Ever since life threw a wrench in our budget, we’ve had to live with the fact that we are back in debt.
This was a big change for us. For the past seven years, we had no debt except for mortgage. It was a wonderful luxury we enjoyed, and going back into debt certainly wasn’t one of my proudest moments.
Life has changed now that we’re back in debt, and while I cannot wait until our car loan is paid off, there has been some good that has come out of the experience.
How Life Has Changed Now That We’re Back In Debt
Being back in debt after all these years has been a humbling experience that has taught us a lot.
We realize how easy it is for your finances to hit a downward spiral.
We had gotten pretty cocky in our financial situation. We felt like we were doing well with our emergency fund and retirement savings. We felt like we were handling things well. The unexpected catastrophic car repair that resulted in us borrowing to buy a new-to-us car was a real eye opener in just how easy it is to get into debt.
And now that our savings is depleted and we’re in debt, we know just how easily we could get into more financial trouble. If our other vehicle (which is 10 years old) were to have problems, or some other house repair came up, it would be a real challenge to keep from accumulating more debt.
This is not a good feeling, but it is one that we had forgotten about when we were debt-free. It’s been humbling and motivating to say the least.
We realized the importance of regular financial maintenance.
The biggest surprise in the process of getting back into debt was finding significant errors on my husband’s credit report. It was a big reminder of why you need to check your credit report regularly. We thought it wasn’t a big deal if we didn’t check it every year because we weren’t borrowing money. That was a mistake.
We also had to get in the habit of making loan payments. Since our current loan provider doesn’t have an auto-pay program, I’ve had to work the task of paying that bill into our financial routine. Thankfully I’m a list-maker and a good calendar keeper, but it’s still a task I have to remember to keep on my to-do-list. It’s also made me think more about our monthly cash flow, so that we can make that payment and still afford to eat.
At this point it’s more of a struggle to get by, and less about getting ahead. Things we should be focusing on, like contributing to both a Roth and Traditional IRA has gone to the wayside. What does IRA stand for? Just about one of the best types of investment retirement vehicles you can have and contribute to, and it stands for, “Individual Retirement Account”.
We’re paying more attention to our other expenses.
We knew if we were going to take on a car payment that something else was going to have to give in our budget. We’ve been using YNAB to figure out exactly where that car payment money will come from. We’ve also been taking a good hard look at places we can make cuts. We recently made a big change to our cell phone bill (which I’ll be sharing more about in a future post), and we’ve been trimming recurring subscriptions we don’t really use.
Thankfully, I had already made plans to kick my soda habit for good, and I’ve stuck to that plan. Now I’m focused on trimming our eating out budget and keeping our grocery budget in check.
We’re focused on rebuilding our savings.
From a purely mathematical standpoint, I understand that it makes more financial sense to focus on paying down our debt before we rebuild our savings. But there’s a good deal to be said about the all-important psychological aspect of having money in the bank for emergencies. I think it’s important to have an emergency fund before paying down debt, and so that’s what we’re doing right now. Every little bit of extra money that’s come our way has gone into our savings. Once it gets to a comfortable place, we’ll start to focus on getting that car loan paid off.
We’re working on additional sources of income to help build savings and pay down the debt.
I’ve been keeping an eye out for freelance projects and other odd jobs I can use to supplement our income. I’m continuing to do online surveys and use Swagbucks to pick up some extra cash and gift cards to stretch our budget. We’ll do another garage sale this summer to clear out some clutter and raise some money.
Our schedules are pretty tight, but we’ll squeeze in some money-earning projects when we can.
Our debt has made us more understanding and less complacent.
We’d gotten a bit complacent about some of our bills and spending. And until we’d gotten back into debt, we’d forgotten what the struggle is like. It’s been a good reminder to us. We realize now how easily situations can change. It has made us realize exactly how much freedom we did have when we were out of debt, and how we much we want to get back to that place.
Life has changed now that we’re back in debt, but it’s changed in a way that will make us stronger.