DH = Dear Husband
Debt #3 – an “exciting” debt to pay off
I remember thinking, months before we would start to take on Debt #3, the business debt, that it would be exciting to pay it down. You know you’re in a pretty special head space when you think of debt repayment as exciting, but that’s how it is. We decided in advance that when the time came for us to start in on this debt, DH would pay himself as little as possible from his business revenues so that as much as possible could be directed against the debt. That way, we’d be using money taxed at a business rate – about half the taxation rate for personal income – and we would therefore be able to put more against it. Furthermore, we would have variable payments each month, following the variable monthly revenues of DH’s business. Exciting, right?
I liked to think that we’d start off by giving Debt #3 a decisive blow. In my wildest projections, I dared to imagine taking off $10,000 to begin with. Although I predicted that we’d start paying it off in February – not December – I knew there would be a Christmas windfall to use. I also knew that DH wouldn’t have to keep large amounts aside for business purchases because he’s at that sweet spot where he’s got all of his basic, major equipment. Significant purchases will still be required from time to time, but not on a regular basis as they were in his first three years of operation.
Debt #3 – a “fluid beast”
DH’s business debt has been a fluid beast. It started out at about $60,000 and he began right away putting $700 per month against it. With major expenses, however, the beast grew, maxing out at about $90,000. DH’s monthly payments would sometimes bring it down a bit, but then the need for another piece of equipment would shoot it right back up again. By the time we started our journey out of debt in June 2012, Debt #3 sat at $80,800. We decided then, as we took on Dave Ramsey’s approach to debt reduction, that we would not touch it until we had first paid off our smaller Debt #1 and Debt #2, but DH would not allow it to grow either. Any business purchases he has made since June 2012 have been made with money generated, saved, and available from his revenues.
So at the beginning of December 2012, Debt #3 still sat at $80,800. We had done nothing to reduce or add to the principal, and the monthly interest of $200 had been a regular business expense. Taken in total over three years and four months of operation, it’s an expense that has added up to somewhere around $8,000. Ouch!
But at the beginning of December, we were on a high from our earlier-than-expected elimination of Debt #2. We weren’t analyzing the numbers for Debt #3. And how could we? The Christmas rush was already well under way. I have written before about our gratitude for DH’s gainful employment – about how much better it is for him to be too busy at times rather than to be underemployed and floundering. We’ve experienced both, so we know. But this December brought us to the brink in terms of how busy things became. It’s a home-based business, and throughout most of the month, DH only pulled himself away from his office to go to bed at about 2:00 am – sometimes later. It became normal for him to get more business on a given day than he usually takes on in a week. “How am I going to do all of this?” became an almost daily question.
This kind of work volume takes its toll. “All work and no play” doesn’t capture it. “All work and no play, no family time, no church, no workouts, no social interaction, and no sleep,” is more like it. For my part, I was running the household and parenting – as well as working – pretty much on my own. And while we couldn’t help but be encouraged by the boom, I believe DH was completely accurate when he said, “If I had to work like this over the long term, I wouldn’t live very long.” It was unhealthy physically, relationally, and mentally. And although at its peak it lasted for only a month, it’s not a month we want to repeat. Christmas was lovely – but we hovered over a breaking point in the lead up to it.
First slice out of Debt #3
On one of the last days of 2012, mellowed by good sleep, rich and recent memories of friends and family over Christmas, and looking forward to a day on the slopes, DH and I put down our first payment against the business debt. Never dismiss your wildest projections – because sometimes they turn out to be true. Debt #3 now sits at $70,800. The first slice we took off of it was $10,000.