I am in debt up to my eyeballs. Serious debt. You know, the kind of debt you find yourself in when you finally hit the wall. Your line of credit is maxed out, your cards (plural) are maxed out, and you are forced to live on what you earn, no more, no less....actually much less. Even though the cards have been put away, the bills keep coming in.....Then you fall behind on some payments, and the calls start coming, often on a daily basis. On the bright side, I may not have a phone much longer at this rate, but I digress. They'll just turn to the mailbox, the trip to which I dread every day where I will only find more bills marked "past due".
However, the journey to freedom has already begun, and despite the moments where I feel like a rope and a stool are are a serious option, now, there is a speck of light at the end of the tunnel.
My wife and I have been living from paycheque to payheque since almost day one. We have been up and down the debt ladder several times only to get right back to where we were, only worse each time.
The first time we had trouble we took a consolidation loan to cover about $5000.00 in debts. The bank required us to turn in our cards, and sent letters to each creditor asking them to close the accounts.
Within two years, there we were again, $5000 or more in debt! Our income at the time was much lower than it is now, and we were sweating big time. Then we got a surprise cheque from the government, which was to compensate for overpayment in income tax, and we wiggled out once again. This time we did not cut up our cards, and the companies gave us even larger limits. The reeled us in like the fish we were. We fell into every trap they set. Walk into Sears to buy some shoes for the kids, and Sears gave us $10.00 off the purchase if we would take their card, and purchase the shoes on it. Naturally, we accepted, even though it was against our better judgment, with the full intention of paying the balance in full and bever using it again. We all know where the road paved with good intentions leads....
By the end of 1996 we were drowning again. I'll never forget how my daughter's tongue was yellow from eating chicken soup so regularly. I could not get a raise from my then-employer, nor could my wife from hers. We were looking , for the first time, at the possibility of losing our house.
Then in Jan. 1997, I was headhunted, and got a $20 000 signing bonus (to be paid in two installments) and a near tripling of my salary to jump to the new company. We were saved again. Every penny went toward paying off credit card debt. But again , we kept the cards.
A year later, we had some debt, but with the new salary, we could manage just fine with minimum payments, but still kept on living from paycheque to paycheque (My wife had stopped working to stay home with our daughter.) We sold our first house, and with the second installment of my signing bonus put a downpayment on House number two. We moved in Feb 1998, and within three weeks, my new job was history.... I got my two week notice, and within that time had lined up two possible new jobs which would have paid me the same. One was with my old company so I took that one. However, with the new house, came the "need" for new furnishings, and before we knew what hit us, we were back up to our eyeballs in it again in April 2000, I lost my job again (partly due to being distracted by financial concerns) but quickly found another which kept us afloat, but just treading water. By the end of 2000, the new job was not working out well, so I left, and lined up a new one the next day. A family member bailed us out of our debt, so we started fresh again.... but again did not change our habits. By the summer of 2001, we were looking down both barrels again. We decided then to put our house on the market and downsize. During this process, we got lousy offers, and then 9/11 hit and everything changed for everyone. Our Realtor suggested that intead of selling and downsizing, that we remortgage the house, and pay off our debts. We did this, and on Dec. 11th, 2001, we were debt free once again..... but not for long.... 2002 did not bring much good for us either. I was let go by my employer, and was left with little else but to start my own business which i continue to operate to this day. I did not qualify for unemployment insurance payments since i had started my own business, and even though I would see no income for a couple of months, I was considered "employed" so my wife went back to work outside the home, while I worked from home.
Again, the debts started piling up, but a bit more slowly than in times past, but by the summer of 2004, things were a mess once again. We put the house on the market, and there it stayed for several months without a single offer. Realtors have a way of not telling you what needs to be done just so you hear waht you want to hear, and they get the listing.
by Jan 2005, we had hit the wall. It got so bad that even though our income was good, our expenses, because of the compound interest of credit cards, exceeded what was coming in. We were hurting so badly that we had to look into a second mortgage to pay off our debts which at that point totalled over $40 000.00. We did that, through my wife's tears, and used the residual to start upgrading the house so that we could sell it, since by then my wife had decided she wanted to leave the province in which we lived. So on the renovations went from May 2005 through August 2006, and again we managed to accumulate significant debt just to complete the job, but fortunately for us, the housing market was exploding, and the values increased by over 20% in almost 18 months. We had learned our lesson about realtors, and sold our house ourselves, on the first day on the market, for nearly full asking price, saving us an enormous commission.
However, our trip to the notary/lawyer's office was not very pleasant since it was time to pay the piper: To close out our mortgage, we had to pay the balance in full. We also had to pay the second mortgage in full, and our mortgage company, in order to get our new house outside the province, required us to pay off over $35 000 in debts! This left us with a grand total of enough to pay our down payment and closing fees for our new home, pay the movers, and leave us with about $2500 in the bank.
We tjough it would be slam dunk for my wife to find new wok, but how wrong we were. We started renovating immediately after we moved in , but still no job was forthcoming. Finally we found out that she needed to get accredtation for this province before she could ply her trade, so she had to go to school for several months. So we were down to one income again, and the line of credit and credit cards carried us through until she finished school and landed a new job. Then she had to fly home to her country because of the death of one of her parents, which meant more money out on the credit cards and line of credit. By October, we had hit the wall, and my income took a major hit. Sine then we have fallen behind on some payments (never missed a mortgage of car lease payment, though) We have received letters from the utilities (here they come after you if you're three weeks late) threatening us with being cut off, so we have had to put some other bils off (department store credit cards. Major cards have always been paid on time) and are getting calls almost daily.
Early February, it looked hopeless, almost to the point where I would lose everything. I had enough income to cover a few expenses and keep a creditor or two at bay , at least temporarily, but little more that that. March would be the end, and it would have to end with the sale of my house to pay off debts, and back to renting, something I have not done since 1992.
Then things broke in a wonderful way for me. I confirmed a huge amount of new business, enough to at least get me caught up on all expenses, and slay a credit card or two, while starting an emergency fund.
This will be the beginning of the journey toward freedom for us. We have decided that if possible , we will pay down our cards using the Debt snowball method, and reel in several aspects of our lifestyle. We have resolved NOT to borrow any more. Ever . (We have not cut all the cards up yet, because there is still about three weeks to go before we can establish an emergency fund of $1000.00), but will cut them all up once we can do that. The evidence is clear that we simply cannot handle credit cards. For booking hotels, flights etc, we will get a American Express Green Charge Card which of course, must be paid in full each month.
Nothing will be bought until it is absolutely needed, and if possible at a discount store like Giant Tiger or even thrift stores if possible. Eating out will only be done when we have the cash to do so, and only in celebration of big events like brthdays, and to celebrate each time a debt is paid off. We are always looking out for new ways to save.
We also plan to sell off alot of clutter in our house at a garage sale, which we will probably have to hold in April, given the amount of snow we have now. All proceeds to go toward debt repayment. We plan to get rid of CDs' (they helped me get into debt-my big vice)since all my music is now stored on my computer and MP3 players, books, and out of the still usable light fixtures, and other things we replaced during or renovations, in addition to alot of other nickel and dime stuff we have accumulated over time, and never use.
Our goal may be a bit ambitious, but we plan to be free of credit card debt within a year, and free of all debt within two.
This is my online journal documenting my attempted escape from debt hell. If you think that applying the term "hell" to being in debt is too extreme, you've probably never come close to the point of no return.Please feel free to follow me on this escape mission, maybe all of us will learn a thing or two along the way.