Sunday, July 13, 2008

$17,000

We have a problem at our house, and I want to tell you about it. We owe approximately $17,000 to credit card companies.

I do not really know how to write about this.

We have been without credit card debt three times in our married life: first, when we were first married; then for less than six months when Triss was a toddler; and for less than six months around five years ago.

Two years ago we went through Financial Peace University. We cut up our credit cards, except American Express. We saved our emergency fund. (Then spent it. Then saved it again. And spent it. Then saved it. And spent it. You get the idea.)

We got rid of AMEX a little over a year ago. We even paid off the debt to American Express a few months ago. But the other credit card debt hangs on.

Our Achilles' heel has been the overdraft protection loan attached to our checking account. We tend to go into that every couple of months, because we don't have a good budget. We continue to try to apply Dave Ramsey principles to our budget, but just cannot get a handle on it.

Needless to say, we are treading water. At this point, over $400 of our income per month goes to credit card companies, and we are barely making a dent in the debt.

Mr. Honey and I decided we couldn't do this on our own anymore. We just don't have an intuition for this kind of thing. We took a class and tried and tried to apply the principles to our own financial situation and kept messing up. We read books and kept messing up. We asked for and received advice from friends and family and kept messing up. So this week we paid a Dave Ramsey financial coach to help us think through our specific situation and redo our financial strategies. Neither of us wanted to pay someone to help us, but we tried the other avenues first. We have been trying and messing up for over a decade, and we just need help.

There is a certain amount of shame involved in paying someone to help with basic finances. But it would be a worse shame to continue the way we are currently and not ask for help.

We spent three hours this weekend with the coach, unpacking and repacking our budget.

It was gratifying to hear him say that we are frugal in our spending. (I know, how can someone be frugal and run up $17,000 in credit card debt? I cannot answer that satisfactorily, but I will say that we are somewhat frugal in the way we buy groceries and shoes and clothing and schoolbooks-- nothing like these ultra-frugal families, but we try. We just have more expenses than income at times.)

He didn't tell us to sell the house or the car, so we are all right there.

Our problems are that we don't have a saving plan for the little 'life happens' moments, and that we need some extra income to apply diligently to the debt in order to shrink it more quickly.

With the Lord's help, we are going to fix this.

It is going to be hard. I can hear my inner spoiled child gearing up for a tantrum right this minute. I like things to be easy. That is another reason I am sharing this with you. I want to be a good Christian, and I want to be honest. I have this struggle, and it impairs my witness.

I will post occasionally and tell how things are going.

I can already tell you that no one will be playing in orchestra or chamber groups or going to extra PE-type classes this year. Or ice skating. I am going to try to significantly reduce our food bill. We have been advised to give up trips. I am adding piano students and looking for other ways to earn a few extra dollars. Mr. Honey is growing his territory at work (he is a salesman).

We are going to stop paying into retirement until we get the credit cards paid off. I really want to get the credit cards paid off quickly, because it makes me very nervous not to be paying into retirement. We figured out yesterday that we would have to pay $1400 per month to the credit card companies in order to have the cards paid off in a year. That is $1000 more than what we currently give them each month. I don't know if we can pay them off in a year. It certainly illustrates the seriousness of our situation.

The kids want to go on the radio and shout that our family is debt-free. Me, too. I always get tears in my eyes when I hear a family do that. Will it ever be us? It has to be. We cannot live this way forever. It is so guilt-inducing, so stressful, and so ungodly.

So now you know. And I ask you to please pray for us.

10 comments:

G.L.H. said...

Praying for you, that the Lord will provide multiple ideas for expanding your income and minimizing your outgo.

What a freedom it will be to do this. Looking forward to your progress reports, as it will glorify the Lord!

Emily said...

Hi Katie,
I just wanted to encourage you, dear sister, and let you know that you are not alone in your struggle. I think the Lord will bless your desire to obey Him, and that your family will come out on the other side of this stronger and wiser. Thank you for sharing, and know that I, for one, will be lifting you up in prayer. My husband is self-employed and we have had many financial ups and downs over the years. We are currently in a bad mortgage, though we were finally able to refinance, and that is our worst debt. We have AmEx but pay it in its entirety each month. It's way too easy to overspend when you use credit so I prefer cash which my husband gives me in a lump sum each week. It really makes me question my purchases: is this a need or a want? (Thankfully, I'm not an impulse buyer!) We don't have medical insurance and prefer to see naturopathic physicians anyway, so that is an extra expense. Basically, we all need to ask the Lord to give us wisdom and guidance in our finances, and it seems that you are doing that. I am looking forward to hearing your success story, and in the future the Lord will be able to use you to minister to others with similar difficulties. Oh, by the way, for further encouragement, go on www.LainesLetters.com and look up her story on their road to living debt-free. Be blessed!

Katie said...

Thanks so much for your encouraging words, ladies! They mean a lot. My prayer is that the Lord will straighten out our thinking.

SeƱora Smith said...

Oh, Katie,

You WILL get through this! And I'll be praying for you. You are SO not alone; We have been where you are, and while we are down to the last little bit of debt now, we still struggle to make wise decisions with our money. Satan leaves and returns for more opportune times. "Oh, we're so close... we can just pay less on the debt this month, that way we can buy XYZ or do XYZ." UGH! You are on the right road, though, and in good hands. Gazelle intense!

love,
julie

Javamom said...

Praying, Katie! You are indeed not alone. J's car may cost us (then eventually, him) 1500-4500 dollars to repair. We can only turn to the Lord for that, so that credit is not relied upon to fill the need we/he has right now. Thankfully, J lives close to work and was already riding his bike to save $ on gas.

It's good that you all are facing this now, as the kids only get more expensive through high school AND AFTER they move out for college!

I enjoyed our extended visit over tea yesterday. I'll see you soon.

Love,

Javamom

Katie said...

Exactly my thought, Javamom. We are barely making it now, what are we going to do when we have two children who need outside classes for math/science?

We have known for some time that this debt was sitting there eating up interest, just like a pet. It's time to deal with it.

I'll pray re: J's car repairs. Thanks for staying and visiting yesterday.

lindafay said...

I'm behind you, Katie, too. Half the battle is having a strong desire for change. So see? you are further along than maybe you thought. You will have such peace at the end of this.

Grace and peace :)
lindafay

Katie said...

Thanks, Lindafay. You all are such good friends.

Mr. Honey was reading the other day that people who blog have a healthier outlook on life, and it is because of the sense of community that is engendered by blogging. I don't want my blogging community to overshadow my real-life community, but I do appreciate the insight and caring that is experienced through blogging. And I have gotten to know some wonderful people!

Donna-Jean said...

"We just have more expenses than income at times."

I so get what you're saying. And you spoke of shame, and wanting to be a good Christian. It bothers me deeply, and I've said this to my husband, that in some circles, it appears to be less shameful, more forgivable, to say 'I'm cheating on my wife' than to say 'we owe a bunch of money.' Something's terribly wrong with that outlook.

That said, I know that the weight that debt brings is a heavy thing, a hard thing. I know, too, that God brings ways and means to get us out from under and to see us through. Sometimes those ways are the simple, slug it out, cut-back-wherever-you-can-and-try-to-bring-in-more daily choices. Sometimes it's an unexpected wave of help, or a gift you never dreamed of. But God is there, He is faithful, and this thing called debt is not something that shocks Him or that reaches beyond His sufficiency to handle.

Your honesty is a beautiful thing. You have company. And you will be prayed for. You have been a blessing in this post, and I think you speak for far more people than you can imagine.

Consider it an adventure, to see how God will work through you and for you. And just keep it in perspective - it's not a gauge of your Christlikeness. Leaning on the Lord is a good gauge, and this is a circumstance that will allow you to do that in yet another area of life. And that's a good thing :-)

Katie said...

Thanks so much, Donna-Jean, for your gracious comment.

I have been thinking this week about how much more we are seeing the Lord's hand in things, now that we know where every penny is going. I know He has helped us all along, but it seems more evident now. I just pray the Lord will bless us with continuing momentum and motivation. I'm a little scared that we will cave when the novelty wears off.