First 6 Months of Debt Reduction Revisited: WOW!

DH = Dear Husband
DD2 = Dear Second Daughter
               This morning, we had a rare hour of peace.  Not leisure – I was making apple crepes for Sunday breakfast and DH had work percolating in his office – but we could talk.  I reviewed the numbers I had written down yesterday.  How on earth had we averaged $3,500 per month in payments off of our debt?  Did I have the math wrong?  I checked.  It wasn’t wrong.  I expressed my disbelief to DH, and he said, “That’s impossible.”  But again, I punched in the numbers.
               Yesterday morning I wrote my post, as I often do, in the midst of interruptions that are a part of family life.  DD2 needed to be taken to her drivers’ ed. class; the dog needed to be fed and walked; customers were coming over to see DH . . .  The significance of the numbers I was writing didn’t have a chance to sink in.  Only this morning was I fully struck by how incredible they are.
               As DH and I tried to make sense of it, I asked him if we could access our debt numbers for the six months prior to the start of our journey out of debt.  With a little digging, we found them:
End of November 2011:  Total Debt = $261, 461
#1 New Car Debt – $12,826
#2 Old Car & Course Debt – $12,833
#3 Business Debt – $76,742
#4 Mortgage – $159,060
Start of June 2012:  Total Debt = $257, 400
#1 New Car Debt – $8,600
#2 Old Car & Course Debt – $12,800
#3 Business Debt – $80,800
#4 Mortgage – $155,000
In the six months prior to the start of our journey out of debt, we paid only $4,061 off of our total debt!
               Weren’t we making extra mortgage payments?  Weren’t we paying down the business debt?  Clearly not!  The chaos of our finances and our lack of communication undid every good impulse we had.  Now bear with me as once again, I review our progress over the last six months:
End of Novemeber:  Total Debt = $231, 400
#1 – $0
#2 – $0
#3 Business Debt – $80, 830
#4 Mortgage – $150, 570
In the six months since the start of our journey out of debt, we have paid $26,000 off of our total debt.  That’s an increase over the previous six-month period of $21, 939 – or of 640%!!!
               Yesterday, I estimated that if we hadn’t listened to and read Dave Ramsey’s Total Money Makeover, if we hadn’t started a focused journey out of debt, we would have paid off about $17,000 over the last six months rather than $26,000.  When I shared my estimate with DH, he said, “I don’t think we would have paid off that much.”  I have to agree with him now! 
               A particularly frank colleague at work who knows about my blog asked me, “So you have all this money to pay off your debt.  What were you doing with it before?”  I explained to her at the time that DH had only recently been earning a good income after years of unemployment and underemployment.  I said that only in the last while did we have the income that enabled our debt reduction.  I thought that I was giving an accurate explanation, but I clearly wasn’t.  Our income and expenses from December 2011 until the end of May 2012 were almost identical to our income and expenses over the last six months.  I taught summer school in July, but that’s the only additional income that we’ve had.
               I asked DH this morning, “Did you make an expenses claim last November?”  He did.  “Didn’t I have a three-paycheque month last December?”  I did.  What did we do with those extras?  “Did it all float into the ether?”  It did.
               We certainly haven’t been able to pay $3,500 off of our debt each month over the last six months, but each month we have been intentional about debt repayment.  Each month it has been a focus.  As a result, when the windfalls came – especially the windfall of November – we were inclined to put it all against debt, and combined with what was already very good, it boosted up our average payment to the $3,500 per month that I still can’t quite believe.
               “It’s a thing that happens,” DH said this morning.  “When you go at something with passion and purpose, it becomes greater than the sum of its parts.”  I can’t wrap my head around it.  I don’t get how it all adds up.  But it does.  What a great point at which to start the second six months of our journey!  What a great point at which to face the mammoth Debt #3!  We’ll keep up our focused intensity each month, through the highs and the lows, with the hope that the sum of our efforts will blow us away!

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prudencedebtfree

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  • Been following your progress since I you on CBC. Thanks for your inspiration! This week, we also made smalls steps to reduce our monthly costs; we dropped our cable to ‘basic’ (I wanted to cancel!) and we lowered one cellphone plan. We’ll save about $30/mth. It’s not much but, every little bit helps! I am taking on as much work as I can so, there will be a bigger paycheque at the end of this year. Your posts are very thoughtful and well written. Congratulations on your success. From reading your latest, I realize my husband needs to be more involved. I am the ‘accountant’ so, he is less aware of the costs of our ‘lifestyle’. Thank you and good luck for the next six months!!

    • I’m so glad to know that my posts are helping you! You are right about the small things; they do add up. It would be great if your husband came on board. My husband is the “accountant” in our household, and it made a huge difference when I came on board. All the best in your debt reduction!
      Prudence

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