14.5.18

How we paid off over $90,000 in debt! Part 1: Our Story

by Robin





Up until a couple of years ago - we had A LOT of debt.  To estimate: take a reasonable amount of debt.  Then double it.  Then add a bunch more to that.


Oh - and THEN multiply by stupid high-interest rates.


When we first started this blog in late 2011 we were still neck-deep in debt (way past the knees!).  It had always been my intention to chronicle our journey to debt-free here, but somehow, when we were in the deep of it, it didn't feel like much fun to dwell on the amounts.


I think the thought of adding it all up, let alone sharing that number with others, was scary.


But now, we have no debt - our student loans and line of credit is no longer - except for our mortgage (that's an important distinction for us).  It is this lack of debt that's given us the freedom for me to take this year away from my job to recuperate from burnout and pursue some creative opportunities.


I can't stress this enough: The FREEDOM of choices is the best part of being debt free.  Sure, paying less interest is great - it's a huge perk. But debt is bossy - it loudly tells you what you can't do with your life.  Not having that Debbie-Downer-Debt voice is liberating.


What follows is an account of our accounts.  It's how we got so deep into the muck of debt.  Hopefully, you're not down so far into a debt pit, but if you are, maybe our story will help you see some hope!  You can do it!






Our families had very different approaches to money.


Robin's story...


My family had always been future-oriented.  Saving for my education was a priority - my parents and both sets of my grandparents contributed to bonds and an account for my schooling.  Both of my parents had consistent work and I was their only child.  This made expenses relatively simple to manage.


I went to university in my hometown - so other than 3rd year when I happily lived with friends - I lived at home with no expenses. (A big regret, but that's another story.)  I also had part-time custodian work and summer jobs teaching sailing at a camp.


Between my scholarships, my parents' contributions and savings: I graduated with my Human Nutrition degree and NO debt.  In fact, I still had much of the education savings from my grandparents, which I would need (and more!) for the required unpaid 10-month internship to become a Registered Dietitian.


Sounds pretty sweet, right?!  (But wait...spoiler alert: my debt is lurking just around the corner...)

OUR DEBT TOTAL THEN: $0


Ed's Story...


Ed's family had always been oriented to the present.  For reasons of injury, dreams and entrepreneurship, his parents did not have consistent work.  There wasn't extra money for savings and he wasn't an only child, there was also his brother. Plus they had his grandmother to support as she lived with them.  Their day-to-day expenses had to take priority over savings.  There was no education savings.


When Ed went to university he studied in another province hours away from home. He had a great time living with roommates on and off-campus.  He had scholarships that covered part of his tuition but his other expenses were paid through student loans and his summer jobs teaching sailing at the same camp.


When Ed graduated with his Finance degree he had significant debt: $35,000+ (I don't even want to add up the "plus" part!)


OUR DEBT TOTAL THEN: $35,000

Internship...


My dietetic internship meant 10 months with no income, living hours from home in Kingston (my favourite city!).  Plus, I had to buy a car to do the community focused internship I wanted.  This year cleaned out my education savings, my summer job income - and added a car loan.



OUR DEBT TOTAL THEN: $40,000


Love...


During my internship is when Ed and I fell in love and knew we wanted to spend our lives together.  We knew we'd be happiest together.  Ed was many hours' drive away from me, but we spent at least every other weekend together.


I couldn't bear spending another year apart while he finished his degree. While I would be qualified to work as an RD, I couldn't do that work near where he was.  He lived in Quebec and my French skills were tres sad.  There was NO WAY I could work nearby.



Wait - more school??


So I made an odd decision.  I decided to pursue another degree at his university. I figured out that with my previous credits, and a heavy course load, I could get a Bachelor of Psychology in a year. I had always wanted to study more psychology - I love figuring out what makes people tick. But, best of all, we could be together!


The problem was, I didn't have any more money.  I was tapped out.  My internship ran halfway through the summer, so I couldn't even pick up my old faithful job at summer camp.  What I could do, however, was get a student loan. So that's what I did.

OUR DEBT TOTAL THEN: $51,000



Circa 1999. My natural hair colour! Ed practising "Blue Steel". Our first dog, Wally.


We decided after we had both graduated to move to the city where the first person got a job.


That was me! I started a maternity leave replacement contract nearby to where I grew up. So we moved in with my mom and I started working as a part-time Community RD plus I took over a private counselling practice.  This was my dream work!  In fact, that same maternity leave turned into a permanent job - the same one I'm on leave from now.


Ed's path was less paved. He started work selling investments and insurance - some of it door-to-door.  NOT his personality AT ALL. Together we decided that he'd quit that - so he could experience such luxuries as sleep and happiness.  He worked some odd jobs and then secured work in the back office of an investment company.


Our debt went down a bit, with minimum payments, but we needed to buy a second vehicle, so that offset any gains we may have made, plus added some additional debt.  We were able to scrape up first and last and move into our own place. It wasn't ideal living at my mom's.

OUR DEBT TOTAL THEN: $60,000

Marriage...


We got married! With a contribution from my dad and our tax returns, we had a lovely DIY wedding.  We did most of it ourselves - in 3 months - and it was beautiful.  We took on no more debt!





But here's where the big money borrowing starts to come in.


Ed was not happy in his job and I wasn't happy for him.  He is a gifted teacher (which I knew from years of our working as sailing instructors together) and he is creative and intelligent.  NONE of these gifts were being used in his cubicle finance job.



Hold on - more school??


Together we decided he would return to school: teachers' college.


I was working full-time then, plus I had a contract to plan a nutrition conference.  Our one income probably should have been enough.  Trouble was, our spending habits were based on two incomes - and we didn't alter them at all.  We bought lots of things.  We ate out often. We wasted stuff.  I don't even know what we spent it all on - like many in debt - we didn't have much to show for it.


Plus, there was tuition and gas for the 3-hour a day commute to the closest university with a teaching program.


This is when our debt ran us over.  To our student and car loans we added the worst debt of all: CREDIT CARDS!  Embarrassingly, our 2-income spending on 1-income went on our credit cards. I want to go back in time and shake us!!!

OUR DEBT TOTAL THEN: $85,000


But wait - this expensive year wasn't done with us yet!  The only house we ever wanted to buy was coming on the market.  My dad now owned my grandparents' house and he needed to sell in order to build his dream home with his wife.


Ed was still in school, but my income was enough to qualify for a mortgage.  So we bought our generational family home.



OUR DEBT TOTAL THEN: $85,000 + $150,000 mortgage = $235,000



After teacher's college, Ed was fortunate to find work right away - this wasn't true for all the graduates. Plus it was at a great school in a town nearby.


We paid a bit more than the minimums on our consumer debts, but we coasted on everything else.  We halfheartedly plugged away like this for a few years.  We were both working full-time and had only ourselves to care about.


Here's how stupid we were: one month our credit card bill was less than we expected - SO WE WENT OUT TO DINNER TO CELEBRATE.   Whaa?!?!



Then, we had a baby. A girl!


I took my year's maternity leave (my Canadian maternity leave payments were about half of my normal salary - which we are so fortunate to have.) But after my year was up I couldn't bear the thought of leaving my dolly for most of her waking hours with someone who didn't love her like we did.  So I decided to go back to work half-time.


This is finally when we got serious about paying back our debts.  I got every book out of the library about simple and frugal living.  I would lay in bed nursing my newborn and reading everything I could to get us out of our mess.  (This book was influential for us - and this book gave us the tools to finally live frugally.


We started living below our means and through lots of frugal strategies.  (We'll share those in Part 2.)


2007


Then we had another baby.  A boy! 


Again I took my (partly-paid) year's maternity leave.  Despite our new frugal wisdom and habits, the money started to really add up.


Having a boy and a girl meant our two bedroom house was not going to last us long.  We knew they couldn't share a room forever.  We needed to make some changes.  Some very very expensive changes!



We couldn't bring ourselves to move.  We loved our home!

  • It had been in our family for generations now.  How often does that happen anymore? I love this traditional feel.
  • We had our wedding reception in the enormous, lovely backyard.
  • Both of our children were born here. Yes, right here! They were both born at home. We're secretly hippies ;) 
  • It's in a great neighbourhood and Ed can walk to work.



A Major Renovation.


So, with a four-month-old on one hip and a toddler on the other, we designed, contracted out and built a second storey addition! We even moved out for the four months it took (in with my mom again.  Don't ask.)


I look back in wonder at the courage of that couple! Was that US?!


THIS was the most expensive thing ever!  We even did big parts of the work to save money: all the interior demo! painting! Porch building! And so much more.


Before demo even started - but after we'd signed the contract - our car was backed into by a snow plow and totalled.  Our PAID FOR car! We now had to buy a new vehicle - with a loan! Sob!


OUR DEBT TOTAL THEN: $30,000 (remaining) student loan + $30,000 consumer debt + $10,000 van loan + $20,000 for incidental addition materials = $90,000

PLUS we doubled our mortgage!!!!!! (We'll let you do that math.)


2010 - I can't remember why everyone's on the roof...


When the reno dust finally settled and we moved back into the home we loved - THIS is the point we finally, really buckled down to pay off that consumer debt and student loans.


Do we wish we buckled down sooner? Of course! But we didn't, and all you can do is move forward.


Soon we will follow up with Part 2: How we paid off $90,000 in (non-mortgage!) debt.


What's your story? Have you gotten this deep into debt?  Have you dug your way out?  We'd love to talk about it in the comments!



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