When Robby and I got married, both of us were pretty clueless about finances. Robby had a lot of bad luck in jobs, had a car that broke down every other week costing hundreds in repairs, and he had a hard time (ok, impossible time), saying no to me when I asked for something. I couldn't save to save my life. I got money and spent it. If I wanted something, I bought it. In college, I would buy clothes to look cute, then get asked out on dates. Then I didn't have to buy food with my money so I could buy more clothes. It actually worked really well. Combine the two, bad spending habits and bad luck, and we had a disaster.
When we were engaged, we applied for a house. The market was booming and everyone was being approved for loans. So we jumped in. We had no savings, so we financed the whole house. We got a call the next day saying our house jumped up in price by $20k. We were thrilled and thought we would make SOOO much money on this house. We waited 2 years and put it on the market. We listed it for $40k more than we paid. We were so excited to make so much money. We waited, and waited, and waited. Then the market crashed. We went from having a lot of equity to having our house worth less than 1/3 of what we paid. We couldn't believe it.
Through all of this, we had very low paying jobs. Our mortgage was $1300 a month and we were barely making $40k a year between the both of us. So we used credit cards. We couldn't afford our house, so we bought everything else with credit cards. We also wanted children, so we were doing tests for infertility. I bought baby clothes in hopes of us one day having a child. I spent way too much to lessen the pain of still not having a baby.
Finally we start the adoption process. We saved up a little money, but no where near enough to pay for an adoption. So, we put the adoption on a credit card, with hopes we would pay it off with the adoption credit soon after. Well, the adoption credit took over a year to get back. In the mean time, we adopted Joey, so we again had to put another adoption on credit. We had maxed all of our cards. We had no savings. And then, Robby lost his job. I had no clue what we were going to do.
Then, Robby got the job offer in California. We were very excited. But, because money was tight, we couldn't afford our house. We started working with a realtor so we could short sale. The banks fought us for months saying that we made too much money. Then, after 6 months, the foreclosed our house. Robby lost his job again, and we still had credit cards.
Something had to change. He got his new job, with a significant raise. We stopped a lot of bad spending habits, and just threw everything at debt. We had almost $30k in debt. We got our adoption tax credit for Joey and put all of it towards debt. Now, less than a year later, we are down to our last credit card to be paid off. We paid off 5 cards so far and over $25k in debt. We have $5k left and should be done by mid July. We are so thrilled!
We've been reading a little Dave Ramsey and following his advice about getting out of debt. We started with a small emergency fund ($1000), and then put all extra money towards debt. When we paid off one debt, we took that money and put it towards the next, snowballing our money into a bigger and bigger amount until all our payments were going towards one card. After we finish paying this debt, we will start saving up 6 months for our emergency fund. Then we've got to get rolling on our retirement.
This has completely changed our way of thinking. We still spend more than we need to, but we are doing a lot better. We really think about purchases rather than just getting everything we want. It has relieved so much stress in our marriage. As we get out from all this debt, we feel so much happier and less weighed down. We are able to enjoy the things we do have since we aren't paying interest on them.
I can't wait to be able to yell "We are DEBT FREE" for the whole world to hear. This has been a very long and difficult journey, but it's SOOOOO worth it!