DH = Dear Husband
“Sometimes, even when you’re focused and taking care of all the details, events beyond your control stop your progress,” I wrote a year ago in a post about our first anniversary of debt-reduction. “It’s easy to get very discouraged at such times, but it’s important not to. Ramsey says it takes the average household seven years to get out of debt. It’s a long road, and there will be both ups and downs along the way. Find the grace to weather the journey.” Those words turned out to be prophetic considering the year that lay ahead.
Year 1 / Year 2: Same income, same household, but very different debt repayment
In the first year of our journey out of debt, DH and I paid down almost $50,000. In our second year, we paid down $28,000. It’s an impressive number in its own right, but it is undeniably smaller than the first. Why the difference? Our household income was essentially the same through both our first and second years. Year two, DH earned a few thousand less from his business, but I earned a few thousand more by teaching summer school through July and August. Our regular expenses stayed the same. Two of our three daughters are in their teens and still live at home (the eldest, in her twenties, has flown the nest); we live in the same house with the same bills to pay (mind you food, hydro, and gas prices have gone up); we still have a dog; and we still drive the same car and the same van.
Year 2: A year of exceptional expenses
- We realized our debt-reduction would have to be put on hold for a while when we decided to put up a new roof last summer. It’s a good one, guaranteed for fifty years, and it cost $10,300.
- Last spring, a huge dead branch fell off the ancient sugar maple we had in our backyard. It was clearly time to cut the tree down. And last August, we did. At a cost of $2,400.
- Our dog developed bladder stones this past year, and through a series of visits to three different vets, we paid for a range of tests and procedures, culminating in surgery in January. Total cost: $4,000.
- DH is self-employed and runs a home-based business. His accountant gave him some advice this spring to help set him up for eventual retirement, and it meant putting aside $4,500.
- The exceptional expenses of the past year have added up to $21,200. No surprise that we paid significantly less off of our debt.
Biggest Triumph for Year 2: No yo-yo debting!
Most of us think of debt as having a starting point that steadily, over time, comes down to zero. But if you take a look at the history of your own personal debt, I’m willing to bet it tells a different story. A look at ours certainly does. The first debt, perhaps a student loan, starts to come down, slowly but surely. Before it gets anywhere close to zero though, a car debt is added. The two debts decrease, bit by bit, but then there’s a credit card debt for furniture or a trip. Down the combined-debt travels from its third peak, steadily down, down – until the mortgage debt happens. And that’s not the end of it. There are landscaping debts, renovating debts, more rooms to furnish, and by this time the first car is getting on in years . . . In the normal course of events, our generation remains faithful to a yo-yo debt that peaks and decreases and peaks again – over and over and over through the decades of our lives. Not until death do we part.
But over the past year, even with the relentless onslaught of expenses that we faced, DH and I never once increased our debt. Our debt-reduction progress was very slow at times, but the slope always went down, however imperceptibly. In the year from June 1, 2011 to June 1, 2012 – the year before we got serious about our debt – DH and I paid off just under $16,000 , mainly through regular mortgage and car payments. With exceptional expenses totalling $21,000, we would have gone back into more debt that year. But this past year, we maintained our focused intensity, despite our discouragement, and we still paid off way more than we ever did before our journey out of debt began.
So here is where we stand at the end of Year 2:
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
Start of June 2014: Total Debt = $179,850
#1 New Car Debt – $0
#2 Old Car & Course Debt – $0
#3 Business Debt – $42,050
#4 Mortgage – $137,800
On to Year 3!