CLICK HERE for My Tuesday PERSONAL FINANCE POSTS —> FINANCE

Getting Out of Debt

About three months ago (August 2011), our credit card debt was down to $6300 being charged 1.99% for the life of the balance (our car loan that we transferred) and we had $1000 in savings.  Over the last five years, we had paid $12,000 toward our car loan and paid off my husband’s school loans that were originally around $8000 total.  We paid off our credit card balances every month no matter what.  Even when my husband had to file for unemployment during the off seasons of carpentry, we always found a way to pay off the credit card balances (which were used for monthly expenses.)  My husband even delivered pizzas for a while in the evenings and on the weekends, something I recommend if you need the extra cash and you have the time.  I’ve gone back to work part-time after each of my children up until Ethan, our third child, was born in 2010 and my husband got his new job at NSR Business Solutions as their web designer.  That was when I started childcare in our home to bring in a little extra cash.  We were pretty much on track with our finances until we bought our house in 2008, a deal we just couldn’t pass up at the time.

Breaking the Bank

Home $weet Home

Then, this past summer, we decided to waterproof our basement.  This, after we had just paid cash to finish our bathroom remodel.  We’re outgrowing our house since we added our dog, Shadow, and I found out I was pregnant with our fourth child in April of this year (2011.)  Since then, we’ve been planning to either add livable space in the basement or move to a new house.  We contacted a trusted and experienced local real estate agent to come take a look at our house.  He told us what would have to be done in order to sell quickly and at a good price.  And, what do you think was on that list?  Waterproofing the basement!  We didn’t have major flooding or anything like that, but we knew that if we wanted to finish the basement or sell the house, we would have to waterproof it completely by excavating around the foundation and sealing it from the outside and inside.

My husband, a former carpenter, was familiar with the process.  So, he decided to take on the project himself.  We planned to apply for credit cards with at least a 12 month 0% introductory rate in order to finance our home improvement project, then pay off the balance come tax season.  We also refinanced our mortgage to a lower interest rate in order to lower our payments and save on interest.  We figured that in order to get the basement done before our fourth child needs his own room, we would have to get the basement waterproofed by the end of summer 2011 and finish the interior by the end of summer 2012.

Unexpected Obstacles

Well, as with any home improvement project, we ran into some unexpected obstacles.  We had to use our entire savings balance to pay a contractor for the excavation part of the project.  Then, with all of the supplies and materials needed to finish sealing up the outside, we ended up putting another $10,000 on our 0% credit cards.  Our budget of $7500 was completely busted!

Current Debt

That brings me to our current credit card debt balance of $17,677.49.  Although we’re not getting charged insane amounts of interest right now, we could be in some real trouble if we don’t pay off the balance within 12 months.  So, instead of having the goal of finishing the interior of the basement by the end of summer 2012, we now have the goal of paying off those two credit cards by the end of summer 2012.  We will, of course, be putting our entire tax return toward that balance.  But, we will have to get the remainder by stopping our current spending habits and finding ways to save.

And, if you must know, as of December 1st, 2011, our current mortgage balance is $101,712.68.  But, we’ll cross that bridge when we get to it (after all credit card debt is paid off.)

My Background

My experience in banking and finance began when I was 16, when I worked as a teller for a local bank.  I was in a youth apprentice program, so I was trained in every area of banking.  It was a great experience and I’ve since then gained more experience by working for a large bank in their loss mitigation department helping customers that are behind on their mortgage payments.

I know that even though someone is knowledgeable and may have tons of experience helping others with their finances, it doesn’t mean they have their own finances where they want them.  Life happens, and I know that people make mistakes.  Through this blog, I’d like to reveal a few mistakes we’ve made that have put us into debt and how we’re gradually digging ourselves out.  Our goal is to pay off all of our debt, accept our mortgage, by the end of 2013.  Once we’ve done that, we plan to pay our mortgage off within 15 years.  I know a lot can happen between now and then, so I hope to use this blog to see where we started and keep us on track to successfully being completely debt free by the year 2028.

Thanks for joining us on our journey to becoming debt free!  I hope that we may be able to inspire others to become debt free as we’ve been inspired by so many in our lives.

Happy Saving!

Marissa