Choosing Debt

by GettingFreedom on April 27, 2012

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You can catch the previous Finding Freedom Boot Camp Drills here.

I have to tell ya–this is one of those posts where you know you want to share it, but you’re not sure what everyone’s reaction is going to be.

Obviously you all know me enough to know that I despise debt.  We’ve spent the last 4 or so years paying off debt from our care-free days. Add on top of that that the last few months have given me even more reason to be debt free–and yet, we’re not.

However, I can say–We were debt free once.  It lasted a whole week.

I’m going to be flat out honest here and tell you–our lives have been a living roller coaster since 2010. It all began in May on our way home from our first ever family vacation to Florida.  The transmission in our trusted mini-van went kaput when we were only in Mississippi–and I was 7 months pregnant with Blake.

That was the easiest part of the last two years.

I glazed over the surface of what our life was like from that point to March of last year.  What that post doesn’t tell you is the financial strain {in addition to the emotional battle I was facing} those 9 months put on our family.  Before setting out for vacation–our finances were looking pretty good.  We paid for the entire thing in cash, and we still had our emergency fund intact.

Until we came home.

Project Major Home Addition{also known as Project: MADD} was an utter nightmare.  In short, our contractor did not do his job.  The chaos that we were in with having Blake early did not contribute to the matter.  In the end, he took us for every bit of $15,000.  If I were to really look into the numbers, I would wager to bet it would be higher than that.  At this point, though, it just doesn’t matter.

There went our emergency fund, plus some.  We hit some additional hurdles in the middle of Project: MADD that cost us additional funds–like when the electrical wire to our well shorted out,  our existing central air unit just quit working one day, and my grandmother passed away resulting in two unbudgeted trips to Iowa. We were already using our debt snowball money to buy a lot the supplies we needed to finish since our contractor ended up with all our house building money.

From there the only other thing we could do was what we didn’t want to do.  Turn to store credit.   This was not an easy decision.  At all.  We were very upset having to turn to credit–but we were on a tight timeline to get the house finished and get our final appraisal.

Everything was finally leveling out around May of 2011.  And then my mom’ s health took a turn for the worse in July {just a few weeks after my 29th birthday}.  The kids and I ended up living back in my hometown until her passing in the middle of August. We attempted to do this as frugally as possible, but the reality is–when you’re in emotional disarray, frugality isn’t always on the top of your list.  Survival is.

When all the dust settled, there was debt.  Roughly $8,000 of it.  We were both ashamed–but we knew that with the situations we had just went through, we did our best.

Upon my mother’s passing, my brother and I inherited her IRA Account.  The amount that I received {after taxes} was enough to pay off all of the debt that we had incurred.  Oh what a happy {yet, very gut wrenching} day that was!

We could officially say that we were debt free, other than our mortgage!

Although we had a small emergency fund–all of our other savings accounts were gone.  Our mini-van was surprisingly still running.  My husband’s truck, although we bought it new in 2005, was having issue after issue.  The repairs were beginning to add up on both vehicles.

We had began to look for a new-to-us vehicle many  months prior to this point, knowing in our minds that it would be a while before we would have anything saved up.  Our hope was to pay for at least 75% in cash, if not all of it–but we needed to have a better idea what price point we were aiming for.

We ended up at a dealership in a neighboring town shortly after making our last creditor payment and found the vehicle that hit on every criteria that we were looking for–plus many more. Our list was pretty short–roomy enough for all 4 kids plus any stragglers, able to haul a trailer, and in excellent running condition with under 100,000 miles–but we continued to strike out.

Until now.

We sat in the office with the car salesman for over an hour passing deals back and forth.  Over and over we rejected their offer.  They finally told us that they literally could do no more.  It still wasn’t good enough and they were beside themselves when we walked away.

We came home, and my husband called all the neighboring dealers just to see what they had.  Upon telling them what we found and the price the dealer was willing to sell it to us at {with all the extras that they threw in}–they told us that if that was what we wanted, we needed to hop on it. Now.  They would never be able to touch it.

Honestly, we were stunned.  What do we do??   Go back into debt?  Or wait it out?

The Day We Chose Debt

The mere thought of our main vehicle leaving me stranded on the side of the road with all 4 kids was terrifying.  Couple that with everything that we’ve went through in the last 2 years–and I couldn’t bear it.

I knew that with our current budget–we could get this new-to-us vehicle paid off in no time flat.  The payment was less than what we had planned to put into our Car Fund on a monthly basis anyway.

So, here we are. In Debt.  Doing the very thing I said I would never do.

Were we selfish?  Probably.

Do I regret it?  No.

Is debt the answer for all of life’s problems?  Absolutely not.  However, now I do see that there are situations where, for the sake of sanity, it just fits.  

Finding those situations where it really is justifiable, is where the work comes in.

Or else you’ll end up over your head and in a place you can’t dig out of.

The Questions to Ask Yourself Before Going Into Debt

Can we afford it?

Can we pay it off before we have to?

Do we really need to do this?

Is ____ still worth it after all interest payments?

Once you’ve made your decision, debt or no debt—don’t let anyone make you feel that you’ve somehow shorted your family.  

Every situation is different.  And no one knows what they’ll do until they’re in it.

I found out first hand.

 

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