Thursday, July 2, 2009

Our Story

We have never had any debt in our entire lives, until we got married. That wasn’t hard for me, since I got married at 19. Unfortunately, I married into debt. Not a lot of debt, since my husband didn’t even know he had debt when he asked me to marry him.

When my dh proposed, he didn’t have any money in savings, not that he was living paycheck to paycheck, he just wasn’t very good at saving. He’s definitely the spender in our family. Shortly after we were engaged, he received letters from the IRS and the Idaho State Tax Commission letting him know that he owed back taxes. He had made an innocent but costly mistake of declaring “exempt” on his W-4s the year he worked before he started school. Anyway, his tax debt was upwards of $3000, but thanks to his dad’s CPA at HRBlock, my dh was able to get that down to about $700 to the IRS, and about $300 to Idaho. Fortunately, since we got married just before the new year, we were able to file as married the next year on our taxes. We got back enough to pay off the debt, and things were great.

The first debt we ever incurred was a loan for my ring. We couldn’t qualify for any loans at jewelers in the mall, and when we went to our bank, they basically told us we were SOL, but one of the loan officers mentioned a mom and pop jeweler up the street from our bank that offered in-house financing. We stayed cheap, bought a ring for under $1000, and paid it off in nine months. However, the banker offered to get us a credit card to help “build our credit.” That was the worst mistake we have ever made. The credit limit started at $500, but shortly after we were married, they increased the credit limit to $5000!!! That was more money than we had ever really seen, and suddenly, when we wanted something, we thought, “Well, we’ll just put it on the credit card and pay it off in the next few months.” BAD IDEA! Whoever came up with buying something now and paying for it later? Are you kidding me?!

Shortly after that, I totaled our paid-for car while my husband was at military training. And the spending just got worse.

We ended up with probably over $10,000 of credit card debt. After a bit of dumb luck, we knocked that number down to about $5,000. Unfortunately, when you get to knock out your debt really quickly, it doesn’t teach you a lesson. You just build back the debt unless you change your mode of thinking and behaviors.

So when my dh went to Basic Training last summer, August ‘08, we decided that since I was living with his parents, we would throw money at our debt like there was no tomorrow.

Well, then my brother in Arkansas got engaged, and we decided that we would fly to Arkansas for the wedding. Unfortunately, that was going to suck up all of the money that we had, and then some. There goes Christmas. So we went on an emotional spending spree, buying more gifts and more expensive gifts than we ever would have under normal circumstances. We rode that debt back up to about $9,000.

Well, so long story short, we finally decided (after this emotional craziness) that enough was enough.

We swore off our credit cards, and have been doing a really good job not using credit cards almost since the new year.

Then about a month ago, I read Dave Ramsey’s book again, The Total Money Makeover, and we decided to get gazelle intense. And that’s where our new story begins.

1 comment:

  1. Would you mind if I followed your blog? Seriously, your story sounds so much like ours it's not even funny. We paid off our engagement ring so fast, then got a few credit cards with outrageous limits ($5,000), and now we're $11,000)+ in CC debt, some due to me being very sick while I was pregnant and unable to work. Now we are finally thinking straight (no more CCs!!), and we're doing Dave's TMMO. We understand! And I'm thinking about making a blog to track our progress, too :)