Ok the post I had promised over a week ago about CC debt
I had quite a few mama's ask to tell them how we got out of debt in a short period of time, so here it is
First I will tell you how we got into debt, since that says about as much as how we got out. My dh graduated University with a 21,000 dollar student loan, we were married about a year later. Shortly after we were married he went away for 7 months to train as a Federal Police Officer, it used to be that they were paid for this training but now they only get a small stipend of 200.00 a month. Not nearly enough to cover bills let alone pay his student loan off. He applied for interest relief on his loan and was told he had to let the loan go into arrears before they would consider it. So he didn't pay the loan for a month then applied for interest relief again, this person at the bank (Canadian student loans were done though the government but then were transferred to private banks just before he graduated) told him that his loan had to be current, so he paid his loan and applied again...once more he was told that the loan had to go into arrears before he could apply...ARGH!! So he let it go and this time did nothing when they told him he had to pay. The bank was really messing him around *BUT* he still should have kept on top of it because 5 months later (a month out of training) we were sent to collections to the tune of 20,000 dollars!! YIKES! The collection agency were NASTY!! They called everyday, threatened us, compounded interest DAILY! Anyway dh and I had a big fight and I decided we should go to the bank to take out a loan to pay the collection agency off. Dh view on this was "well now our loan is just at our bank, which is better anyway" as though it was no big deal. I had to GENTLY :P explain that this meant we would have bad credit for 7 years and his loan was at an interest rate of 6.5% where as the loan we have now was at 9.5%!! To him a measly 3% didn't make a lot of difference, not until I showed him the full amount that we would have to pay in interest because of his negligent behaviour! ARGH! (still makes me a little mad, but I don't tell him that LOL) Anyway we paid that loan off bit by bit over the next three years, but our problem were far from over. We were in the habit of buying things on credit, we even took out a line of credit to buy this computer I am typing on now. 19 months ago we were on a trip to Olympia WA when we realized things were out of control, I felt I had no choice but to go back to work changing our spending habits hadn't occurred to me! I mean we were the type to go spend 100.00 at Costco, but I didn't see that as a problem, to me it wasn't like we were buying stereos or new cars so what could we do differently? (BIG ROLL OF THE EYES AT OUR IGNORANCE!) At this pint we had maxed out our CC at 5000.00 (Thank goodness we only had one!) our LOC (Line of Credit) was maxed out at 5000.00 and we still had 16,000 dollars left on our student loan...YIKES at 26,000 we were in deep!
So how did we do it? We got home from our trip and decided we were going to make DRASTIC changes. One thing we noticed was that using plastic be it debit card or CC meant we really had no concept of how much money we were spending. So we switched to a all cash system for spending, we decided that 300.00 ever 2 weeks was enough to buy EVERYTHING we needed, this included groceries, gas, and thing for the house clothes...ANYTHING. Dh would get 40 and I would get 110 every week (I got more because I did more of the grocery shopping) If we ran out of money on Sunday (we are paid on Wednesday) then we just didn't buy anything, sometimes dinners really sucked! LOL but we never went hungry, made me realize how we both believed in INSTANT gratification. Knowing we had limited funds also made me a more consciences shopper. i bought on sale, passed buy those impulse items, we still bought mostly organic but choose the items that had maximum health value for the least amount of dollar value. Next thing we did was streamline all our bills. I figured out all the bills we had, called the company and asked to be put on a budget plan, for those that would, they averaged our bills for the year and we were asked to pay a certain amount each month. Then I set up automatic withdrawal from our account on **THE DAY DH WAS PAID EVERY TWO WEEKS**. For those bills that didn't have a budget plan I sat down figured out my own average, added 10% as a cushion and paid the same amount every two weeks. Same thing with the mortgage, RESP (college funds for the kids) and RRSP(IRA's) we paid it every two weeks on the day dh was paid. Our mortgage was the same but in the beginning we put very little away for the kids and ourselves, later though when we were able we bumped it up. This system works really well because all your bills are paid before YOU can touch your money, so you know EXACTLY what you have to work with. So after the bills were taken care of, the food an necessities paid for there would always be a little left from his cheque at the end of the two week period. With this I started paying back the CC (make your minimum CC payment and LOC payment every two weeks along with you other bills just to make sure you don't run into problems BUT DON'T CONSIDER THIS A PAYMENT,IT IS NOT ALL IT DOES IS GET EATEN BY INTEREST!) I started by paying off the bill with the highest interest rate (usually CC) every extra cent we received for ANYTHING went on the CC debt. In Canada if you earn under a certain amount as a family you get a "child Tax benefit cheque" this went every month on the debt, anything I made from my business that didn't get reinvested went to the debt, any payment I got from passed work (I was a massage therapist and still had the occasional cheque come in from insurance patients) went on the debt, money from grandma, tax returns ANYTHING YOU GET goes to the debt. It is easy to fall back into the "we have worked hard we deserve to spend this money" TRAP but the BEST thing you can do for yourself is get out of debt!! Once the CC was paid we started on the LOC, all the while our student loan payment was coming right out of the bank account every two weeks. Once the LOC was paid off we doubled our loan payments and worked really hard to pay it off. During this period dh never got a raise, yet as our spending habits changed we found we had more and more money to put on the debt, at first you really scrip and save for those pennies then one day it just seems to get easier..I PROMISE! you just have to hang in there. Many people who I have talked to will say to me "ya but we don't earn enough" or "this won't work my husband works on commission" or some other reason why they can not have financial control, and basically if you WANT to believe that that is you prerogative. but if you **REALLY WANT*** to be debt free there is a way and you just have to tailor your own "debt free plan" to work for you. We did it in 19 months, other may do it in 6, still other may take 4 years but the thing is if this is something you really WANT you can do it...but that is the catch...only *YOU* can do it, no one can do if for you. Even if you win a lottery or inherit Aunt Marge's estate, if you don't learn spend only money you have eventually you will just end up in the same hole again..only this time you will be closer to retirement!! YIKES!
Now there are MANY other little things we did to get out of debt faster and I will touch on a few of those in a minute but first let me talk about a few other things since right now I may have you crying the DEPRIVATION blues!! LOL We knew that if we COMPLETELY deprived ourselves of the things we enjoyed that this plan just wouldn't work, so we did two things, first started concentration on things we enjoyed that were FREE instead of those that cost. Camping, going to the beach, riding bikes and walking, family stuff that made us feel good but didn't cost money. SECOND (and I think this will make you all happy) we decided we would continue some of our rituals but try to make them cheaper. We go out for lunch every Wednesday, it is a family tradition and we really enjoy it, so we DIDN'T give it up! but it used to cost us about 30.00 every time, now it cost about 17.00. If you do that math that is a saving of 676 dollars EVERY YEAR!! Think about what a chunk of debt that could pay off! So how you say do you cut the bill nearly in half? First..drinks! They add up!! My girls love Italian sodas so now and then they get one to share but not every time. Mom and dad usually drink water and now and then we SHARE a coffee. Second (and this is the most important) order half the food you used to!! As I say to the girls "If you don't order enough you can always go back for more, but if you order too much you can not return it" Dh used to order 2 specials and be stuffed at the end of lunch, now we share one and add a soup and we are both just fine, if we are still hungry will order something else but 9 times out of 10 we are both fine (and my dh is a big man too!! LOL). Dessert is another way to save, I am CERTAINLY NOT SAYING GO WITHOUT!! LOL but one or perhaps two for the family to share is cheaper and HEALTHIER! there are times when we go away that we have to eat out but even then we have come up with great ways to save. Cafes with counter service often have great food (HEALTHY FOOD) but because it is not table service you don't have to tip and prices are usually lower. Vietnamese food is often cheap and filling, we order two bowls of soup (the bowls are HUGE) and it is enough to feed us all (family or four) if we are extra hungry we can order salad/spring rolls but the bill almost never comes to over 20.00, for a dinner out that is not bad! WE bring fruit and other munchies for snacks and breakfast, this saves us a tone of money. If you feel the need for a shopping fix (as many of us recovering shopaholics do) you will do less damage to your pocket book at the thrift store than the mall. Unless you have something SPECIFIC you have to go and get at the mall...DON'T GO!! They are way to tempting! I can now go into one with no problem, but a year ago, 10 to 1 I would have walked out with SOMETHING! You will slip up, we all do but remember if you are only allowed to spend the money in your wallet the damage will only last a week (plus the consequences will be short term so you are more likely to learn from it) DON"T USE THOSE CC or DEBIT CARDS! Take look under you sink in the bathroom and kitchen, how many products do you have under there that you have used never or only once? How much of that crap do we really need? My household cleaning is done with TKO (an orange based cleaner that is eco friendly and economical) vinegar, baking soda, borax, washing soda and water. All these are CHEAP like borscht and eco friendly. I admit I used Aveda face products (we all have vices) I buy them once a year and other than that we use shampoo, conditioner, pit stick, toothpaste and basically that is it. Really take a look at what you buy and how much of it is REALLY needed. let me tell you another perk to this way of living is when you stop buying stuff the clutter goes away, cleaning is much easier when the clutter is gone!!
Ok back to the money side of things. One thing you have to remember is that interest is our enemy when we are in debt. Anyway you can lower you interest rate you should. Many banks offer a low interest CC but they don't advertise this. Ask your bank, and if they don't have one ask other banks. Be careful though not to fall for their low introductory rate, then have them bump you up to some awful rate. Also if you have a loan like we did, always be on the look out for banks who will give you a lower rate. In the end our loan was at 5.5% that was after juggling it about 3 different times with different lenders, plus it was a LOC at the end which gives you 30 day interest free and more control. Always pay off you highest interest debt first and always try to get that rate down!!
I know I still have much more info, but gosh this is getting LONG! I will add one last thing and then post, please ask questions on things I forgot to cover, I am sure I will post more as I remember stuff. Ok last thing. Don't expect to be come experts in a day!! or even half a year. Spending is an addiction and as with all addictions needs to be handled with care and FORGIVENESS! Don't beat yourself up, when you do you are just likely to give up! In the end we were paying 400.00-600.00 every two weeks to our loan without blinking an eye...in the beginning 200.00 was a HUGE struggle! Originally our plan was to get out of debt in 2 1/2 years but as we got better at it it was easier to pay. As you become more adept at saving money and living frugally living with less money becomes easier, but it does TAKE PRACTICE. BABY STEPS MAMA'S BABY STEPS! LOL
A great book to read to get you started in Your money or you life jeez I forget who wrote it...I am sure someone here will know. The Tightwad Gazette is also a great resource. I know there are others out there too. Honestly mama's I can say that although it was hard sometimes, the freedom we have now, freedom from debt and freedom for a consumerist lifestyle, well it was all worth it
Ok I have to post now before I go cross eyed from typing!! LOL
Namaste
__________________ Need natural art supplies? We have Stockmar, Lyra and more....EMAIL US!!
Bernice~~mama to 3 sweet BumbleBee's
Ayla our Zen Child born August 19, 1995
Lily our Passion Child born September 20, 1998
Rosy our Bliss Child born November 09, 2002
Miss Rose's second birthday....who looks more excited to eat the cake Rose or Lily? :P
ISO:
-Killington flannel
-flannel sheeting any colour. Can be cotton, hemp, or organic WHATEVER I just need sheeting!
I should show it my DH - he just does not understand the whole concept of sacrifice. He whines if he can't get take-out pizza once a week or buy a new DVD each month. And it's just an absolute travesty if I make a meatless meal. He was spending $5.00 a day for his lunch ($10 on Friday to celebrate the weekend) because he couldn't be bothered to pack a lunch in the morning. I think he finally was shocked into reality when he got to the mail last month before me and saw our credit card statement. I had charged most of our groceries and all my gas because there was no money in the checkbook. He was upset, but I sat down with him (again), showed him our budget and how much lunches, etc were costing us. So this week he's packing his lunch - hopefully that will last.
Of course, I know that I need to work on things too. Charging groceries was not a good thing. The card is suppose to be for "emergencies" only but after our talk, we ripped up the card since it is just too much tempation to use it for non-emergencies.
Anyways, hope this isn't hijacking your post. I've been bummed about bills lately and maybe I just need to talk about it more than I thought I did. Thanks for inspiration and support!
__________________
Maryalene
Proud Mama to Madeline, Donny and Max
I so admire your perserverance in getting out of debt, Bernice! As you know, we SUCK but are getting much better. We are still in massive debt though, and I love reading your posts, it gives me inspiration. Off to forward this to df....
__________________ Tamara AP'ing, EBF'ing, FB'ing, PP'ing, loving, SAH MOM to Micayla Lee-Ann (7 yrs), Shayda Kiran (3 yrs) and Jadyn Tierra (04/09/03)
tamara@islandpineapple.com Click here to leave me feedback! ~Motherspirit~
We are almost done with debt, too! It will be paid in less than two years since we made our "plan". We had the credit cards up to $20,000.00 My dh used to feel deprived too but now he loves it. We love our simpler lifestyle.
Another good thing to do is clean out your basement, garage, storage, whatever you have and really look at the stuff you spent your money on and don't use. We just finally finished cleaning our basement and paid $76 to dump a bunch of junk and have a huge car full of good stuff to go to Salvation Army. We will never bury ourselves in clutter again!
Your Money or Your Life is a great book and I know one of the authors last name is Dominguez -the first name might be Joe?
It really helps to see people in the situation get out!
May I share my story, if this bothers you on your thread, let me know, and I will use the delete button, LOL!
We are, taking a deep breath here...$45,000 in debt.
All unsecured.
How?
When we first got together, dh had a student loan and a car loan.
I did NOT want any debt, so we worked our butts off and paid them off in no time
We moved in together with a fresh clean slate
We did great with no credit for several years, then a friend of mine became a bank manager and decided we needed good credit, well, any credit!..
she lied and pulled some strings and got us our first credit card
We felt like we were so mature, hahaha!
We decided it would be best not to use it, and put it away, but then taking the cloth diapers to the laundromat thirty miles away was becoming a drag, so we put a washer on credit card
then, my mom was behind on her bills (I had always paid her bills when I worked, but, I did not work now)
and we took out a cash loan
then, we started getting more credit cards in the mail, my mom needed bills paid, my mil needed bills paid, dh was getting laid off, we needed bills paid
I was always doing small jobs to help out (babysitting, sewing)
and dh was working any odd job he could... but one adult working to support three houses... sigh
I have hated it, hated it, hated it!!!
I have thrown so much on debt, then dh would go buy something, or just pull out money just 'in case'
Them , there were times we needed to pay debt with debt (in the finance biz, this is called pyramiding)
I lost it late last year and decided we were so much in debt, why not take money out to build my business? I felt so apart from dh and ready for divorce..
(LOTS of stuff has happened between us, but this is about debt!)
First the first time, I took out credit he did not know about, I got myself a loan. Dumb, dumb, dumb!!!!
Mamas, I bought alot of stuff for my site.
As you may notice...
I have never ever been a shop a holic. I was now...
I am really ashamed when I look at all this stuff here in the name of business.
We do not have new cars, new furniture, we live in a rented singlewide trailer in the most hicksville town possible , and appear to be dirt poor (and, we are) who IRL would know we have this debt?
Several months ago, dh started getting a pay cut every few weeks, then he lost his job... this was a big blow!
Here I was with lots of new bills, and one person's pay gone...
The other night, I was checking around sites about buying a home, I used their little debt ration calculator, wow!
According to that, we should not even be able to pay our rent. I just cried and cried!
Now, we could file bankruptcy, which we do NOT and will NOT do
We have decided to pay this... you are right, interest will eat you up!
We talked to our bank (since we are 'great' customers! In our five years of debt, we have NEVER missed a c/c payment, and we keep a high balance, a creditor's dream!!!)
They gave us free checking, ok, may not sound alot, but that does save us $144 a year, $288 actually, since I also have a biz account there, too
They lowered our interest on our credit card by 5%! and on our line of credit by a whooping 10%!!!! Quite alot if you carry a high balance like we do!
We have moved several cards over to cards with a 0% interst for several months (which later go to 12.5%, which is not too bad-be careful, some cc offers offer 0% for a few months, then go up to 22% or more! read, read, read the fine print! also, if you are someone that pays late these offers may not be for you, as if you miss one payment, I was reading some go up to 23% or more! yikes!) Then, after we moved the cards over, we CANCELLED the other cards!!!
We are trying to get settled here, and so far so good...
We cut the mothers off, sorry, but at almost fifty, time to fend for yourselves!
I know we will have them when they are older and unable to work, but that is later...
In two months, I have almost paid off one of my smaller cards, it really feels great!!!!
I can not wait until I have it all paid off, and can move on to the next one
Today, I cancelled the option to pay for anything on paypal with my credit card, ah freedom!!!
Ramble, ramble!
Sorry!
I needed to have a release..
I really am sickened by my business buying frenzy, remember my dress fiasco, well... had I only purchased what I could afford, would not have bought those dresses in the darn tooting first place!
Important, very important lesson, do NOT take the loss if you can't afford it!!!!
Also, I put a serger on c/c, guess what I am too silly to figure out to use it!
How is that for a slap in the face!
(I am currently writing a novel, 101 things NOT to do when starting a small business!
Also, had my friend not pulled strings to get us a c/c, we would not have been been able to get one, and that would have been a good thing!
See, living beyond just gets you in trouble!
I am sooo glad you posted this Bernice!
I agree with 100% of what you said
I grew up really harsh, and have been raising myself and paying my bills for a long time, and I know/knew better than to get into this mess!
I know my grandfather's ashes are stirring in his little box right now as I write this! (A man that worked very hard his whole life, paid for everything with cash, gave so much to help people, and died with a very fat bank account- he taught me to always save and never get in debt, man did I stray!)
I am so glad to be able to share my story, and be encouraged my others going through this and getting out of debt!!!
Can we start a forum or a email loop!
I really like the Mary Hunt books, she has a great program for paing for the expected unexpecteds in life....
Hope - you can cancel the option to pay w/ cc on paypal? That's my biggest downfall! It's easy o not take my cc into a store, but I have the # memorized AND have it attached to my paypal. I spend spend SPEND online! I will look into that, thank you!
thank you all so much for sharing...i am in a similiar situation....i just moved to canada from texas with husband who is canadian and i am trying to find the 1500 to become a citizen....of course this all depressing so i have over spent until we are maxxed out everywhere.....yalls posts have made me realize i am not alone and i can get thru this....i posted last night that our bank acount is at 3 dollars and some odd cents and i have a 50 dollar bill in hubby's wallet..thats it till end of month but we have groceries and most things are paid...i went on a trading spree which was good but the shipping was over 80 bucks this month....sigh..ok enuff of me but thanks to you all again,
carla
ttc first child stuck in toronto second mama to nephew will, caretaker to inlaws and disabled hubby, mommie to a spoiled pug and rat-rescuer with 15 furry fuzzbutts of joy three of whom are very ill and need lots of extra care and meds (((((
I want you all to use this thread to talk about debt, how it is effecting you and how you are conquering it ! I love to hear stories of other who have won battles with debt and I am happy to know I can help. Don't you dare delete your post Hope!! :P
I think starting a forum or a email group is a great idea, I will even moderate if anyone wants me too. I have been there mama's I know how hard it is to see the top when you are under a mountain of debt.
I think support would be a big help. I am so sick of dh working 6-7 days a week and never getting ahead. We need to suck it up and get through. We have pared down most everything but can do better, I know! The biggest change I have made is paying bills first- HUGE reality check when you see you can't afford most of what you used to buy-LOL! But, it feels good to know that most of the bills are paid most of the time For the first time though, we have a birthday coming up that I am stressed about, before I would just do/get whatever I wanted but now we are so tight(in a better way- paying bills) that I can't just do that! It will all work out, but mostly I want to get rid of debt- and save money ahead for things like holidays and birthdays nevermind our cars that always break
Thanks for sharing your stories mamas, it is hard to admit when we've goofed our money, but the best thing we can do is get control of it NOW so our children can learn to be responsible with their finances from us
B~ that is an awesome story. Thanks for taking the time to help us all out!
Jen
thank you for the inspirational post. I'm going to print it and tape it to my fridge. I'm a spender. Dh is a saver. I know I spend way too much. We've been married 9 years and have no savings or retirement, none. Ig you all start a list, I'd like to join.
Ig you all start a list, I'd like to join.
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