In an effort to open up on my blog I am sharing some common questions I am asked and delving in a little deeper to our personal finances. While we long ago established household rules for what is the line for our family when it comes to sharing online there is definitely more I could say, but it’s been hard to figure out exactly how to share in a way that makes the most sense for the blog and you, my readers.
Are you in debt? When did you pay off your debt? How did you stay out of debt?
Probably the biggest questions that I get asked in some form or another are related to our personal debt. If you’ve spent any time on my site you know I am not a blogger who is laying out income, expenses, net worth, etc. Some bloggers in the personal finance realm do, and I love it. I don’t-and I should say WE don’t for personal reasons. The truth is we’re still in debt. We will be for a long time (hello, mortgage).
How did you get into debt?
We spent 12 years living on one income and in that time added 3 additional children to our (then) little family. We had times of being ahead and having a cushion of savings and times where we were paying for groceries on a credit card. But we never had a plan. We took things as they came throughout the chaos of having and raising four small human beings. We made stupid choices (house hunting at 23?), we made smart ones (a low, low budget wedding), but in the end we racked up debt (mostly in the form of medical, dental, and home repair expenses), moved into a bigger home for our family, and were spending way more than we brought in by 2009. That brings us to the moment when I started this blog-which is really a how-to story of how we’re living on less and paying off debt with budget-friendly advice in other arenas as well.
What debt do you have?
This question is a little personal, but I’m game. We have a hefty-ish mortgage (thanks to a stagnant market since we bought 7 years ago). Our house is not underwater (thank goodness!), but with the repairs we have done (and still need to do) and the mortgage itself we are spending well more than it’s worth at the moment. We bought our home at the literal height of the market and it was only owned by one other family. That meant that there was (and is) a lot of potential, but it costs big bucks to fix. I sometimes call it ‘the Money Pit.’
All that aside I’m hopeful that the market will swing up a bit which will make all the literal blood, sweat, and tears we’re putting into the house worth it. Of course, it’s also well worth it when I consider our neighborhood, our schools, and simply having a (needs to be replaced) roof over our heads.
We also have about $25,000 in other debt in the form of loans and credit card debt. Yes, that’s a lot, but it’s going in the right direction-down-which is all that matters. Speaking of paying off debt…
How much have you paid off?
We have paid off well over $100,000 in debt in the last 5 years including student loans, paying off two car loans, and credit card debt. We spent the first months of this blog and slashing expenses to turn the tide from spending more than we were earning. Since then it’s been a steady two steps forward, one step back. Slashing debt and then needing to mind every penny when we needed to pony up big bucks for repairs or costs related to the kids.
In addition, we have spent nearly $50,000 more on home repairs and upgrades that were necessary, family trips, and furnishing our home in that same time span. Not to mention the mountains of food our children consumed-I try not to think too much about that.
How are you getting out of debt?
We are getting out of debt $1 at a time. We started with slashing expenses, and carefully examining the big stuff (refinancing our mortgage, and carefully considering our car purchase 4 years ago), and are conscientious about our spending. We slashed expenses and gave up anything that didn’t matter, and looked at ways to save big on the the things we need (like appliances) or want.
Bringing in more money helps us slash even more debt. I started earning money first at part-time jobs and then as a freelancer and have built up a nice salary (minus business expenses and taxes) that has helped us tremendously.
We absolutely still make mistakes–sometimes stupid, sometimes through not seeing the whole picture, but in the end we get right back on track.
What about that trip you went on/that thing you bought? Isn’t that the opposite of living a ‘centsible’ life?
My husband often jokes that he should start a ‘not centsible’ blog where he showcases my Target $1 spot purchases or the occasional splurge, but the reality is I’m not a frugal person by nature. It’s something I have to work on every day. (So does he by the way. 😉 )
What you see on the outside is often not the detailed thought process that goes into those choices. We often make choices that seem counter-intuitive on the surface, but that’s why it’s called PERSONAL finance-they are our personal financial choices. Some are not hard choices-we would rather have hot water and a dishwasher than throw that $1,700 at debt and live without hot water. We’d rather have new brakes on my car than ignore it and get in an accident. Occasionally, they aren’t as straightforward. Like when I brought my 10 year old on a business trip (and extended it to enjoy DisneyWorld together), but they make sense for us.
I wish our story was like those stories of people who cut back on eating out and sold their third car and suddenly they were able to pay of $90,000 in debt in 6 months! I think it’s great for them, but it’s not exactly realistic for most people.
In fact, we could have paid off our debts completely if we had pinched every penny as tightly as we could, but we prefer to lead a financially balanced life-choosing at times to put our money into family experiences or simply quality time with each other. And that’s really what living a ‘centsible’ life is.
What challenges do you face when it comes to paying off debt?
We spend a LOT of money on our kids. Like a LOT a lot.
While I know many parents spend a lot on their kids we have some added expenses that make our finances challenging. We have two kids that require special care from the autism spectrum and mental health issues. While these costs are nothing compared to what families deal with when they are dealt a devastating health issue, a debilitating disease, or more serious needs– they aren’t insignificant either.
Even with really, really good insurance and a flexible spending account we still spend thousands of dollars out of pocket each year (sadly not enough to earn back any tip of credit on our tax refund, although in 2013 we were awfully close). The expense is well worth it, of course, but it’s a consideration not every family has to make when it comes to their finances.
We also spend a good deal of out of pocket money on family therapy to help keep our home somewhat sane. I’m pretty sure sometimes it’s the ONLY thing that can keep me going.
Why haven’t you shared this before?
I don’t know that I have an answer to this, but I think in part it’s because I was ashamed of myself. The rigid thinking that some personal finance gurus have about debt is tough to ignore. It’s so prevalent in the personal finance community. While I value being financially responsible and living with less debt and more savings, I will not make those my only goal in life to the detriment of my family, marriage, and the quality of my life.
My hope is that by sharing my own story you will know that you aren’t in this alone. I’ve been where you are when you’re facing down bills, I’m still there figuring out what to pay off now and what can wait, and like you I’m working on it every day.
What other questions do you have for me? Ask me in the comments.