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About a year ago, Mr. Dreamer and I found ourselves with a new mortgage, lots of debt, and a job loss. We were terrified. Of course, losing our main source of income in and of itself was terrifying, but having all of this debt just added so much stress to the whole situation.
What were we going to do? Well, first and foremost, Mr. Dreamer needed a job! Next, we needed to analyze and tweak our budget. Once we looked carefully at our income and expenses, we decided we needed to severely cut back our expenses.
See this beauty? We had one in our driveway (only ours was white). We also owed over $23,000 on this baby! We were paying $540 per month just for the payment. We ended up selling it to a local car dealer because we needed to dump it ASAP. Fortunately, we were not upside down on the loan and walked away with a little bit of cash. This was hard on Mr. Dreamer because he really, really, really liked this truck. Fortunately, he liked buying groceries better! 🙂 He will now tell our kids (and anyone else who wants to listen) that the best thing we did was sell this truck. (Photo credit: Edmunds.com)
Right before we dumped the truck and the debt that went along with it, we took out a personal loan and purchased this Toyota private party. Our line of thinking at the time was that a personal loan for $8,000 was much better than the $23,000 for the truck. Any cash we had at that time was off-limits because we weren’t sure of Mr. Dreamer’s job situation. Plus, we didn’t have $8,000 in cash! Yes, I know we should have bought a really cheap car with what cash we had, but I had faith that everything was going to work out with Mr. Dreamer and a new job! I was living in a bit of a fog then as well and not really thinking clearly.
So the rest of our debt was from miscellaneous stuff on a home improvement credit card (12 months no interest – hurrah!). This included the new washer and dryer we
financed purchased when we bought our new house . Honestly, I did try using the local laundromat once, but it was a terrible experience. Plus, I didn’t have the time to spend there since I had two part-time jobs. So, we tried to be really, really frugal and bought the cheapest washer/dryer set we could find (again, 12 months no interest – hurrah!). We also bought a new couch, financed, of course. 🙁
Ok, fast forward to August of 2016 and Mr. Dreamer had a new job! I was also working a part-time job in addition to my regular work-at-home job (I did this until January of 2017). Our consumer debt (not including our house) was a fairly manageable $9,700.
We have been chipping away at this $9,700 for the past year. Once Mr. Dreamer started working and we knew what his salary was, we just started throwing everything “extra” that wasn’t already allocated in our budget. Since I had an extra part-time job, we put that money towards the debt. We tried to cut back on any and every expense we could to put towards the debt.
Once we saw the light at the end of the tunnel with this debt, we went to our savings to pay the final $2000. This was a tough one for me because of our recent job history. I know the “rule” is to keep $1000 in your emergency fund and put the rest toward your debts, but my comfort level says we need more than that. Once our cushion was a little bit more than $1000 (we now have $4000), we scheduled that last lump sum payment.
Today I am happy to
shout to the rooftop say that we paid off our last debt (except for our mortgage)! I’m doing a happy dance right now! I logged on our loan account and found this:
We aren’t completely debt free because of our mortgage, but I truly believe in baby steps!! The relief we are feeling right now is truly amazing.
Debt makes you feel trapped. Unfortunately, debt can happen very easily if you are not prepared.
Debt robs you of so many good things for your future. You borrow from your future for “stuff” that really isn’t that important today.
Paying off debt is hard. We not only cut our expenses, but I took on a second part-time job in order to help pay this off.
“Budget” is not a bad word! You need a budget. It can be such a blessing to your finances.
You need an emergency fund because emergencies and job losses can and will happen – TO YOU!
You need to educate yourself about personal finance. Funny thing, I listed to Dave Ramsey for years! My family went through Financial Peace University together (even our kids participated) and we still managed to get ourselves into debt, again. I know his program works – I’ve heard countless success stories through his radio show. Recently I’ve read countless blogs and listed to Podcasts where people are winning the fight against debt.
I thought we would NEVER lose a job, and I thought we were entitled to that truck and that “stuff” because we worked so hard. WRONG!
Sometimes the lessons with the most impact are the hardest lessons.