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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{ 23 comments… read them below or add one }

JessieLeigh April 27, 2012 at 8:39 am

Thank you, Phoebe, for sharing your story and your journey with us. I think there is precious little in life that comes down to black & white– and, for most people, we learn that lesson more with experience and maturity. (I know I have! ;)) I’m glad you have a safe, reliable vehicle for your family and that you and your husband worked thoughtfully and as a team to make the best choice for your situation– that’s what it’s all about. I do know a little something about how unexpected medical crises can wreak havoc on a family and budget (750K NICU bill, anyone? :O). I am grateful for your strength in sharing your tale.

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GettingFreedom May 1, 2012 at 2:03 pm

@JessieLeigh, Thanks, JessieLeigh! I wish that I didn’t have to learn lessons by being in the middle of them–it’d sure be a lot easier that way. :)

Ouch! I cannot even imagine a 750 THOUSAND dollar NICU bill. I had to take a double take on that number!

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Amanda April 27, 2012 at 8:47 am

We had our first baby in October and were able to pay cash for a car that is big enough for one child, and MIGHT be big enough for two. However, we don’t want our children to be many years apart in age, so if we end up needing something bigger before we’re able to save up enough to pay cash for a minivan, we’ll have to go into debt for it. To us though, it’s more important to have our children while we’re young so that, Lord willing, we can be around a long time for them, rather than wait until we are 100% financially secure. We have to trust God for our needs from day to day anyway. You really have to do what is right for your family!

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GettingFreedom May 1, 2012 at 2:02 pm

@Amanda, I agree fully!

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Liz April 27, 2012 at 8:49 am

Tears are in my eyes for you. I can feel the pain and anxiety. Been there and I am still digging and scraping myself out with help from people like you. Good for you for owning it and not just saying do what I say and not what I do. Even if that would be easy to most of the followers out there with the anonymous nature of the internet. Brava

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GettingFreedom May 1, 2012 at 2:01 pm

@Liz, Thank you for your kind words, Liz! This was one of the hardest posts I’ve written {right behind the “The Beginning” posts–which were tough!}.

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Sherri @ House & Home{stead} April 27, 2012 at 8:51 am

Don’t beat yourself up too much. Life happens. Best you can do is saddle up and plow through it again, just like you did before.

We had similar things happen – we chose to start following the Baby Steps, and at the time we had a lot of debt, but also had the 6 months of savings tucked away. We tore into that, leaving $1K, and paid off hubby’s student loan. Then we started on the next debt. And then….my mother died. She had nothing. I’m the only child with any means. So, unplanned trip to KY but also an unplanned funeral expense. Two months later, our 10 year old truck died. And we bought brand-spanking new. I knew it probably wasn’t the choice most on this path would make, we needed something for our growing family and we drive our cars into the ground, and we could pay it off fairly quickly. We’re really hitting it hard again (after a few months off the path) and will have it paid off by September (so less than 2 years). I’d say the same – were we selfish? yes. Do I regret it? Absolutely not. Especially since we bought a car with a 3rd row “Just in case” and sure enough, found ourselves pregnant with a very surprise #3 this January. So, it’s now very necessary. If we hadn’t bought that, we’d be shopping for a new vehicle that could handle 3 kids. So, live and learn, but I still don’t regret it.

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GettingFreedom May 1, 2012 at 2:00 pm

@Sherri @ House & Home{stead}, Congrats on #3! How exciting!

I think it’s very important to make your decisions carefully so that you don’t regret it. When you regret it, then you know you didn’t do what was best. Sounds so simple–but it really fits when talking about debt.

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Rachel April 27, 2012 at 9:06 am

I think it’s important to remember that for you, debt is not a way of life. You’re not going into debt for things you want, your current debt is due to a need! And with your desire to be debt free, I’m pretty sure you’ll be there once again soon!!

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GettingFreedom May 1, 2012 at 1:57 pm

@Rachel, I can only hope! Oh what a happy day that’ll be! :)

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Hiptobeme April 27, 2012 at 9:30 am

I think that careful consideration is key. You’ve shown your readers what it means to do that while still putting your needs before your wants. That was your goal was it not?

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GettingFreedom May 1, 2012 at 1:56 pm

@Hiptobeme, Indeed! And I agree–careful consideration is HUGE.

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Kellee April 27, 2012 at 12:39 pm

Been there done that!! We also were out of debt, except for the house for about 4 months. Then same ol story, card died, medical expense, etc. We were able to pay 1/2 of the new/old car and financed the rest.
The difference I always have to tell myself is this, The normal spenders out in the world, will not have the excuse of medical bills, car died, deaths, etc.. They will have excuses like the vacation we took last year, had to also buy clothes for the vacation, they gave us a huge deal on the “New” car, etc..etc…

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GettingFreedom May 1, 2012 at 1:56 pm

@Kellee, Great point! Someday we will be debt free, and I will scream from the rooftops so everyone can hear me. ;)

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GettingFreedom May 3, 2012 at 10:07 am

@JessieLeigh, Thanks, JessieLeigh! I wish that I didn’t have to learn lessons by being in the middle of them–it’d sure be a lot easier that way.

Ouch! I cannot even imagine a 750 THOUSAND dollar NICU bill. I had to take a double take on that number!

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GettingFreedom May 3, 2012 at 10:07 am

@Amanda, I agree fully!

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GettingFreedom May 3, 2012 at 10:08 am

@Liz, Thank you for your kind words, Liz! This was one of the hardest posts I’ve written {right behind the “The Beginning” posts–which were tough!}.

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GettingFreedom May 3, 2012 at 10:08 am

@Sherri @ House & Home{stead}, Congrats on #3! How exciting!

I think it’s very important to make your decisions carefully so that you don’t regret it. When you regret it, then you know you didn’t do what was best. Sounds so simple–but it really fits when talking about debt.

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GettingFreedom May 3, 2012 at 10:08 am

@Rachel, I can only hope! Oh what a happy day that’ll be!

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GettingFreedom May 3, 2012 at 10:08 am

@Hiptobeme, Indeed! And I agree–careful consideration is HUGE.

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GettingFreedom May 3, 2012 at 10:09 am

@Kellee, Great point! Someday we will be debt free, and I will scream from the rooftops so everyone can hear me.

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Jennifer May 9, 2012 at 1:04 pm

I have been kind of in your shoes. Minus the emotional family struggles you had (I’m so sorry!). But our minivan was failing. We had sunk almost $10K in it over a few year period yet everytime we went out of town it broke down. Faced with a 1000 trip to SC I couldn’t take the stress. We bought a new van. We borrowed 2/3 of it. We had been debt free for years, yet here we were again taking on debt. We have paid cash for a car 1 year prior and we couldn’t do it again just a year later. BUT we paid it off in 2 years – as fast as we could and you will to. Good luck!

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Julie May 9, 2012 at 2:48 pm

This post encouraged me beyond measure. We’re a single-car family of 5 living in the congested San Francisco Bay Area. When our beloved sedan needed it’s third transmission replacement in as many years and then failed to pass CA’s required smog test, we were left facing critical decisions: should we purchase out-of-pocket a cheaper, less-reliable vehicle with higher miles, or make a downpayment on a newer, better model? After careful thought and prayer, my husband decided with the second option. Every time the sedan broke down, we were left to the mercy of friends and distant relatives to come get us from our stranded car, and the rental fees while our car was in the shop added up at an alarming rate. For us, financing a portion of a new-to-us vehicle made more financial sense than purchasing one that would probably cause us many more headaches. We’ve never regretted our decision!

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