The lyrics of Damien Rice’s “Elephant” come ringing through my head and focus in on one line:
“This has got to stop.”
Though I’m pretty sure Damien’s lyrics demonstrate a more emotional situation, our predicament is no less painful and difficult to get out of. After all, debt is the number one killer in the US. Or is that cancer?
Over the course of the past two years we’ve accumulated a large lump sum of debt in the form of school loans, credit card usage, and general lack of care for our finances. I won’t disclose the amount, but let’s just say it’s not $1,000. Or $2,000. Or $5,000. Yeah, it’s bad…. especially considering that most of that was accumulated during the past 6 months, and we’re only in our early twenties.
Why Get Out of Debt
Many people just live with their debt like it’s a cuddly puppy they keep warm with their constant purchases. So far, that’s exactly what we’ve been doing, so why should we bother crawling out? For one, we’re going on a 12-country journey for a year which isn’t exactly free, and we don’t want to leave our home with a thick coat of fiscal burden upon our shoulders—no one wants that. For two, I don’t feel like constantly owing someone money is anything to be proud of. It’s not always avoidable, but it always sucks. Needless to say, we want out. Like now.
What Went Wrong
I suppose most of how we got to where we are now is due to lack of foresight as well as an exaggerated estimate of our expected monthly cash flow. You see I am self-employed, which is a double-edged sword. Sure, I get to come to work in pajamas, cutoff jeans, or my birthday suit (sometimes all in the same day), but I also get to take time off whenever I want and set my own hours. Most of you are probably wondering where the downside is in all that. Believe me, it’s hidden, hidden like a cloaked dagger. The fact that I can work whenever I want means that I can choose to either work… or not work. Guess which one I do more. It’s probably true that a lot of other human beings are easily driven by money, especially when in a debtful situation such as ours, but my ignorance was a fluid mixture of a false sense of financial security and the desire to do what I wanted to do, not what I needed to do.
But we’re here. There’s no whip-crack lightning bolt moment where it all disappears and we go about our merry spending ways. And we’re going to confront the issue head on.
In the beginning of the year I finally realized the debt we had gotten into, and I came up with a sound plan to eliminate it. Little by little we were able to pound it down, but then progress stopped. We went to Mexico for two weeks, which meant two things: we were spending money, and we were not making money, which put our debt back almost the same distance we had gained earlier on. The trip was necessary and worth it, but in no ways was it helpful for our wallets.
Since then we’ve made some more progress, but it’s a slow trickle. April is not a good month for a family that relies on self-employed income, thanks to the heavy taxes that get yoinked out of your bank account around the 15th. They say that debt is 5 times harder to get out of than it is to get in it. Actually I don’t know who said that, but it’s true. So true.
So what’s the plan now? Well, I’m working a full 40 hours (the most I’m allowed to work with my current client), and we’re coming up with ways to utilize our talents to make money. Emily’s taking on more photography jobs and getting ready to sell her accessories to boutiques and at the farmer’s markets that start in June. I’m gearing up to provide videography services and website design. Every little bit helps, and we’ll be trying our hardest.
On top of that, we’ve issued a strict monthly budget that we’ll HAVE to stay under. No more eating out every other night (even if it is a dollar menu), no more super-expensive trips, and no more donating to the poor. Kidding about that last one. With a set monthly budget, we’ll be sure to know what we’re able to put towards our debt at the end of the month.
There’s no fancy trick to getting out of debt. The best tip I’ve seen is to pay off the lowest debt first (while paying the minimum monthly payments for the other debts) then take that same amount you were paying towards it and put it towards the next lowest debt + the minimum. Before I try to get all super descriptive, here’s a snapshot from a pamphlet called “One For the Money” by Marvin J. Ashton that outlines exactly what I’m talking about:
(Here’s the link if you want to read the rest of the pamphlet—pretty good stuff.)
If you’re having a hard time with debt or using your debt as an excuse to not travel, we hear ya. It’s not easy. But it’s doable, and we’re going to prove it to you. Keep reading to both hold us accountable and read how we are becoming debt-free.
Some of our own “tricks” to setting and sticking within a budget