Tuesday, January 20, 2009

My Debt Story

It's sad and hard to believe that in October of 2005, I had no debt except for my mortgage. I had paid off a credit card and a 6 month computer loan and was debt-free, except for mortgage. The missing component to my finances was having a plan, knowing what to work for. Other than saving $300/month for DD2 upcoming college expenses, I didn't have a savings plan. I thought I was financially fit and responsible. The next 20 months would prove me wrong. By June of 2007, I was $13,700 in debt and still thinking I was financially fit and responsible!

My journey into debt included the transmission going out in my Jeep, getting a store credit card to get 10% off a gift (really stupid!), getting two 12 month-interest free cards, one to pay for professional board certification, and the other to consolidate two big purchases. Another factor was that my income decreased, but my spending stayed the same, so that every month I went farther and farther into debt. I finally woke up in June of 2007, when I read Dave Ramsey's Total Money Makeover. I listed all my debts and was shocked at how much I owed. For some reason, I had been telling myself that I owed $7000. Talk about denial!

The first two months of my TMMO were difficult, because I had to learn to not use my credit cards and to live within my means. The debt totals did not come down at all for several months, which was very discouraging. I found that several experiences helped to keep my spirits up. At first, I kept reading TMMO and working on my debt snowball. Next, I found Dave's website and discovered personal finance blogs. I was encouraged and inspired by the journeys they shared with their readers. They also shared tips and tools (like budget spreadsheets) that kept me inspired to keep plugging away. My debt was coming down, albeit slowly.

Starting this blog in August gave me another boost of encouragement and accountability. Writing about my goals and updating my progress (or lack of it) helps me to stay on track. Plus, I am learning a little more about blogging and personal finance. It's a win-win for me! I would encourage anyone who is on a journey to become debt-free to consider a personal finance blog as one way to learn and stay accountable.
Right now, I am really enjoying my journey into financial wellness. When I finally get debt-free this time, I want to have a plan to stay financially healthy and the knowledge to implement the plan.
Can anyone relate to getting out of debt and then getting back in due to lack of a plan? We will not repeat the same mistakes again!


Ms. MoneyChat said...

yes, i definitely understand the debt the cycle, all too well unfortunately. like you, i was debt free but not for long since i didn't have a plan. i actually did this 2 times! i guess you can that three's a charm.

Sharon Rose said...

Hi there-yes, the key is to have a plan, such as a realistic budget and to live below your means. Very best of luck on your debt free journey!!

jpkittie said...

I have never been out of debt in order to get back in --- this will be my first time around... hopefully I won't go backwards when I am done!!!!

Francois Viljoen said...

Hi RTC!!

Debt really is like an addiction!! It's so easy to fall into debt. It happens so quickly! And then it takes a lot of time and dedication to get well again.

I haven't been at your blog for a while, but I'm glad to see you're still doing well and so motivated!!

Looking forward to watching your debt ticker tick to zero this year. :)

Take care & God bless!!

RTC said...

Ms. Money, jpkittie, Sharon Rose
You guys are doing great in getting out of debt. You are an encouragement to me!
Thanks, Francois! Are you enjoying your summer? It's pretty cold here!

Anonymous said...

Hey RTC yes I'm loving summer!!

And making the most of it - I'm leaving for Mozambique again for a week tomorrow, before my next contract starts in Feb. :)

Hope you at least get to build some funky snowmen RTC?

messy said...

I've been in debt since I was 18 and I'm pushing 40 now! I sometimes wonder if getting out of debt is the easy part? Maybe staying out of debt is even harder than getting out of debt? I don't know but I really hope I get the chance to find out.

I added you to my blog roll, that you for the comments and encouragement.

RTC said...

I think maybe you are right!

Miss M said...

Sort of, I didn't get completely out of debt the first time. I had $14,000 in credit card debt, paid it down to $7000. Then ran it back up to $22,000. Paid it off in a year, that was one year ago. I'm doing well because I got in the habit of saving years ago when I was still in debt. Now I love being able to focus on savings goals, not debt goals. Finding new things to focus on, having a plan, has definitely helped me get on the right path. Once the CC debt was done I focused on my car payment and paid that off last year too. There are always new mountains to climb, you just have to find them.

Ethically Chic said...

RTC-Remember that your DD sprang an engagement on you in summer 2005 and that you planned (and paid for) an awesome wedding for her in 2006. I bet that had a huge effect on your spending. I'm not trying to make excuses for your debt, but I don't want you to be too hard on yourself.

p.s.-DD so appreciates the wonderful wedding that you gave her-it was the best day of her life.

RTC said...

@Ethically Chic
Thank you for your kind comment. As you well know, DD did all the planning for the wedding and did a wonderful job of keeping expenses down...and it was a beautiful wedding! I'm all choked up remembering it!

Anonymous said...

the plan is the most important part, maybe! you look to be on the right path now though, so at least the mistakes mean you learned something!

Budget Mama said...

Hi RTC, I think you are well on your way to personal wellness. After I get out of my financial mess, I really hope to never be here again as well. Good luck!

Saver Queen said...

You will definitely get to where you want to be. And I couldn't agree with you more, re: the benefits of blogging. A mutual source of support, as well as a group of people to be accountable too! I learn so much from my readers and other bloggers. It's the best!

Dawn said...

I agree with you completely - finance bloggers and having a blog myself really helps with inspiration and keeping myself on track.