I think it is important to discuss how we both got into this amount of debt.
I received my first credit card during my freshman year in college. I was not able to work while in college, so the only money I had came from a small on campus job, a little grant money, and whatever I could make in the summer. And, starting in 1999, a credit card.
The first card had a $500 dollar limit and I never figured I’d be able to spend that much. Oh, my was I wrong. I paid my bills on time, so the limit increased and increased and increased. My spending increased to match my new credit limits. Before I graduated, I had numerous cards, most with balances. The bartenders at my favorite bar still know me, to this day. I spent quite a bit of money there, money that belonged to Discover Card, or Citibank, or MBNA. The entire time, my income never increased, but I did whatever I had to do to make the payments. Minimum payments.
A year after graduating, I returned to school to earn my Masters degree. I borrowed money to attend school and to pay my bills, even though I was working at the time. Looking back, I could have limited myself to living on what I earned and only use the loans for school expenses. I borrowed the full amount allowed every year and spent it on books, classes, beer, eating out, traveling, etc. The essentials, really.
After graduation, I moved to a new city with a much higher cost of living. My first job paid poorly and I chose not to adjust my lifestyle to my new income level. I remember a few months of being short on cash and choosing to put my rent, utilities, or food on the cards.
When Heather and I got married, I was working full time and she was looking for a job and working part time. Thankfully, she soon found a full time position, which eased our cash flow situation. We decided to stop using cards and start living within our means. We made mistakes and spent more than we should have, but we largely stuck with the plan.
The earliest record I can find of our debt is from January 2008. We had 2 credit cards, 5 student loans, and one car loan. Total debt was $79,093. If I could find earlier records, you’d see where we paid off about $13,000 before 2008.
Since January of 2008, we have scraped together a down payment for a house, renovated a bathroom, using cash, renovated our kitchen with some help from a family loan, and paid off $40,000 in debt.
We’ve made the easy changes; reducing our eating out, watching what we spend, picking up a part time job to generate a little money, and changing our expectations of our lifestyle. Now, we have to make the hard decisions, significantly reducing our expenses and doing what we can to increase our revenues.
Wish us luck.