Today, I’ll write about the crisis(es) that lead us to making drastic changes to our lifestyle. As I mentioned before, if we had been good stewards before, we would have been able to weather these things better, but these are the consequences of our actions.
My husband and I started accumulating joint debt before we were even married. It started with a loan to address a financial crisis and to purchase our wedding rings. I had Victoria’s Secret, Express, JcPenny, Sears, and a Mastercard credit cards with low balances, but was a minimum payment person. This debt kept growing and growing as we moved from one city to another, all the while promising each other that we would address it and pay off our debt.
And we tried. I made excel spreadsheets that projected a re-payment plan – It calculated interest charges and projected payments and the timelines went from one year to two years. We continued to open credit cards and at one point we got a $26,500 loan to consolidate our debt. Without a budget, we couldn’t keep to the plan and as time went by, our debt grew and the timeline continued to move further and further out.
In March of 2007 (a mere 2 years ago), after spending two months of starting a Microsoft Money profile for our finances, I started putting a budget together. It was another unreasonable budget, so it didn’t stick, but I used the exercise of getting it all together to take an honest look at our finances. With all of that information, I updated another one of my Excel Spreadsheets to project when we would be out of debt. With our jobs and my husband’s bonuses, it looked very likely that we would be out of debt in March of 2010. This felt very promising and we even started saving up for our first vacation ever. We had done fundraising for a mission trip (I was a staff person, so my trip was paid for) and were excited to continue our aggressive debt reduction plan of paying more than $2,400 toward consumer debt each month.
When we returned from the trip, I got the results from medical tests that were done before we left and it turned out that I had a rare cancer. My insurance coverage was very poor and we had to make some home improvements in our apartment to prepare it for my recovery from my cancer surgery and treatment. This stopped our progress and put us back into the “minimum payment” lifestyle.
In early 2008, my husband and I each had job changes. I was in a position that was phased out in the middle of a 10% staff layoff and my husband found his dream job. I returned to a previous employer and continued my 6-year history of working for a non-profit and my husband started his first round at a non-profit, too. My husband was working part-time at the same place that I was leaving and he had to leave also. That resulted in a $10,000+ year income loss – coupling that with the $7,000 loss from no more bonuses and we were looking at a $17,000 annual reduction in income.
The question became “how are we going to maintain our life here” and the answer quickly became “we can’t.”
TO BE CONTINUED