Ditch debt and learn to relax.
Pull up a chair and relax. This may take a little while
Many years ago, I was in a rough spot. You see, shortly after getting married, the wife and I (but truth be told I was the bigger culprit) went a little crazy with the whole credit thing. Didn’t have enough in the account, throw it on a Credit Card. Not enough room on the credit card? Call for an increased balance. Can’t get the balance increased? Screw them, transfer the balance over to the new card with a bigger balance. Want a better Car, E-Z payments… I think you can see where this was going. Add to this the fact that I was going to college, so let’s throw in some student loans. In a fairly short time, I managed to dig a pretty deep hole. It wasn’t all bad though. My degree was fresh and with my new family in tow we took off for my first new job out of college. Never mind the shiny new Mobile home we just bought that had a resale value of a badly used Hyundai. And the nightmare began.
While still in school, any credit card stuff was staved off by Student Loans. Those happened once a semester so nothing ever got behind.. I didn’t have to worry about payments because the Student Loan wouldn’t come due until a while after I got the dream job with a huge paycheck. Well, after a little more scrambling, I found that new job, but it didn’t pay as well as I had hoped. Was I annoyed at myself for not getting the paycheck I wanted? No, it was the college advisors fault for not setting my expectations right. Also, several of my classmates had just landed jobs in the pay range I was hoping for, but the critical difference was that they all had Computer Science majors and mine was in Information Systems. I couldn’t hack it for a Computer Science degree so I switched to a BBA program in Information Systems. I did well there, enough to even bring my suffering GPA up, and hey, Information Systems was almost as good as CS, right? Well, that was a resounding ‘NO’. Turns out that having the BBA made it easier to get ‘A’ job, that job was going to universally be a fairly low paying management type job.
By now, I have been living way beyond my means for 3 years of college in anticipation of a plum job that is not going to happen, and I have to take the first thing that comes along. Assistant Manager at a paint store. I was a sad sack. Miserable, unable to use the bulk of what I learned and was good at in the coursework, and not making enough to keep up with the lifestyle expectations I had. Also, all of that debt started coming due.
Apologies for that detailed description of what was going on, but I wanted to convey how easy it was to fall into the debt trap. At this point, FAFO is about to start rolling. I had spent about 6 years doing the FA part. Now I was about to FO. Things are going to move faster now, I promise
Well, the job I was working wasn’t going well. I was feeling shortchanged by life, I wasn’t all that good at my job, and the Debt just kept piling up. Creditors were no longer letting me have balance increases. New cards were not offering me great deals on balance transfers, I was living in a different city from where my mobile home was and attempts to rent it out led to a ton of damage and tenants would just would not pay the rent. Let that home go into foreclosure, Moved to another state, took another job that was horrible. Credit cards began threatening to sue, Student loans were calling and threatening action. Got fired from that job. We ended up in Bankruptcy court. That stopped a lot of the major harassment.. We were lucky in one area though. My inlaws let us move in with them. The city they lived in was nice, clean, had good schools and a thriving economy. My in-laws didn’t like me much, but that was ok, because I wasn’t planning to be around much. When we first got there, my wife had a job carry over from where we were. I took the first job I could find. Then I took a second job so my wife could take care of the kids. Flipped burgers until 4 then I worked on an assembly line until midnight. We sort of recovered, got out of the In law’s house. Rented for a while, then bought a house at probably too high an interest rate, but it was still cheaper than renting. It was a real house this time. I had a lot more humility, and strangely this helped lead to better and better jobs. Then I got in to the world of working for aircraft manufacturers. They paid really, really well. Unfortunately they are really sensitive to economic fluctuations. Got laid off 4 times in as many years. Frankly I blame lefties for that, since everyone was railing against the 1 percent and targeting them with IRS schemes, audits and so on, and the fact that politician were constantly calling out people flying in private jets. Anyway. the whole industry was tanking. There are 4 major aircraft companies out here, alson with tons of subcontractors. I worked for the big guys as well as the subs, and I got laid off 4 times in as many years. We were going to lose the house again. We were facing yet another bankruptcy over nothing. Then we decided to get radical.
During all of this mess, my wife began listening to talk radio. In the mornings, right after getting the oldest kids to school, she would catch Dave Ramsay. I started to listen to him on podcasts while driving. It started making a lot of sense. So we started by getting rid of the credit cards and saving an emergency fund. That alone took off a ton of pressure, and it was actually showing in job performance. Since the bankruptcy, we didn’t have a ton of credit card debt so we got rid of what we had besides the house and the Student loans. Then we had an epiphany. We had gotten our house at almost a steal, put a lot of effort into it, and we figured we had some good equity. What if we sold it and used that equity to buy something else? Obviously we would likely have to move out of the main part of the city and have a bit of a commute, but if we could get the payments down to something really small… So we put our house on the market, figured out what our equity should be, and then began talking to the realtor about finding a really cheap house. Turns out Rural areas can be a lot cheaper than metropolitan areas. There is a downside. You couldn’t get a Mortgage on anything under $50,000. Well, we were ready to take a tar paper shack if need be and we found our current house. It was old, built in 1920. It was beat up. But it did have modern wiring and central heat and air. It would do, and we had enough equity to buy it outright, for cash. With no more house or rent payment, we were able to pay off the student loans. We had no credit card payments, no car payments, and we rebuilt our emergency fund. Then we discovered something else. There are many home improvement projects that you can do for the cost of a house payment or two. Take Energy efficient windows. To have most of ours done cost a little over $2k. That was less than two months house payment at our old house. Insulating the ceiling, Less than a house payment. Fencing in the backyard, about one and a half payments. Redo on the upstairs plumbing, about half a payment. Building a large back patio, one house payment Adding wall insulation will be about 3 house payments. Granted, we did most of the work ourselves, but for the cost of a year’s worth of house payments, I suspect we will triple the resale value of the house, And we can do this precisely because we have…no payments.
Here is a beautiful thing. If money is tight, I won’t lose the house if I don’t do the projects, where you WILL lose your house if you don’t make your payments. If I lose my job, it’s not the same kind of crisis as it used to be. I can now put the money towards savings and investments. Building wealth. All of my work now ends up making my life better instead of making life better for Capital One. I really want to reply to Samuel Le Jackson. What’s in my wallet? Money. Actual Money.
In conclusion, I’m not extraordinarily lucky. I’m not a super genius. I wasn’t born to wealth. I’m actually kind of an idiot. But if I can manage this, you can too..
