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.