DH = Dear husband
Roadblock to debt-reduction in the early days
In the first year of our journey out of debt – from June 2012 to June 2013 – we paid off more than we did in any of the 4 years that followed. $50,000 down! It was a year of good income with no extraordinary costs – unlike year #2 and the new roof and year #4 and the renovations. Our mission to reduce debt was fresh and fueled by lots of adrenaline.
Despite the great progress we made in that first year, there were two months when we couldn’t put anything extra against our debts. Here was my response at the time:
“I haven’t been sleeping well lately … Thoughts of muffins, egg rolls, and melted cheese have beckoned to me from some deep recess of my brain, promising to be the answer. Except for when the knot in my stomach has stifled my appetite … In both March and April, DH’s business was slow. Remarkably slow. After months of hyperactivity, the slow-down was at first a relief. By the end of the first slow month, relief gave way to philosophy: There are ups and downs in self-employment. This won’t last. After the second slow month, philosophy gave way to dread.”
Perspective from 5 years later
I have to muster up compassion for that angst of 5 years ago. From this perspective, I can say, “It was only 2 months!” as well as “You’ve had such great success in paying off debt so far! This blip will be absorbed.”
Of course I didn’t know it would be only 2 months then. DH’s business has always been subject to risk factors, and for all I knew, it was failing. And as for our progress up to that point, I actually had too-high ambitions. My original hope was that we’d pay off over $50,000 per year and be out of debt in 5 years. It wasn’t until later that I recognized that we were on a 7-year trek.
There’s something else I have to take into consideration. When I felt that angst, we were still over $200,000 in debt. We were still worse off than the record-breaking national average household debt-to-income ratio – and too old to be in that position. Yes, we’d made big strides forward, but we were still close to the poor financial health that was the starting point of our journey out of debt.
Our current roadblock
This past October, multiple stresses made our lives go off-kilter, and one of them had to do with DH’s business. Not able to disclose much (because DH didn’t want me to), I wrote “DH operates a home business, and there are always ups and downs with it – resulting in variable income, and variable debt-repayment. DH’s business is currently undergoing a stress test. We’re all feeling it. I can’t say much more than that.”
The change DH made in his business (which I completely supported) has resulted in significantly lower revenues for almost half a year now. It worries us, but I’m not being tormented by thoughts of “muffins, eggrolls, and melted cheese” promising to be the answer. And there’s no knot in my stomach. No “dread”.
The difference? We’re in much, much better financial shape now than we were 5 years ago. Our remaining debt is a small mortgage that we’ll pay off later this year, and we’re cushioned by savings. We’re way, way below the national average for household debt.
What if? back then vs. What if? now
I did my best back then to get out of the discouraged funk I was in. “If I answer the ‘What if?’ questions, I come up with, ‘We’ll stop the business. We’ll sell the house and move into a smaller one. DH will look for another job. I won’t retire as soon as I’d planned.’ Disappointing, but not the end of the world.”
Now there’s a difference when I answer “What if?” DH can keep the business going at a reduced level and start a phase of semi-retirement. I’ll retire in 2019 as planned, and we’ll see at that time if it would be wisest to stop the business and sell the house or not.
Freedom from financial stress
Good financial health doesn’t mean that worry goes completely away or that the passive, head-in-sand money management approach is an option. We do have worries about this extended blip in DH’s business, and we’re having to focus as we navigate through it. But it’s not overwhelming. It’s not distressing or depressing. And I promise you that it would have been 5 years ago.
Have you ever been through a time when reduced income was very stressful? Are you well cushioned with savings to see yourself through an unexpected reduction in income? Your comments are welcome.
Image courtesy of Wikimedia Commons.