t cover.
Upgraded cell phones.
Instead of keeping our paid-for cell phones, we upgraded to the new model which added about $60 a month to our bill.
Some of that was our fault, and some was just bad luck. But here we are…
How We’re Going to Fix It
It’s clear that ignoring our money problems isn’t making them go away. So, we have to attack it head-on.
Andrew and I are disgusted with ourselves. How are we ever supposed to retire with all this debt hanging over our heads? And what if he loses his job? Or my freelance clients dry up?
We need a plan.
I’ve always been a huge Dave Ramsey fan. That’s how we got out of our financial mess before, so we’re going back to what we know works.
The library had a copy of Total Money Makeover so I borrowed that to read. I’m a huge money nerd and help other people with their finances all the time. But I needed to see it in black and white to make it sink in for our finances.
Here’s our plan:
- Work the Baby Steps
- Switch to cash-only spending
- Stop our retirement saving
- Picking up extra work with side gigs
Cash-only spending sucks. But it works. When we use a credit card, we buy whatever we want and swipe that magical piece of plastic and everything is paid for. Until now, we’ve paid it off every month, so it hasn’t been a problem.
By sticking to cash-only, we’ll put more focus on our spending habits and (hopefully) think twice before we put something in the cart.
I really hate stopping our retirement contributions. It’s what Dave Ramsey’s Total Money Makeover recommends and the extra money could help our debt payoff plan, so that’s what we will do. We put a time limit on it, though – if we don’t pay off our debt in two years, we’re going back to saving for retirement no matter what.
As for side gigs, it will give us the boost we need to help get this debt paid off.
Right now, I’m balancing three roles. I’m a content marketing writer, part-time digital editor, and a Shipt Shopper.
Andrew has a full-time job and is looking into side gigs to make extra money.
We’ve got to get this debt gone, yo!
Stay tuned for updates!
Amy Beardsley is a wife, mom to a teenager and frugal lifestyle enthusiast. She’s always on the lookout for new ways to cut costs and increase income, without sacrificing comfort. She’s also a freelance writer who specializes in credit reporting, FinTech, and probate and estate planning topics. When Amy isn’t perfecting her budget spreadsheet, you can find her curled up with a good book or watching Marvel movies with her husband and daughter.