Breaking bad … habits
This Reader Story comes from Brian. Brian blogs at Debt Discipline, where he writes about his family's personal experience with debt and paying off over $109k in debt. You can follow Brian on twitter @debtdiscipline. http://www.debtdiscipline.com/
Some reader stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income.
We didn't accumulate our debt in one night, it just felt that way. It took years of overspending to rack up over $109k in consumer debt, but in the summer of 2010 we were out of cash and had maxed out all five of our credit cards. Our debt-to-income ratio had ballooned and there was no more borrowing that could be done.
As a husband and father of three children and the one handling the finances in the house at the time, it felt like the debt appeared over night as I told the family we couldn't afford a family vacation that summer. They were disappointed and I was embarrassed that I let it get to this point.
Out of borrowing options (which was the best thing that happen to us), it forced us to look for other options. I hit the Internet looking for information, hoping to find a get-out-of-debt-quick scheme that I had been overlooking for all these years and would still be able to salvage our summer vacation.
What I found was a number of personal finance blogs and a guy named Dave Ramsey. I read as much information online as possible and picked up a copy of Dave's book at my local library, which I read over a weekend.
I was shocked to find that there was no secret to being debt free, that the basic principles were common sense. Spend less then you make, keep a budget, have an emergency fund, and communicate with your spouse. These were all new to us. We typically spent more than we made, using credit cards to pay for things. We never had a plan and did not discuss our finances as a family.
That changed in June of 2010. We changed our bad habits, we stopped overspending, and we began communicating and began to work a debt snowball.
We made changes in our daily lives, as a family, to help repay our debt. We gave up items that I would call luxury items, things that were wants not needs. For example, I gave up Sirius satellite radio, my wife cut back on salon visits, and my children gave up GameFly.
We made changes in our food budget. We stopped eating out — even fast food would cost a family of five between $30 and $35 and a chain restaurant was a minimum $75 bill. Now when we do eat out, we enjoy it much more. We made better choices when grocery shopping. We don't buy as much food each week and wasting food is throwing money away each week.
We learned to say “No” often, to family, friends, co-workers, etc. If it wasn't in our budget, we politely said no. If someone pushed back, we would explain what we were working on with our finances.
We have made a point to include our three children, ages 14, 14 and 11, in our budget discussions. We want them to understand why we are making these changes and prepare them for their futures. We don't want them to make the mistakes we have made.
Paying it forward
We began to talk about our finances with family and friends. I'm surprised at how often people respond with their own tales of debt issues when we share our story. We often share as much information as we can, supplying resources like websites and books, also suggesting that they look at their own bank or credit union for additional information. Most financial institutions offer free debt/credit counseling.
We have purchased many copies of Dave Ramsey's “The Total Money Makeover” and have given them away as gifts. I have seen various reactions to people receiving the book. Some read it in just a few days and start making changes. Others have never opened them and the books are now collecting dust. It's not bothersome to see the book collecting dust; it's totally up to the individual to take action. For those whom I have helped, I'm glad that I have been able to provide valuable information.
It brings a smile to my face to know I helped them make a change in their own finances. Now they have information that they didn't have before. All I ask in return is that they pay it forward. When they finish the book, they pass it on to someone else and ask that person to do the same.
Fast forward 42 months and it's clear to me now that there are no big secrets to personal finance, no get-rich-quick schemes; most of it is common sense. That's not what I thought years ago.
With a little research and a little help, you can dig your way out of most situations. Taking it a step further, I have sat down with some friends and family to review their finances to give them my expert opinion. I'm half-joking, but I feeling like an expert now compared with where I was three years ago. I continue to read books, articles and blogs as we continue paying down our debt, increasing our knowledge as we go.
We have paid off $84k in 42 months. The repayment of our outstanding debt is just the first step in the process. It feels good to be on the right track and share this information with others. I would not change the last 42 months. The sacrifices have been so worth it. The entire family has managed. It hasn't always been easy, but we keep the end goal in mind of being debt free. Having a surplus of over $2k per month can really keep your family motivated too.
What have been your personal keys to your financial success? Have you done anything outside of the general/generic guidelines to reach financial success?