The Problem of Debt

I read an article back in November called, “Your Debt is An Emergency“. (language warning) The title resonated with me.  We’d been carrying a credit card balance since June of between $1000 and $3000.  I don’t even know why.  I guess stuff happens.  The van needed a major repair (its first in 10 years, so no complaints), I bought school books, we got a freezer, and we use that card for our usual online purchases, too.  That last one was the frustrating element, because I’d make a $1000 payment, and then we’d charge up another $900 in our usual purchases.

In November, I’d made that $1000 payment, and then, every time we charged something, I’d pay the bill for it right away.  I was determined to pay off that debt by January, even with Christmas pending!  And then I read that article.  And the title was bouncing around in my brain.  My debt is an emergency.  Emergency savings.  Emergency debt.  Well, you have to have some savings for that proverbial rainy day, but we had nearly $5000 in a savings account, and only $1200 left on that card, due to diligent accounting on my part.  Should I use that savings to pay off that bill?

I payed it on paper first.  I moved the money in YNAB and stared at those numbers for several minutes.  Could I live with those balances?  I decided I liked the looks of them very much, hopped on over to the bank, and payed off our credit card with our savings.  I do not regret that at all.

I mentioned yesterday that we’ve been mostly debt free since 2001, and this is what I mean.  Usually, we don’t carry any balances, but occasionally, something gets out of control, and we need to reevaluate what we’re doing and how we’re spending.

You see, if you owe somebody money, you are a slave to that person and to your employer.  You can’t afford to lose your job or change your job because every dollar you make is already owed to somebody else.  That’s a terrible way to live and I know it.  You know our debt story, and you know I know.

Paying off your debt is vital.

That was our first experiment with budgeting, back in ’98, as we allocated all available resources to debt repayment.  We didn’t drive, didn’t pay for cable, learned to thrift, and watched every penny that moved out of our accounts.  We payed off $30,000+ in three years on about $3200 a month.  (I can’t remember our exact pay at that time.)  Our household consisted of two adults and two, then three, small children.

Just so you know it can be done.  It can.

David has never made an extravagant amount of money, but it has always been adequate to our needs.  If you feel like your family income ought to be enough, but you’re still in debt or struggling to make ends meet each month, you really need to take a hard look at your expenditures.

Tomorrow, we’ll go through my YNAB category list – what’s there and what’s not there, and my thoughts about each line item.