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“Don’t call here again!” is what I would shout rudely into the phone receiver. I repeated this ritual daily whenever the bill collector would call. All of you who have ever missed a payment, intentionally or unintentionally, have experienced the daily harassing calls of creditors. This is what led my husband and I to make what would be one of the most important financial decisions of our lives. We had decided that we wanted to be completely debt free. I began to imagine what it would be like not to owe anyone anything. Once we made the decision we began by taking a hard look at our spending habits. We began keeping a detailed journal of our spending for the next thirty days. What we learned is that thirty-six percent of our income was going towards our mortgage, eighteen percent towards auto, and six percent towards consumer debt payments. That was already fifteen hundred dollars of our twenty five hundred dollar income. We still had to pay tithes, buy groceries, put gas in the car, and pay the light bill, phone bill cable and computer. Not to mention auto and life insurance.
We realized that we would need to make some serious adjustments if we were going to be debt free. We began by reducing the amount of errands I ran in order to conserve on gas. I called my auto insurance company and was able to get our payment reduced thirty four percent. We didn’t have to change our coverage…I simply asked and they gave us a discount. It also helped that we had excellent driving records and had been long time customers. These things alone reduced our debt, but more was going to need to be done in order to get out of debt. Dining out was completely out of the question and cable had to go. We didn’t completely go cold turkey on entertainment though. Instead we canceled the seventy-five dollar monthly cable bill and substituted it with a twenty-five dollar monthly video store rental membership. This is one of the changes that has helped our family not just financially but also has allowed us to spend more time interacting with one another as a family.
After reducing in every area possible we put my debts in order by lowest to highest balance. The one thing that we placed at the top of the list was tithes. If you were paying attention earlier on I said that the tithes were paid after the mortgage, car and credit card payments. To be completely honest with you, if the money wasn’t looking right, it wasn’t paid at all. This is not something that we are proud of; our only desire in writing our story is to be transparent. So from here on out tithes would be paid first. The first month of our new budget still left us with too much month at the end of the money. Do you want to know what else happened? The creditors continued to call. This went on for another six to eight months before we saw any change. The light that was at the end of the tunnel was when we paid off our first credit card. We were so excited that we wanted to treat the family to dinner, but we didn’t. Instead we celebrated by crossing off the debt with a permanent marker. We reconfirmed that the old monthly payment on the credit card would be combined with the monthly payment of next debt on the list. It would be almost three years before the next debt was paid off.
Each time a debt was paid off we applied the monthly payment from the previous debt to the next debt on the list. Understand that things didn’t always run smoothly. For example, with no savings to speak of, whenever there was an emergency such as a flat tire or broken eyeglasses we would resort back to just the minimum on our debts instead of the combined payment. There were times when we would do this for a month or so and not even return to the original plan. It felt good to have some breathing room, but this short term satisfaction resulted in additional years in debt. I believe that a big factor in becoming debt free is an accountability partner. Someone who is impartial to your financial situation that can monitor and help you make some of the tough decisions along the road to debt freedom. During the time that we had gotten off the fast track to paying off our debts we started an emergency fund with one of our tax returns. This helped cushion our income from unexpected financial pressures.
It was not until we were down to our last two debts, which are the car and the mortgage, that we could see the light at the end of the tunnel. We have eight payments left on the car. After that we will take the old car payment and begin re-funding our emergency account. By this time we will have been in our mortgage 10 years. Finally we will able to compound the affects of the debt snowball against this monstrosity of a balance.
The thought of knowing the exact date that we would be debt free is invigorating. Knowing that we were only seventy-two payments away from paying off our last debt is an indescribable feeling. Here let me try. It’s like having the finish line in your sites after running a marathon or like being escorted towards the exit gates on your release date from prison. It’s the knowing that we were almost there that propels us forward.
Very soon I will be able to end this story something like this: It was twelve years ago today that we were heavily in debt and more than thirty days behind on most of our payments, but today we sit down to write out our final mortgage payment and I breathe in deeply then exhale slowly. We can feel the invisible chains of financial bondage release it’s grip on us. We slide the envelope into the mailbox and close the lid. We are finally debt Free.