My debt story, in a nutshell.

My journey out of debt and into financial security started about 15 years ago.  I want to say, I grew up with great parents who really modeled excellent financial habits.  They were very frugal, didn't buy things until they could pay for them (with the exception of a house), and saved for a rainy day. When they bought a house, they threw every extra penny that came there way on the principle, and paid it off very early.   I can only say I WISH I had followed their example early on in life.  But I didn't.

I went wild when I was on my own and spent money I didn't have, racking up credit card debt like there was no tomorrow.  And, I have to say...I have absolutely nothing to show for all the money I spent.  I really used to never answer the phone because I just KNEW it would be a debt collector. I can remember more than once answering the phone while my parents were visiting and lying about the conversation, I was so ashamed.  But I didn't know what to do about it. I didn't tell ANYONE about my financial mess, not even my best friend. I carried so much guilt and shame over it. It was my own little dark dirty secret.

 At some point, I decided it was time for me to grow up... like, right around the time my parents found out about the problem. This was one of the most horrible times in my life, I was so ashamed, and I know I really disappointed my parents. I moved back in with my parents for about 1.5 years.   I caught up with my credit card payments first, and managed to obtain a halfway decent credit score.  I bought my first home at the age of 30 (15 years ago) and by that time I was financially wary enough that I was afraid to spend much money. The realtor and bankers were shocked that I was borrowing just $42,000 for a home (that cost $52,000) when I would have been approved for much more based on my salary.  I bought in a less desirable area to achieve lower costs, but I wanted to make sure I would be able to handle those payments.  I did ok with payments, but credit card balances went up and down, never reaching zero.  I never had an emergency savings account. Somewhere along the line, I realized that someday I would want to retire, and at 35 I started investing in my retirement for the first time.  I lived in that house for 5-6 years, and then relocated due to a job change that just made the commute unbearable.  I nearly fainted when the lowest price I could find on a house was $140,000 (again, not in the most desirable location).. . this was when the market was going up and up.  It was the only house I could find under $200,000 that didn't need $50,000 of structural work before I moved into it.

My credit score was excellent, but again, those credit payments just never went away.  I was driving a car that I had purchased in 1995 (and just replaced in 2013).  I still didn't have an emergency fund.  I decided I finally needed to break free of this trap about 4 years ago.  I was having increasing back problems, and I am a nurse. I would lay in bed at night sobbing, wondering how I was going to survive if my back gave out and I needed to go on disability. I decided I couldn't live with this insecurity, and slowly began making the commitment to NO MORE PAYMENTS.  I cut every corner I could think of. I had pay as you go cell phone which I needed when I was on call for work. I used a voice over internet provider for a lower phone bill.  I got rid of cable TV. I decided I would hang onto my old old old car until it just wouldn't run any more.  I shopped for bargains, used coupons, and became an expert at finding a deal. I started eating at less expensive restaurants.  

I finally got all my debt paid off and was committed to saving cash for a car purchase.  I took my 18 year old Toyota Corolla in for inspection in February of 2013... and it would have cost me $4000 to put it back on the road.  I decided it was time to make a vehicle purchase.  I did purchase my dream vehicle... a 2010 RAV4, but overnight, I was $23,000 in debt again, and had not a penny in savings. I was extremely stressed out about it.

About a month later, I heard Dave Ramsey's radio show for the first time. I had read one of his books before, but until I heard his radio show, and the joyous "I'm debt free" screams, it didn't sink in.  His message hit a core with me.  I loved his baby steps.  I don't agree with everything he teaches, but I am on board with his overall concepts.  I did however, reverse baby step 2 and 3. I started with step 3.  I needed to lay down and be able to sleep at night knowing if I lost my job I'd be able to stay afloat for at least 3 months, which is a reasonable time frame in which I could find another job.   A little less than a year of intense savings and looking for money anywhere I could find it, I managed to scrape together 3 months of expenses and I finally had an emergency savings account.  Then, I sort of drifted away and wasn't using a written cash flow plan for the last 3 months. I realized while I wasn't accumulating debt,  I wasn't making traction, and this is when the $25 challenge idea was born... it was time to tackle the car debt as quickly as possible so that I could get around to maximizing my retirement savings.

My goal:  Pay off my car loan in the next 1 to 1.25 years.

This amounts to finding an extra $18,000 somewhere. This is a HUGE chunk of money, and while I can't complain at all about what I make... it will be a challenge to find that much wiggle room in my budget.  I'm not willing to give up traveling, which is about the only luxury item left in my budget (OK... I did let myself get a droid phone when I finally obtained my bachelors degree).  The only debt I will have left after that is my mortgage. At that point, I will follow Dave's advice and increase my retirement contributions to 15% of my income.  And I already know if I apply my car payment amount to my mortgage after I am finished with the car, my mortgage will be finished in 7 years. That would be more awesome than I can imagine.

What is your financial goal?  Do you have a debt story to share?

What does the bird have to do with this?  Not much, really. I took this picture while in Sanibel, Florida, my favorite vacation destination.  Except that this is an ideal cheap vacation past time... for $12 you can get an annual pass to drive through the Ding Darling Wildlife refuge (vs. $5 every time you drive through). During a vacation, it isn't unusual to drive through there 3-4 times a day to see what we find.  This bird was just one of many critters.  A condo also turns out to be far cheaper on the island, especially when you use it to cook breakfast and lunch in.  You can have fun AND get out of debt at the same time.  You just need to choose your priorities.  Mine is vacation.  I am willing to cut just about everything else!  And I am willing to search hard and long for vacation savings!

"Therefore, since we are surrounded by such a huge crowd of witnesses to the life of faith, let us strip off every weight that slows us down, especially the sin that so easily trips us up. And let us run with endurance the race God has set before us." Hebrews 12:1 NLT