Starting To Eliminate My Debt

18 Mar 2016 22:46
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Getting out of debt is an incredibly hard task! If you think it is easy do not kid yourself. It is a constant uphill battle and unfortunately some never actually climb the hill to success and end up in bankruptcy.

Getting behind in debt can come in many forms. Do not be condescending by assuming everyone is in debt because of bad spending habits. Yes bad spending habits is one of the reasons but the more likely cause of debt is when a tragedy occurs like loss of a job or serious medical issues.

Debt can also be very tricky and unrelenting by slowly creeping up on you year after year and before you know it you find yourself in a tough situation. Imagine you have a small leak in your boat and you can only scoop out a gallon at a time. As you remove 1 gallon of water there is 1.1 gallons of water seeping in. At first that small 0.1 gallons of leftover water doesn’t concern you but over time that 0.1 quickly adds up to 10 gallons, then 100 gallons and you realize that your boat is starting to sink. This is how my family and I found ourselves in debt. The little bit of debt that I did not pay off at the end of each year quickly snowballed within 5 years.

The hardest part of understanding my debt was figuring out how we got there. For the most part we live fairly modest and some would even call it frugal. I never lost my job, had serious medical issues, or went out and bought big ticket items. Somehow I went from manageable debt to being behind the 8 ball but it wasn’t due to spending habits or tragedy.

Bad Timing

What has actually occurred with my debt was a convergence of several expenses all at once. From 2010 to 2016 my paycheck was going up marginally year to year but expenses, taxes and health insurance increased at a much faster rate.

Also in 2010 my home was 14 years old, many of the upgrades I made to the home those many years ago when I first bought the house started to fail and needed to be replaced. From 2010 to 2016 I was replacing at least 1 major appliance per year, it wasn’t overly expensive but the effects were cumulative. Currently my home is 20 years old so I should start to see more expensive structural repairs (like a new roof).

Finally, the last piece during this time period were my 3 children growing into teenagers. Anyone that has teens is well aware that they are more expensive. My kids have extremely high metabolisms and while having fit healthy kids is a great thing they also eat more to feed that high metabolism. My oh my can they ever eat. Also let us not forget education needs. Class trips and specials are bigger and more expensive, supplies and equipment aren’t cheap (ever buy a Ti calc for math?), and of course there is college with SAT’s, applications, and prep classes.

Mind you I am not blaming my children it just happens to that their needs happened to coincide with the other two factors and before I knew it I was in debt. The best adage that describes this situation is “death by a thousand paper cuts”.

Time to Start Digging Out

When a family needs to dig itself out of debt the hardest part is getting every single family member on board and not just Mom & Dad. The best way I got the message across was pulling all of the debt together and calculating how much in interest we were paying daily.

Sitting with my wife and children I showed them the debt but what caught their attention was how much interest we were paying daily which was $4.83 per day! That is like taking a $5 bill out of your wallet every single day and throwing it in the garbage can! Our goal for this year was to reduce our debt by 20% but I was shocked when everyone agreed to beat that and better yet to wipe out all debt in 3 years. Going forward I will sit with my family once a month and update how much we are paying in interest per day so we can see the progress. This might not sound like much but for me to see 5 people all on the same page is a huge first step.

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