Our rainy day came in September. We weren’t ready.
It started with a dime-sized damp patch in our ceiling on an ordinary day in the wettest year our region has ever seen. It ended several weeks later with an estimate for a $50,000 roof replacement.
(Reader, we’re not going with it. We got a much lower bid for “only” $16,000 and will start work in March, but it’ll still be a new debt and we still can’t cover it — I’m frankly not even sure we can qualify for financing).
Believe me, it’s not that I thought we were fine before that dinky little leak appeared. I knew we were $450,000 in debt, including our mortgage — and that’s down by $100,000 since 2013. I just didn’t want to face how not-fine we really were. I’d kept clever spreadsheets for years, tracking our debts and net worth, and I guess I was like, spreadsheets bring life! We are all okay!
News Flash: We Are Not Okay
There were a shit-ton of life-happens events in our way these last several years. In ancient history, there was the widowhood that I never really recovered from, followed over the years by divorce and remarriage (yes, all three are costly). There’d been catastrophic medical bills that hit us nearly every year since 2012 (medical bills are a significant cause of American bankruptcy), and my decision to work independently for 20 years without being the world’s best saver has also had an impact (I went back to an office job in 2017). My husband’s undaunted quest to finally get his PhD as a (now) full-time grad student means we have about a salary and a half to work with (he gets a teaching stipend). Oh, and we are putting my son through college. The savings we curated for decades ran out in sophomore year.
In all that time, I’d managed to pay down nearly $100,000 in debt, anyway, so I thought we were doing okay.
I’m 55, y’all. Like 73 percent of Americans, I might die in debt.
What. The Fuck.
Flashback to September, when I happened to look up at our ceiling and see the leak.
Huh, I thought. Better get someone out to repair that.
Even then, I knew something. I knew I’d fucked up, and I’d need to fix it. Fast or slow, well or badly, I needed to fix that fucking leak in our lives.
The news about the roof replacement devastated me. It has also turned out to be the best news I’ve gotten in years.
Before that leak, I thought I knew a lot about tossing and turning and — yes, feeling suicidal over debt, as Melanie at Dear Debt writes. But I graduated to the major leagues of can’t sleep can’t live can’t breathe after the first estimate came in.
On October 1 we locked away all four of our credit cards, cold turkey, vowing to live within our means and climb out of debt. To do that, I needed a budget and a plan.
How Fucked Is Our Debt? I Am So Glad You Asked.
The big, round, shiny number is $455,000.
Student loans, 58% (yes, you read that right)
Credit card and consumer debt, 6%
Car loan, 1%
Medical and assorted other debt, 5%
Oh but wait. In 2019, it is likely to get so much deeper.
There’s the roof loan for $16,000 or so.
And then, there are two more years of college for my son.
But Guess What? January Is Already Better than September. Here’s How You Can Dig Out, Too.
Our all-time high of debt was actually six years ago. Since then, my husband and I have managed to reduce our debt by nearly $100,000, some of it by downsizing from an expensive location in the city to a less expensive place in the burbs in 2015. Perhaps more significantly, between September and now, we’ve reduced our debt by about $4,000 without (yet) making appreciably more substantial payments than before.
How? Four important things:
Yes, you have to budget.
Trust me, I have avoided this step for the longest time. On October 1, I took a deep breath and did something that, like quitting smoking, I have tried repeatedly but never gotten to work: I began to track every penny we spend.
Again, I thought I’d been doing this, but I’d really just been walking around with a jumble of numbers in my head and jotted on the backs of various items at hand: envelopes, strewn post-its, the like.
Y’all, who keeps their budget on post-its and still claims to be adulting?
If I can budget, so can you. Here are five ways to do it.
When I really, truly, looked at how fucked our credit card debt is again, after having reduced it to nearly nothing three years ago, I had to admit a hard truth: we’ve done okay on long-term savings, but our lack of short-term has hurt us repeatedly. I bought into the “wisdom” that you should pay down debt before saving, which is bullshit for people like you and me. If anything, save first. Dave Ramsey says so!
In these first months after the September panic, it’s been hard not to continue to throw money at our credit cards. But instead, I’ve continued to make the minimum payments on debt while not putting a penny more on cards, and have saved about one-third of the $1,000 in starter emergency funds that Dave Ramsey recommends. While we are going to start doubling down on debt payments in January, I needed that cushion of just a few hundred dollars to be ready.
Take baby steps, and don’t peer too far down the well.
When I did an honest reckoning, I understood that some of this debt will be with us for five to seven years, and a few debts are likely to die with us (cough cough, student loans literally do, cough cough). If I kept that fact uppermost in mind, I’d probably be too discouraged to continue. Instead, I set reasonable goals and celebrate small victories. I try to set goals in terms of behavior changes, which I can control, at least as often as outcomes, which I can only partly control. Two of my goals, for example, are to increase my savings rate (behavior) and to get our credit card use down from 66 percent to 50 percent this year (outcome, and it was 79 percent when we started, so I’m getting there).
Don’t be a dick to yourself.
Look, if you want to buy a case of Diet Coke at the store every other week to take to work instead of using the vending machine, go ahead and do it. In fact, get crazy and buy the cans instead of the bottled, even though the latter is way cheaper and this makes you a Very Bad Person Who Is Poisoning the Universe With Aluminum (you can revisit this decision in a few months when your nerve is up). Make no mistake: going cold turkey off credit cards and changing your spending and saving habits is really really hard. Do what you can to make the transition as pleasant as possible.
One of my favorite little hacks, which I wrote about on my old blog CheapBohemian, is to “match my shame”. If I buy a coffee (my vice), I send a micropayment of the same amount to one of my credit cards. You will need to be kind to yourself to get through this. Pat yourself on the back for getting started, and show yourself love every day.
Shout-out to Get Rich Slowly’s J.D. Roth, whose blog I followed religiously 10+ years ago and whose blog I returned to in my literally darkest hours. Thank you for saving my life twice, brother.
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