The following is an interview with Travis – a fellow personal finance blogger at Enemy of Debt and CareOne. He was kind enough to share his get-out-of-debt story with us as he nears the finish line next month. We hope his story will inspire you and encourage you to (if you have debt) start or continue the journey towards financial freedom.
Can you briefly talk about what your life was like (before “waking up” to your debt woes)?
My wife and I overspent starting at day one of our marriage. We had a good income, and just figured eventually our salary increases would out pace our spending. That never happened. The debt snowballed, and after a couple of years I started to hide from my wife just how much credit card debt we had. The minimum payments were getting bigger and bigger, yet I continued to supplement our income with credit card use. At the time, admitting that we couldn't afford something felt like the ultimate failure as a husband. I would spend my nights, after everyone else had gone to bed, in front of the computer applying for additional lines of credit, and moving balances back and forth trying to lower payments, doing anything possible to manufacture enough funds to make it to the next payday.
What was it that finally caused you to stop and realize you had to do something with your debt?
In June of 2009 we received five identical letters from a major credit card company in the mail, one for each account we had with them. They were changing the monthly minimum payment policy from 1% of the balance to 3%. When I did the math to figure out what that would do to our minimum payments each month, it was painfully obvious that we could not make those payments. We had to do something.
You've been pretty open about your debt (in terms of numbers) – can you briefly list what you had accumulated?
We had thirteen credit cards totalling over $109,000 of consumer debt.
Was your family initially on board with getting out of debt – and if not, how did you convince them to get on board?
We didn't have a choice, and my family accepted that. Not to say there haven't been bumps along the way. When you're used to a particular lifestyle, downsizing can be difficult. But we have never taken our eyes off the finish line, knowing that have been working towards a better life for the last four and a half years has helped keep us moving forward on our path to financial freedom.
Practically – what are some of the steps you took to begin your get-out-of-debt journey?
The first thing I had to do was come clean to my wife about our situation. That was the most uncomfortable conversation I have ever had. I had to admit to the person I promised to share my life with that I had failed her and broken her trust completely.
After that conversation we started to investigate our options. We wanted to avoid bankruptcy, but knew that it may be our only option. We talked to our bank about a consolidation loan, but they were unable to help. We started searching the internet for debt relief options, and over the course of about a week took a crash course of self-education on debt management programs, debt settlement programs and bankruptcy.
After a lot of research, and several phone conversations, we enrolled in a debt management program with CareOne Debt Relief Services. They negotiated a monthly payment at a lowered interest rate resulting in our debt being paid in full in 3-5 years. In exchange for these accommodations, all our accounts would be closed. We make one monthly payment to our debt relief provider, and they disperse payments to our creditors.
Additionally, we had to significantly cut our monthly expenses. It took us a long time to realize just how much we had to downsize our lifestyle to live within our means. But over time, and through constant evaluation of every expense we eventually have ourselves living on a consistent budget within our means.
How has a credit counselor helped you?
Not having those lines of credit to lean on has forced us to live within the income we have. To do that, we had to do make a budget, which is something we had never done before. Our debt relief provider has a wealth of budgeting tools and tips available, as well as an online community where customers go to share tips, tricks and motivation to each other.
What has kept you motivated to get out of debt?
Over the last four and a half years my wife and I have struggled to learn how to budget, and discuss our finances. It's taken a lot of hard work, but we finally have a system that works for us. It feels great to know each week after we leave our budget discussions that we are on the same page with our finances. We know how much money we have, and where it's going. That feels so much better than staring at a computer screen trying to figure out how to shift credit card balances around to make it to the next payday. That feeling keeps us moving forward. Knowing that we have survived this process for over four years, making our family better and stronger, is such an awesome foundation to build on. On February 28th we will make our final payment to our debt management program, and the $2489 we have been paying to our debt will go into our pockets. Having that on the horizon has us running towards the finish line!
What would you say to others struggling to get out of debt – how might you encourage them?
You don't have to struggle with debt. There are options out there, do not be afraid to use them. Educate yourself on all possible debt relief options, pick the one that is best for your situation and go for it. It's NEVER too late to take control of your life back.
Thanks Travis – and congrats on paying it all off next month! Travis will be responding to any comments/questions on the blog, if you have any.