Watching Someone Else Find Their Way Through Debt

One of the best parts of writing a site like The Simple Dollar is that you get the opportunity to find out what problems others are having with their personal finances. I’ve heard some incredible stories, a few of which I’ve had the opportunity to share on here, and I’ve learned a lot – not only about my own issues with money, but about the common financial issues we all share.

Last night, I came across a blog called Confessions of a Stressed-Out Mom. I came across it because I was searching through parental blogs for some advice on a minor issue I’ve been having with my son (he really likes to throw everything he can grab), so I didn’t really expect to find anything profound on the topic of personal finance. What I found was a person drowning in debt and trying very hard to simply keep her head above water. I spent a lot of time just digging backwards through the archives to piece together the story, and what I found was a compelling picture of a real person facing real debt – and trying to find a way out. Let’s walk through the story a bit.

The first entry that really deals with debt is from June 25, 2006, entitled Get Rich Quick Schemes, which contains the following tidbit:

Sorry if this post is sort of a financial downer but lately I have been feeling like we are drowning in a sea of debt.

This is just a final, throwaway sentence at the end of a lengthy discussion of the dubious nature of most get-rich-quick schemes, but it indicates that somewhere in the back of her mind, there is an awareness of a deepening financial problem. The big clue as to why this is happening comes just a few days later, on June 28:

In the beginning I was the bread winner and I bought him presents left and right so he grew accustomed to getting whatever he wanted whenever he wanted. I’m sure you can see how we ended up in a great deal of debt because of that philosphy and still digging out to this day.

Sound familiar? Perhaps not the “presents” concept specifically, but almost everyone who ends up in debt trouble go through a lengthy period where we become accustomed to simply having whatever we want – or nearly so. The concept of budgeting, saving, and financial practicality are far less important than a need for more stuff.

Unfortunately, the path to a better financial future goes dry for several months, with almost no hint at all of any mounting debt issues. Again, this is fairly typical; I like to look at it as small tremors before an earthquake. And, yes, an earthquake was coming, as debt issues begin to pop up like crazy, starting with this frightening tidbit from December 1:

I have let our finances get grossly out of control to the point that there are more bills than there is money. And this time there have been no lost jobs and the like to blame it on…only me and my inability to manage money better.

This sounds like a financial armageddon to me. The blunt realization that your poor spending decisions has put you in a situation where you literally can no longer afford to pay your bills is often overwhelming, but even this realization didn’t quite do the full trick. By January 8, our heroine and her husband had obtained a copy of Dave Ramsey‘s Financial Peace University program (a multi-CD and workbook set that I hope she borrowed from her local library rather than buying) and they did Dave’s “quickie budget” exercise. The results weren’t pretty:

For this Quickie Budget you are only to budget your life’s necessities — Shelter, Transportion, Food. Credit Card debt isn’t added to this Quickie Budget at all. So here we are going through all of this and after we are finished low and behold we have $25.27 left to our names at the end of that budget. Mind you I said this didn’t include any credit card payments.

Unfortunately, it looks like the problems still aren’t solved. Take a look at the entry from the very next day:

Just tonight I called about local Jazzercise classes and I am pretty sure that I will be joining them if I can make them fit into the budget. It’s unlimited classes for $35/month.

Hmm… something’s not adding up here. $25.27 left after shelter, transportation, and food, without even touching credit card debt, and yet there’s somehow room for $35 for Jazzercise? At least they’re getting an emergency fund together:

We have been able to come up with a way to get our $1000 emergency fund in place and we will be beginning the debt snowball very soon. It’s going to be a long road ahead and we both know that but I feel we are committed to working on it together.

This makes me think that there may be more breathable room in their budget than they originally thought, but they need another wake-up call and one comes courtesy of Dave Ramsey once again, just a few days later:

As sobering as doing the quickie budget was a few days back doing the actual Cash Flow Plan was even more so — if that’s even humanly possible. So when Dave says people don’t do a budget out of fear of what they will find….he’s absolutely right. Don’t get me wrong I knew we were in bad shape but seeing it in black and white and realizing just how bad of shape it really is — well it’s more than a little scary. Let’s just say that after paying our necessities there is almost nothing left to pay off the credit cards and unsecured debt we have. And neither of us knows how to change that.

Thankfully, the couple have started throwing themselves into the Ramsey plan, which is definitely a step in the right direction. The real sign of a positive direction, though, came in this most recent entry:

I can’t tell you what a great experience it was to know what I was going to pay and had the money to pay them. It gave me such great peace.

This story sounds so familiar to me because I went through this very process, though the things I discovered when coming through the other side were somewhat different. I have just these five pieces of advice to give to this stressed-out mother as she and her family come through the other side of a financial armageddon:

Be diligent. Spend as much of your spare time as you can stand absorbing financial information. The archives of this site are a fine place to start (particularly the 31 Days To Fix Your Finances series), but you can’t go wrong with reading financial books by a wide diversity of authors. Try reading titles like Your Money or Your Life, Smart Couples Finish Rich, The Millionaire Next Door, or The Wealthy Barber. Even if you’re not doing this at the same time as your spouse, you can read the material, absorb what’s important, and give the important pieces to your spouse.

Keep refining and eliminating. Look for both big things and small things you can eliminate from your budget. There are almost infinite ways to save money if you really want to get ahead.

Don’t be afraid to live frugally. Many people are convinced that there is shame in living frugally, that they will be seen as “cheap” or “poor.” The fact is that those same people are the ones in debt up to their eyeballs, unable to sleep at night because of all of the unnecessary stuff they’ve bought.

Involve your spouse in everything. If you’re making major changes to your spending, keep your spouse on the same page, no matter what. Let your spouse know everything that you learn and every idea you’re having. Show them every thing you figure out. If they are still doing things financially you don’t agree with, ask your spouse why and listen to the answer. Do everything you can to make sure that all of your goals are in sync, even if it’s not easy to talk about.

Never forget the fear of being in over your head. Any time you’re tempted to take your eye off the ball – you’re tempted to spend a little extra money because you’ve got plenty in the bank – remember the fear you felt when you were drowning in debt. Even as I walk further and further away from those days, not a day, not even an hour goes by where I don’t remember the feeling in my gut when I really realized that I didn’t have enough money to get through the end of the month, and I sat there next to my son’s crib and cried my eyes out.

In a few months, I might peek in again at this stressed-out mother to see whether or not they’ve stayed on the path to financial freedom.

Loading Disqus Comments ...
Loading Facebook Comments ...