Monday, July 29, 2013

Digging Out of Debt

Debt is a four letter word, isn't it?  I hate it.
  

I hate feeling like I owe anybody anything, especially The Guy at Some Big Company who could possibly ruin my life with a bad credit score.  I also can't stand paying interest on that money borrowed, which makes me different from nobody ever.

When Phil and I were married, we had between us $70,000 of student loan debt (two undergraduate degrees, and my Master's Degree).  We could have had a LOT more, but we both worked crazy amounts of hours, were savers not spenders, had a few scholarships and some help from the parental units, and Phil got his Master's degree for free.

Of course, it wasn't just student loans that we were paying each month, we also had car payments (once our cheap college vehicles went kaput), an IRS loan (when the government took back our First Time Homebuyer Credit) and a mortgage.  Although we never read or studied Dave Ramsey, I had heard a few things about it, and using the expensive degrees that got me into this debty doo-doo, I came up with a plan.

For the first few years of marriage (until Baby #3 came along) I was a SAHM and Phil was (still is) a Catholic high school teacher.  We made sure to pay off all our minimum payments each month, and the only way we could afford to do that was because we lived rent free in a house sitting situation.  I put an ad in the local newspaper that we were looking for a house to house sit (we live in an area with lots of summer homes) and that first day, we got a call from a really nice family offering their house in exchange for taking care of their lawn and sending them their mail.  Done and done.

Once that living arrangement wasn't working anymore, due to the fact that we had to move out each summer, find a rental, and then move back in, we were able to rent a condo from my parents.  As soon as we had to start shelling out $1000 per month in rent, I had to start making money or we would be homeless.  But I was a SAHM, and determined to remain that for as long as possible.  So Phil and I did the following little jobs to make ends meet:

Me - babysat extra kids, tutored math, had 3 weekly bookkeeping clients, and worked at H&R Block during tax season.
Phil - was a waiter on weekends, worked maintenance at the school in the summer, and was CCD Coordinator at our parish.

If there's one thing I can't stand, it's people that complain about money and then do nothing to make any. Where there's a will there's a way, and God helps those who help themselves, right?  We were determined and faith-filled that it could be done, and God provided ways for it to happen.  But we had to search them out and go after them.  I placed ads and answered ads until we got exactly what we needed.
{Shameful Blush Alert}
 We also took advantage of any kind of government help that was available to us during these really lean years.  Our midwife told us about WIC, and the WIC people told us about health insurance assistance.  So that was able to cut back our grocery and insurance bills.  We wished we didn't need it, but we did, and we qualified, and that's why it was there, right?

When all these things weren't making ends meet anymore (y'all know how little Catholic schoolteachers get paid, right?) Phil and I sat down and decided I needed to work part-time.  I was lucky to have a sister in nursing school at the time, and we coordinated our schedules so that we would watch each other's kids while the other was at work/school.

Long story slightly shorter....eventually all my kids were in school full-time so I got a full-time job.  (I also got pregnant with Baby #5 - definitely God's plans, not mine!) That was when were finally able to start really paying down our debt and not just managing it.  I made an excel spreadsheet with all our debt, the interest rates, and total owed, and listed each one in order of how truly expensive it was.  Meaning, the car loan with the biggest interest rate was going to get paid off before the student loan debt that had a small interest rate plus a tax advantage of claiming interest paid.  

Once the spreadsheet was created, I could see exactly how many months/years it would take to pay everything off, and adjusted it whenever necessary.  We paid way more than the minimum payment on the first debt we were tackling (my van), and once that was paid off, we rolled that amount of monthly payments on top of the minimum monthly payments we were making to the second debt item (Phil's van), etc. etc.  Sometimes I had to make adjustments because life would interfere with my master plan and money had to go elsewhere.  But, other times, we would receive gifts or tax returns that would speed up the whole process.  

This month we finally paid down all our debt, except our mortgage.  We have saved sooooooo much money in interest that we should have been paying for years.  We have also been able to really live within our means and we don't take any luxuries for granted.  Now, we feel like we have the ability to start saving for our next house...something that looked impossible a few years ago.  With 7 people in our family and only 3 bedrooms, we are running out of space.  A house that would fit us all comfortably is the goal, and one that is now within our reach in a couple years.  Not saving for all of those debt-paying years was a very scary thing indeed, and something we prayerfully considered.  In the end, we couldn't see saving our money at a rate of less than 1% while paying five times that on the debt we owed.  So we took that leap of faith. 


I'm not writing this post to brag or make others feel badly.  Pinky swear.  I want to encourage you to honestly assess your finances and debt and see how you can stop the madness, and I'm glad to offer any help that I can.  I never would have believed we could have done it in 11 years on 20 year loans, but hard work pays off!

26 comments:

  1. I really think it is great that you were able to manage it so well. But, overall--I think America's spending habits are out of control and there is a great mix up of need vs want. You seem to have all that worked out.

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  2. Great post! We've only got a little bit of debt left one small school loan. But we did the same thing. Pay highest interest loans off first. I see how people are crippled by their student debt and it makes me wonder if it's worth strapping our kids with that kind of debt for a four year college "experience." I know that sounds anti-American, but I am going to tell my kids to pray about possibly looking into a trade school or a community college or service until they really know what they want to do. Higher education is so outrageous and makes it so that many young people are fearful of marriage and kids because of that debt. (Stepping of box... now)

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    1. It's so refreshing to hear someone else echo what my husband and I have discussed. We are big fans of trade schools after our college experiences proved a waste of time and saddled us with debt. I am hopeful that my kids will go a different route.

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  3. Ps. So cool that you and my sister got to hang out. She is the bomb biggity.

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  4. This really reenforces my dominant thoughts about loans as our oldest gets closer to college. In three years, when it is time for him to move on, I cannot in good conscience sign my name to help him take on massive amounts of debt. He won't have enough life experience to understand what that will mean for his future. And we certainly can't afford to sink our family financial ship that way. How else can a kid get to college? Well, we will continue to explore our options. But debt is a yolk that burdens our ability to live freely within our vocation. We live on credit while we pursue our educations and then are forced to live on public assistance because we made that choice. It's a lot to think about... and good to have the subject brought up. I want freedom for my kids. I once read that one of the top reasons for the shortage of religious vocations is that a person cannot enter the religious life with debt... and almost everyone graduates college with debt. It is a largely unexplored subject. Thanks for posting your story.

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  5. Congrats! I cannot really relate because we did not have any student loan debt to pay off - but we did have some car and general debt to pay off. Part of our marriage prep was a section of finances and that chapter was the most challenging.

    Sometimes I still cannot bear to look at our mortgage statement each month and see the interest paid and the total amount left on the loan!

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  6. I love this Colleen, so much, and I'll tell you why. One word- sacrifice. A lot of us ('us' being people our age) made decisions that ended us in debt (college, cars, etc...) and that is killing our generation financially right now. A lot of people are looking for quick fixes (government forgiveness of student loans, etc...), but the thing is, the answer is quite simple and so very very difficult. Work, make more money, sacrifice, etc...even if you don't want to. You rock and your story is inspiring! particularly the extra jobs, that is amazing! You must be so proud of everything you and Phil have accomplished as a young couple with five children!
    Question- because my sister and I discuss often...is it more 'expensive' (not including Catholic school tuition) to have multiple babies, or multiple school aged children? Aaron and I are trying to gauge what our future will be like! It seems like school age kids are really expensive, but then again, three in diapers/formula/deliveries/etc... are pretty darn expensive as well. Do you think it will just even out?

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    1. I only have three, butI think it evens out. If I take, school, out of the equation, I do not think school-aged kids are more or less expensive, you just spend money on different things. Your grocery bill goes up and you pay for sports and activities, but you are not buying diapers, etc. We have been blessed to have had to buy very little clothing for the kids. So many people have been so generous to us all along. Plus, my kids are perfectly happy with thrift store clothing too . . . so we do not have the, "Mom, I am not wearing THAT!" issue just yet.

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    2. Well multiple babies grow up to be multiple school-aged children...so I don't think it really matters...but from my experience, babies can be had very cheaply (or very expensively) if you are able to breastfeed and use cheap diapers or cloth diapers, and depending on your insurance, birth can be cheap. My babies have been very cheap. . School-aged children are expensive...they eat more, their clothes are more expensive. And, while they don't NEED these things, it's nice if they can play sports or do activities (music lessons, etc.) and all those things cost money. Plus, there are school supplies, museum/zoo admission cost more when you have older kids. My older kids are way more expensive than my baby. Just life in general is more expensive with older kids.

      Anyway, good for you for paying down debt!! That's so awesome..what an inspiring post.

      Question...while I'm sure you don't "regret" going to FUS, would you encourage your children to go there and take out debt or would you encourage them to go someplace cheaper?

      I think it's a tough decision. Before, Ben went to law school, we didn't have any debt, and now he has his student loans (which are quite high), but we felt God was calling us there, so it was a big leap of faith. But, we are also older and better able to understand what debt is and how it affects us...a young student may not be able to. It really is a tough thing...between going to a great school that you love, if that means taking out loans.

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  7. WOW good for you guys! We are about 5-7 years and 3 kids behind you. I, too, was a SAHM but had to go back to work to be able to pay for...well a place to live. We started at 100+K (only 2 bachelors...my next husband will be cheaper ;) ) and are FINALLY making headway after being stuck at -75K for 4 years. I'm very jealous but can't wait to say we are debt free (minus the house) too! :)

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  8. This is a fantastic, inspiring post that I want to share with people! We are low in the debt column but recent circumstances are going to require hard work, and this was inspiring to read. Thank you!

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  9. You are so right Colleen, it takes sacrifice and hard work. My hubby came out of college with no debt from anything. I have no idea how is parents did it but they paid for all 6 kids to go to college (and two at Steubenville, no less!). My parents told me how much they could give me toward college and I just chose a college that was within that budget (yay for state schools!). Then, both Pete and I worked our way through grad school, so the only debt we had when we got married was some grad school debt from me and my car. We sacrificed and worked hard to be debt free by our first anniversary. For our first three years of marriage, we lived in horrible apartments, but they were free due to Pete's jobs. It is all about sacrrifice. There are so many times that I will search listings for bigger, nicer homes, but then I think about the bigger morgtage, and I just realize it is not worth it. Would it be great to have more space? YES! Is it worth exta years of debt?? Not to me. In less than 10 years, we should have our house paid off and I cannot wait for that day!

    It is funny that you wrote this post, because I have been thinking about writing one about finances too, especially since we are working so hard to make extra money for our adoption right now. It really is about hard work and sacrifice and God Blesses that.

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  10. I love this. It's great to hear the details of how a real family has made it work.

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  11. Thank you so much for posting this. I am graduating college soon and I just want to come out of the gates living as financially responsible as possible. It is inspiring whenever I hear of people living within their means rather than living with debt.

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  12. This is really helpful - we actually just sat down *last night* to figure out a long-term budget solution to pay down these student loans! Thankfully neither of us have undergrad loans, but Andrew's law school loans are quite hefty... When we first got married and I was pregnant with John Paul, I had two nanny jobs, a tutoring job, and we were both singing professionally AND living off of student loans to make ends meet. Then I got a teaching job so I dropped the nannying, but kept the others. Now we're both working and he's still working two singing jobs to help ends meet. It feels like we'll never get rid of these student loans, but I know it'll happen some day!

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  13. Whoa!!!! I have ended up on your blog through clicking here and seeing a link there and oh my gosh...you are totally the affirmation I needed! Thank you Jesus! We just made a "master super saver budget" to pay-off our car debt in five months. I was crunching numbers before my blog strolling and had a bit of a panic moment about the not saving money. But now I know its worth it! And I totally don't think you should be ashamed of the government assistance especially if you were on the path to bettering your finances and you also pay taxes! Our kiddos were both born with me on Medicaid. It isn't ideal but we pay at least one baby birth worth in taxes each year! :)

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  14. Good for you, Colleen! It's inspiring to hear your story! One thing I need to take you to task for though... Please don't feel ashamed for using WIC and other government programs when you were in the thick of it. That's what they're there for!!! Ideally, they are for families such as yours who were working hard to get themselves to a better place. And you did and now you don't need it! We all hear/know of people who take advantage of Government subsidies but you rarely hear of people like you who used it when you needed it and worked your ass off to not need it any more. Anyway, good for you for being honest about it. You've probably helped other families who are struggling who felt too prideful to take advantage of the programs that are there to help!

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  15. What a great post! And inspiring too. I often sit on this side of the computer and wonder how other bloggers do it when finances/expenses are concerned. While we are on a one income budget, I'm still always looking for ways to whittle our budget. Thankfully, Reed had school debt paid off by time we were married and I had no debt besides a small car loan. Since then, we've tried to just maintain the mortgage and usually one car loan as our main debt. Still, I like to see some money going in savings and Reed usually likes to get the debt paid.
    Again, thanks for working it all out and showing us how it's done. You and Phil are amazing and definitely did the work and sacrificing to get rid of debt. So proud of you! :)

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  16. Brilliant! So Happy for you and thanks for the encouragement with your debt pay down story. Leap of faith for sure!

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  17. This post truly speaks to me! As an attorney, people assume I make a lot of money. Not true. I make about what a lot of people make with a bachelor's degree. And to top it off, I ended law school with $90,000 in debt. I sometimes struggle with always having to sacrifice and save to try to pay down the debt...only to see it increasing just based on interest alone! Being frugal is especially tough when planning a wedding, although I'm sure it's even harder with kids like you have. But you're right, I know it all will be worth it in the end. Sacrifice is key. Congratulations on paying off your student loan debt!!

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  18. So happy for you!!!! We are finally seeing the light at the end of the tunnel. How exciting to be starting the process of planning for your next home!

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  19. Great, great post. I was not raised to be a saver, or to live within my means, but thankfully my husband was. We have no debt either, except our mortgage. This year, for the first time, we are paying two Catholic high school tuitions, and it's definitely pinching our budget. But we know HOW to do it, and we know we can. It's stressful, but also a relief to know that we can make it through the 10 months.

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  20. I'm so happy for your family; this is WONDERFUL news. Debt is a scary monster....and I don't like monsters! I too loathe hearing people complain about money issues; you have to work harder, spend less and things happen.

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  21. I hate it. Makes me want to throw up... seriously. I need you and your excel spreadsheets!!!

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  22. I know this is a pretty old post, but I've been reading your blog for about a week backwards (going from the newest posts back--weird, I know), and this post is so encouraging to me today. Thank you!

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