I have debt.
I’ve noticed that people don’t like to talk about this. They don’t want to think about their own debt. They don’t want this to be a topic of discussion. But, if you follow me on twitter, you’ve noticed that I have started talking about how I am getting out of debt. Because I think it is important and I think people often don’t realize how much their debt is holding them back. This is a big focus of my life right now and I blog about things going on in my life. I also like the support system. Some of you send me a simple “yay!” when I say I paid off a credit card. Some of you tell me you’ve started the same plan. Some of you tell me you think it’s great that I am talking about this. So I am going to keep talking about.
Today I wanted to share WHY we are getting out of debt and why we have made drastic changes in order to do so.
So, what debt do we have?
We have a mortgage. We live in a reasonably-sized house in a reasonable real estate market and we waited until 2012 to buy so we bought at the bottom of the real estate market. So we’re not doing too bad there.
We have one car loan that should have been paid off by now, but we refinanced the car when we needed a new roof a month after moving into our house because that’s what people with no cash do.
We have some credit card debt. We had it all paid off in 2011, so, naturally, I blame Evan, who is definitely the cause of a good portion of our credit card debt. But, honestly, plane tickets have always been our credit card weakness and that’s been an issue since we moved to Florida.
And then we have student loans. A lot of student loans. Six figures worth of student loans. My husband and I both have graduate degrees and we both got them in the most expensive way possible – at very expensive schools and using student loans. This is probably the only piece of the puzzle that makes us different than the rest of America.
That sounds pretty normal, right?
That’s not much of a confession. Most of us have debt, right? And people often talk about good debt versus bad debt. Student loans and mortgages are “good” while credit cards and car loans are “bad.” Under this philosophy, 90% of our debt is considered “good.” But, when your student loan debt is almost equal to your mortgage debt (and your monthly student loan payments are actually higher than your mortgage payment), I can tell you there is nothing that feels GOOD about that. When you throw in an average amount of credit card debt and a car payment, it quickly becomes a very unpleasant place to be.
So what happened?
We were treading water for a long time, sometimes getting a few strokes ahead, but eventually we felt ourselves starting to be pulled under. We never got in trouble. We’ve never missed a payment. We never even made a late payment. We are blessed with steady incomes in jobs we like. We have excellent credit scores. Everyone wants to loan us money. We were completely normal.
But the debt was starting to drive us insane. It was this constant THING hanging over us. We tried to ignore it, but we couldn’t.
And then we did some math and realized that we literally couldn’t afford to have another baby. If we were to have a second child, which has always been the plan, we couldn’t afford to send that kid to daycare – we just didn’t have enough free money each month in our budget. Now, we understand where babies come from and that they don’t just show up demanding daycare without some warning, but it really made me stop and think about what we were doing with all of our money. We live paycheck to paycheck and we shouldn’t HAVE to.
So we made some drastic lifestyle changes…
This post has gotten a bit long, so I will save the HOW we are getting out of debt post for another day. Meanwhile, I’d love to hear from some of you in the comments.
Debt has become a ‘dirty word’ in our society and it’s great to see people start to talk openly about it.
I’m looking forward to more of your story!
Thanks. I am looking forward to sharing more.
I too, struggle with debt. We bought a large expensive house at the top of the real estate craze (2008) so when our house dropped in value two years later by nearly 50% we were unable to refinance which was our plan from the start. I work for the State of California in higher ed and we had to take mandatory furloughs so my gigantic mortgage + second, since they had to split it so it wasn’t a jumbo, could not be paid for without using credit cards for the every day stuff. I kept on top of it for a long time but slowly.. we could not pay the cards off each cycle. We did not qualify for loan modification because they said I made too much so we cut way, way back and have been living that way for the past 3 years. The debt is coming down, but slowly and the mortgage remains the same. I am hoping that in a year, we can refinance because it’s almost worth what we owe on it now, but not quite.
It’s a real bitch! I never wanted a hand out. I feel responsible and want to pay what we owe but our mortgage is at 6.75% and my payment not even counting the $7000 a year in property taxes is $3600. a month. I just want a lower rate. That’s it! And soon, my Evan will be going to college and I worry about that too.
So, you are not alone!
Oh, man. That’s tough. 6.75 is insane compared to today’s rates. Did you look into a HARP loan? I think those are meant to allow people to refinance when they are upside down. I feel lucky that we were still young and poor in 2008 – we had nothing to lose. I get the feeling of responsibility since I have the pleasure of having so much student loan debt. All I can say is stick in there and feel free to find me and vent anytime you want. 🙂
We don’t qualify for HARP because our loan is not owned by Fannie May or Freddie Mac and Wells is not participating in HARP.
It certainly makes life much easier, too, when couples are on the same page money wise. Because of how my husband and I grew up, we have very different philosophies and so I am in charge of all the money. Which also means that I carry most of the stress. I HATE carrying debt on credit cards, so we don’t do it often, but we do have two car payments, the mortgage, and a small household loan (started when we had to redo our entire foundation last year). It makes me CRAZY. I think that money classes should be taught in high school (or even before then) as money management seems to be something that many people cannot do on their own. Good for you for working through the tough!!
Ben pays our bills and for a long time i let him worry about they money whole i just went on with life. He still pays the bills but we both make the money decisions now. And there is less worrying altogether.