This blog started out as a way for me to keep track debt, as well as my attempts at saving money (to pay off said debt) by living a more sustainable life. Obviously, a lot can (and has) happened over the past two years, and my thoughts and feelings on quite a few issues have evolved over this amount of time. I think the one that has most evolved though, have been my thoughts (or rather, actions) towards my debt for the year.
I distinctly remember telling my dad not too long after I started that I wanted to pay off all my debt, mainly because (at the time) I owed what was equivalent to almost 2 full years of pre-tax salary. Meaning that if I paid every single cent I earned towards my debt, it would take me 2 full years to become debt free. My dad was understanding that I had a high debt-to-income ratio, but was much more restrained when talking about it. While he thought that getting rid of debt was a good idea (and even more so in my case). He was less enthused about complete and total debt removal and debt freedom, however. Here’s what he told me (Im paraphrasing here, it was a while ago):
It’s a great goal Jeff, but not really possible. In todays world, debt isn’t something that you cant completely live without – but you do need to manage it wisely.
At the time, I understood what he was saying, but I didnt let it get in my way – I wanted to be debt free (still do) and couldnt understand why everyone else wouldnt want that same thing. Every bit of math that I looked at and every story I read kept showing telling me how much better life was/has been since the author became debt free, and what plans the author has for the future.
For those of you who were reading last year and have been reading most of this year, you can tell that I have made nowhere near the progress that I was able to in 2010. Of course, there were a lot of different “big ticket” items that I bought this year – I paid over 1,000 in state and federal taxes, I bought an engagement ring, I spent the better part of the summer and fall on the road for work, vacation and more weddings, I booked a honeymoon for H and I, along with countless other things. I did manage to pay off one loan and make a big payment on my truck loan. I didnt have to pay any of these “big ticket” things in 2010, and it looks like some of them will go away in 2012, but will be replaced by others (like my wedding). Still though, having all of these expenses in 2010 instead of 2011 would have just tossed me into the abyss because of all of my debt at the time. This year, I was able to pay cash for all of the items mentioned above.
Obviously, making all of these huge purchases didnt really do much for my debt repayment. I’ve been trying to figure out lately why exactly that is (aside from the fact that you cant spend the same dollar two times), and I’ve thought up a couple of reasons. I think that one of the reasons is that I’m not standing on the edge of the grand canyon of debt anymore. My high debt level is no longer the ‘boogeyman’ that it once was. One missed paycheck wont put me out on the street anymore, nor will I lay awake nights worrying about how I’m going to pay off my credit cards or any other bills, for that matter. My debt level is no longer almost 2 years of my yearly salary. Due to salary increases and my focused debt repayment, it’s less than half my yearly earnings.
The clear realization that i’d be up what they refer to as “shit creek” (or crick) in the event of a possible job loss really pumped up the intensity in my eyes. There was a legitimate fear that pushed me to work far too often on a daily (and weekly) basis. That same fear made sure that I kept getting up before 5am and stayed working until around 9 pm three nights a week. The risk is now gone – and so is the drive and intensity that pushed me through 2010.
One of the other reasons is because I had a lot of things this year that I would have rather done than repay my debt (bad, I know) – I enjoyed being there for my friends weddings and seeing them happy at their wedding, I enjoyed my time in Alaska, and of course, I’m excited to be engaged and getting married to H.
Given that’ it’s the beginning of the year, this leaves me wondering where I’ll be headed over the course of this year. Of course, I’d like to pay down the remainder of my debt in order to give H and I more flexibility after we tie the knot – expanding our cash flow will allow us to save for travel, a home, or whatever else we decide that we want to do in the future. Of course, I’ll be sharing the continued journey here (to the extent that H feels comfortable – I havent really talked it over with her yet). Now that the boggeyman is gone, I feel like my debt is on the backburner and I’d really like to move it to the foreground and get as much of it reduced by the time I get married as I can. It’s time for my focus to come back. I can increase my income and I can lower my expenses and tighten back up my budget. That should free up quite a bit of cash flow to pay more to debt.
Readers: When you had backed yourself off of the cliff of debt where 1 mistake would put you down in the hole, did your intensity go down like mine did, or did you get even more intense? Why do you think that you made the choice that you did? If you got less intense, were you able to eventually reach debt freedom sometime in the future, or do you still carry debt, but not as much or of the same type that you used to?