Mar 03 2010

Let’s watch my friend get out of debt!

See part 2, part 3, part 4, part 5, part 6 and part 7.

My friend from college recently e-mailed me about budgeting and debt stuff. She’s excited to start making strides paying off her debt, and I thought it would be fun to post her story here on my blog so my fantastic readers could offer some encouragement to her.

With my own debt journey, posting my progress to this blog has really helped me stay motivated and accountable. We’ll be checking in with Courtney periodically to see how she’s doing.

Thank you in advance for your respectful comments. :)

Here’s a little Q&A to get us started:

Tell us about yourself!

I’m Courtney, 25, married for 5 months (newlywed and lovin’ it)! I work as a secretary at Indiana University–I fell in love with Bloomington, IN while attending college and now I cannot imagine living anywhere else (except maybe for the beach when it is -10 degrees and there is a foot of snow on the ground)!

How much debt do you have?

Not including my home mortgage, which I don’t ‘count’ simply because it’s an inevitable expense because we have to have somewhere to live… GULP… My husband and I combined are $54,000 in debt!!!!

How do you feel about that number?

Overwhelmed–it is a pretty terrifying number. Now, let me say that $27,000 of that is student loans from my undergraduate degree. I paid for college on my own, worked the entire time I was in college, and still ended up with that $27,000.

Even though it’s a daunting number, I think my education was worth it. I am a secretary, which generally does not require a degree, but I am happy in my job right now and I know that I will have many options I would not have had without my degree. Plus, I’m a completely different person after having my in and out of classroom college experiences! Besides that, I feel like I need to shrink the number as quickly as my husband and I are able (and with a healthy dose of willpower and Kacie’s advice)!

How did you get into debt?

Again, most of it is college student loan debt. $11,000 of it is for my vehicle and $3,500 for my husband’s vehicle. The rest of it, I am afraid to say, is (dun dun dun) credit card debt! I was jobless for about 3 months and had $0 savings and $0 income… Guess what though? It still costs money to live! So, that’s how I ended up with a large chunk of credit card debt. My husband’s credit card debt comes from home improvements (we are getting ready to sell his bachelor pad house and upgrade to a family home) and also our wedding.

I was as thrifty in a lot of areas with our wedding (my wedding dress was brand new, but only $350 including alterations) while still realizing that we were not willing to cut corners in some areas (not inviting really important people, not having a sit-down dinner, etc). We’ve been steadily working on paying down all of our credit cards and have managed to put only a minimal amount on any of our credit cards in the 5 months we’ve been married. We probably had about $60,000 in debt right when we got married, so we’re making SLOW progress!

[Kacie’s comment here: Courtney says she’s making slow progress, but if she’s reduced her overall debt load by about $6,000 in five months, I think they’re really on the right track!]

Before you resolved to get out of debt, what were your views on debt and how did they develop? What are your views on debt now?

I think I just wanted to pretend everything was fine. Neither my husband nor I has ever made a late payment or not been able to eat a meal because of our debt, so it was really easy to ignore it. My parents and my sister have both been to court to settle credit card debts, and my sister has declared bankruptcy–I guess when I compared my situation to theirs, it seemed as though I was so much better off! I started thinking about paying off my debt and not buying anything unless I had the tangible funds (novel concept, right?!) after we got married and realized we had SO MUCH debt between the two of us!

Do you have any specific debt-related goals?

Yes! I would LOVE to not carry a monthly balance on any credit cards–that’s the biggest thing. Credit card debt gets you NOTHING. Having a mortgage and even a vehicle loan–you GET USE of those things!

Arguably a vehicle (though many disagree) and somewhere to live are tangible, necessary expenses. That $40 pair of boots I just HAD TO HAVE and put on my Discover card? So NOT worth it! We want to pay our mortgage off in 20 years (which is the longest, least tangible goal at this point) and be completely debt free (less the mortgage) within 5 years.

Why do you want to get out of debt?

Who really wants to be in debt? Did I WANT all of the things that got me into debt? Yes, I’m sure I did! But did I NEED most of them? Heck no! The feeling of not owing anyone anything and the prospect of teaching my children to value money, save up for things you want, have fun, but be responsible because things could change in a minute–is a lesson my parents were unable to give me and I grew up unequipped to really handle my own finances!

To me, if I had any money, I should spend it–because my parents always did it that way. (DISCLAIMER: My parents were/are wonderful, but I simply mean I had to fall on my own face to learn how to make a budget and I just did what I saw them do despite them telling me otherwise on several occasions!)

How will you put your plan into motion? Are you going to do a debt snowball like Dave Ramsey suggests or?

We are selling our current home and moving into a new one. We will put part of the 1/2 profit down on the new home and take 1/4 and put it in the bank as an emergency fund and the other 1/4 to pay off what debt we can. That’s the starter plan–Definitely going to use the debt-snowball method for a first little victory! (I have 3 credit cards I want to cancel that combined have just over $1,000 so this payoff/closure will be WONDERFUL!)

It sounds so “DUH” but my husband and I are going to take our lunches to work and cook and eat at home. We are on opposite shifts and so instead of cooking by myself (I find/found cooking for one sort of depressing) I would just eat out or go to dinner with a friend. We will still go out and budget for special occasions, but I imagine we’ll be saving $100/month by doing it less often, and it really is painless!

I plan to really plan out meals and purchase ingredients for those things and not just shop for whatever I’m hungry for at the moment. We have already taken steps to eliminate or lessen some monthly payments (lowered our cell phone bill and are searching for a better deal on car insurance and plan to cancel the Internet). I’m sure I’ll learn more along the way, but those are our starting block steps for now!

What challenges do you foresee on this financial journey, and how can you overcome them?

I covet THINGS–it’s wrong, it’s silly and THINGS do not make me happy! I want for nothing–I have plenty of clothes and home decorations and furniture and all of it, but man I’m such a shopper by nature! I tell my mother “I’m going to TJ Maxx” she will ask, “What do you need?” and I’ll reply, “Oh, well I don’t know that until I get there!”–I wish I was joking!

So, putting a definite stop to that has GOT to happen. I think to overcome it I will just have to say–do you NEED those crystal candle sticks or do you WANT to own your car free and clear? I’ll be the crazy lady in the aisle fighting out loud with herself to have willpower! I think the overwhelming length of time we have to go in the next (proposed) 5 years to get debt free is reasonable, but it will be a challenge! We want to start trying to conceive soon, and let’s be honest–baby clothes are SO TINY AND CUTE!

So, I’m sure that will be something we’ll address when the time comes, but as Kacie told me, “People LOVE to buy you baby stuff!” and both my sister’s have had children, so I imagine there will be a lot of generosity there!

Anything else you want to share?

Thanks super much Ms. Kacie for all the help and motivation! Now instead of shopping online and coveting a pitcher and drapes I don’t need, I spend my time analyzing my budget, searching for information on how to get debt-free and I absolutely love it! :-)

——

Coming up in the next post I’ll have some thoughts and suggestions for Courtney.



5 Responses to “Let’s watch my friend get out of debt!”

  1. I think your story is the same story that MANY young couples are facing today. It’s a shame that so many of us start out adult lives so deep in debt, but my story is the same. Credit card debt from using it as an emergency fund or shopping for THINGS I don’t need, and student loan debt. Ugh.

    I feel you on the coveting of the THINGS. But honestly, if you go on a things fast and just stop buying what you don’t need for just a couple months, you WILL get over that. I still struggle with it, but it seems the more I indulge myself and buy things, the more I WANT. When I wasn’t buying anything, I wasn’t in those stores shopping, and it was a lot easier to resist. Your perspective on what you want and need changes after a few months of frugality.

    Best of luck! I think you’ll be thrilled at how quickly things turn around for you now. As they say, the hardest part is admitting you have a problem and coming up with a plan to do something about it!
    .-= Karen´s last blog ..Endlessly waiting =-.

  2. Hi Courtney! I think it’s great you are getting out of debt now. You can do it!
    .-= Mrs. Money´s last blog ..How Much Money are we Spending? =-.

  3. Sounds like you and your hubby are doing great already, Courtney! Can’t wait to hear the next update. :-)
    .-= Mrs. Accountability´s last blog ..Display Widgets WP Plug-In Review =-.

  4. I have to say that just today I was contemplating a trip to TJ Maxx…for no real reason, other than to just see what I had to have! And then I looked around my house and thought, “Nope! I’d rather not bring anything else in here today!”

    It was a good feeling. But TJ definitely tempts me on a regular basis. So does Target!
    .-= tiffany´s last blog ..Looking Great Just Got Easy (Guy and Eva Jewelry GIVEAWAY!!!) =-.

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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