We did it!

Yesterday was a big day in our household. Yesterday, we paid off our last credit card.

When we started this journey a little more than four years ago (about the same time I started this blog), we weren’t sure this day would ever come. Let me take you back to the beginning.

In September 2005, my husband was working a job he hated. Eighty hour weeks, Sunday conference calls, and being on call 24/7 was making both of us miserable. Did I mention the pay was terrible? We decided that he would leave that job and do some free lance work. It took about eight months for things to really get going and in the mean time, we had a lot of trouble getting by. We used our credit cards for everyday purchases just so we could pay our bills on time. We had a number of things break down in the house so we used credit to repair/replace them. We drained our savings account. I was working and finishing up my master’s degree, so I wasn’t as frugal as I should have been. Plus, I was working a new job which was a longer commute than my previous job. I was tired and sick all the time. The doctor couldn’t figure out what was wrong with me.

In May 2006, things started to look better. Jeff had a really good contract and was also doing work on nights and weekends to make extra money. I finished my degree and things were looking good at my job. I was still sick and tired all the time but I thought it was just because I had stretched myself too thin. I still wasn’t cooking much because I was so sick and tired. I kept dragging myself to work everyday which meant by the time I got home, I was pretty worthless. We started developing a plan to get our credit card debt paid off. At that time, we had approximately $25,000 in credit card debt. It was a lot, but we knew we could get it paid off in a short amount of time. My student loans would be in deferment for another six months because I had just graduated so we could use that time to hammer down the credit card debt. Jeff had also returned to school so his loans were also on deferment. This helped us out with cash flow even though we were racking up additional interest on the loans. We would have plenty of money to make those payments and pay down the credit card debt in short order… at least that’s what we thought in May.

I kept getting sicker. In July, I got sick at a seminar I was attending. One of my doctors found a lump on my neck and at the end of July 2006, I was diagnosed with Hodgkin’s Lymphoma. I had to leave work because I was so sick. Luckily, I had good medical benefits where I was working but the premiums were expensive. I also had a small disability plan but I had to fight with the insurance company for five months before I started getting payments. Again, we turned to credit cards. We used them to pay everyday expenses and my medical bills just to stay a float so we could pay our mortgage and health insurance. Whatever we could pay with credit cards we did because we needed any cash we had to pay the bills that had to be paid with cash. We even borrowed some money from family before my disability payments started.

In February of 2007, Jeff got a job with the state and I finished chemo. I gave notice at my job. My oncologist said I couldn’t work like I had in the past and I had to find a new direction. Hodgkin’s Lymphoma is linked to stress in type A personalities and the stress of my job was not going to help me stay in remission. Things were going to be tight, even though I was doing some side work.

By fall 2007, we were able to keep current on everything and not use the credit cards, but we weren’t really making any headway. We added up all of credit card and money we owed to family. It totaled almost $70,000. This was an insane amount of money. We didn’t know how we were ever going to pay it all back. That is when I read David Bach’s Automatic Millionaire and Dave Ramsey’s Total Money Makeover. We made a budget, made all of our payments automatic and started following Ramsey’s baby steps. We figured out our debt snowball and made a plan to get going. Things were really slow at first. The minimum payments left very little for us to use in the snowball. Plus, we were now making payments on both of our student loans.

In the fall of 2008, I was offered a part-time adjunct professor job. It didn’t pay a lot but it would be able to help us add more to our snowball. We started paying off a few things which helped us free up cash to increase our snowball. The fall of 2008 was also when I started the blog. The blog helped keep me in check and on task. We were slowly making progress.

In the fall of 2010, I was offered a two-year, full-time teaching position. This job paid very well and was the opportunity we needed to really get this paid off. With both of us working full-time, we were able to pay down large amounts on the debt. We also did some much needed repairs on our house. I taught some extra classes in the summers, Jeff did side work on the weekends and I kept my small side business. The extra money went toward the debt.

Were we as intense as we could have been all the time? No, but we did stay on course and enjoyed ourselves a bit along the way. Last summer, we finally went on our dream vacation to Italy and paid cash for the trip. This summer, we went to see our niece graduate from college and spent a week visiting family (again, paid cash). We created some amazing memories along the way.

Yesterday when I made that final payment it was very emotional. It was like a huge weight was lifted from my shoulders. The thought of no more payments and freeing up all of that cash each month, approximately $3000 a month, was so exciting. I really understand what Dave Ramsey meant about being able to build wealth when you get out of debt. We aren’t debt free yet, but we are credit card debt free. Now we only have the mortgage and the student loans.

Our next step is to build up our emergency fund and start paying down the mortgage so we can refinance in the next few months. I know it’s not exactly the order of things in Dave’s world but we will be in a much better situation if we can refinance the house, freeing up additional cash to pay down our student loans. We lost all of our equity when the housing market crashed so that is our next task.

It took us about two years to get into $70,000 in credit card debt and four years and nine months to pay it off. We couldn’t have done it without supporting each other. We’ve had some really good days and some really bad days but we always knew that we were strong enough to do this. What a long strange trip it’s been. I can’t wait to see what the next few years looks like.

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