Thu, 19 May 2022 | Serving Your Family
Our Get out of Debt Plan: Intro
Confession: I am not out of debt. But we do have a plan, and I want to share with you how you can get your own plan. I want to inspire you that if you have even $50/month (and you probably do!), you can start the process. Every story is different, and this is ours. If you’re willing, I would love for you to take this journey with me! I’m going to walk you through our steps of planning and progress, and I hope you’ll share yours as well.
When you have a mortgage (or other large debt), seeing the end of it can start to look like the pot of gold at the end of the rainbow—something you spend your whole life chasing after, but never find.
When I first started thinking about living on a budget and paying down debt, I researched a lot online. I stumbled across Dave Ramsey’s site in the midst of this research, where I read stories of doctors, lawyers, and families with two fat incomes. People who were making an average of $100,000+ each year. I read stories of people who inherited $20,000 unexpectedly from long lost relatives, people who had received a new car as a gift, or in some cases even free housing. I read of people who had $35,000 items sitting in their basem*nt just waiting to be sold for extra cash. They had large resources and many areas in which they could easily cut back.
We didn’t have any of that. We already had a bare bones budget. On his site with all those high-income debt free stories, Dave Ramsey says that becoming debt free is for everyone and not just the rich, so I sent an email through his site with our numbers, hoping he could refer me to a lower-income family who had done it, or give us some tips I might be missing. I never received a reply.
We were stuck, and each new success story left me feeling more disheartened. I could easily see how people making $100,000+ per year could dial back spending and get out of debt. But what about us? My husband’s salary is around $36,000/year before taxes, much less than all the other stories we were reading. Despite seeing the repeated message that “anyone can get out of debt,” I continued to only see stories of people with double our income.
Despite being discouraged, I continued with our frugal budget, and maintained an emergency savings account of around $1000 (funded mostly by tax refund money). I thought that was the best we could do and celebrated the fact that we now made our meager budget stretch enough for necessities. This continued for about 3-4 years, but I lost hope of getting out of debt, because we were already living with every dollar accounted for.
Throughout this time, finances became a source of constant tension in our family. My husband comes from a family that loves credit cards and never had to pinch pennies. He’s never really had to consider his purchases, so getting used to a frugal lifestyle on a budget was an adjustment for him. However, when it came down to it, numbers don’t lie. Our bills ate up most of our paycheck and we were left with precious little to live on after that. There was (and is) no wiggle room.
We got a breakthrough one night when I was lying in bed, unable to sleep, and pondering our budget. After crunching some numbers in my head, I realized that with SMALL, affordable changes in our budget, we could be debt-free (including our mortgage!), in about 6-7 years! That is what I’m going to share with you in this series, how small affordable changes can make a big difference in debt reduction.
So, for anyone who ever wished for a story of how a lower income family can get out of debt, I’m excited to share our journey with you!
(Disclaimer: I am NOT a financial advisor. I am just a mom with a family living on a single income and I want to encourage others that it is possible to live on a tight budget and still have your needs met and be content…and get out of debt! I really hope that our personal budget information will help someone.)
Continue reading here: First Day of School!
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