DH = Dear Husband
A year ago, DH and I started our journey out of debt. With three lines of credit and one mortgage totaling over $257,000, it was no small deal. DH’s hi-tech job loss and eventual franchise purchase in the first decade of the millennium had added greatly to our already impressive debt, and last year, aged 53 and 49, a sobering reality was dawning upon us: We would almost certainly be retiring within ten years, but we weren’t anywhere close to being prepared for it. A recent and prolonged experience of financial stress combined with impending retirement made us feel uncomfortable with our debts as we never had before.
Last March, a friend of mine who knew of our struggles loaned us her CD-version of Dave Ramsey’s book The Total Money Makeover. Last May, I reluctantly started to listen to it on my commute to work. Somehow, that CD worked its way through the quagmire of denial and chaos that was my financial mind and made me weep. “I was surprised by my tears,” I wrote in my first post last May. “Debt repayment, after all, is dull. It’s all about practicality and numbers and detail and doing without and being sensible. But here was Ramsey presenting it as something life-giving. I allowed myself a vision on that car ride to work. In my mind, I fast-forwarded to the day my husband and I would make our last mortgage payment, and we’d be completely debt-free. It was glorious! I’ve known for years that our debt load has been a burden, but I didn’t realize how life-sucking that burden was until I envisioned it gone.”
We are part of a debt-ridden generation. My mother, a product of the Great Depression, was horrified into utter speechlessness when she found out the sum of our debts. A slightly younger colleague of mine, on the other hand, wondered what the big deal was. Ramsey has a theory for our generation’s growing comfort with debt. “The story goes that if you drop a frog into boiling water, he will sense the pain and immediately jump out. However, if you put a frog in room-temperature water . . . and . . . gradually turn the water up to boiling, the frog will not sense the change. The frog is lured to his death by gradual change” (Ramsey, 13). Last June, DH and I decided to jump.
We have three children. One is grown and living on her own, and two are in their teens and living at home. So we’re paying off debt while managing expenses typical of family life: groceries; property taxes; home and auto insurance; utility bills; gas for the car; costs related to our younger daughters’ sports and other activities . . . These are hefty obligations in their own right, and to pay off debt as well is challenging. From June 2011-June 2012, we paid close to $16,000 off our debt. From June 2012-June 2013, we paid $50,000 – a number that represents a jaw-dropping percentage of our combined take-home pay. Despite the fact there were no significant changes in our income or expenses, we had a 312% increase in our debt-repayment from one year to the next, and while I don’t completely understand it, I can share some lessons I’ve learned so far on the road to debt-freedom.
Lesson #1: Be fiercely intentional.
“You can wander into debt, but you can’t wander out of it,” says Ramsey. I don’t think that an easy-going approach to debt reduction is possible. In the April 21, 2011 issue of Statistics Canada’s Social Trends Magazine, Matt Hurst shows that Canadians’ average debt-to-income ratio has increased by 70% since 1990. The “flow” of our culture is towards more and more debt, so if you if you want freedom from debt, don’t “go with the flow”; go with focused intention.
Lesson #2: Sweat the small stuff.
There is a popular saying that goes something like this: “Don’t sweat the small stuff – and it’s all small stuff.” I really don’t like that saying. It pretends to be an antidote to worry, but it’s not. The management of personal finances requires attention to detail. For years – even decades – I had my head in the sand when it came to money matters, but since we started our journey out of debt, I have joined DH in tracking our finances, creating monthly budgets, preparing for big upcoming expenses, and deciding where to cut back. When we’ve let the details slip, we’ve been less successful in our efforts to reduce debt. We’re committed to sweating the small stuff so that we don’t need to worry.
Lesson #3: Be prepared to do some soul-searching.
In her book Payback: Debt and the Shadow Side of Wealth, Margaret Atwood examines debt. “ ‘Debt is the new fat,’ someone said recently. Which led me to reflect that, not so long ago, fat was the new cigarette-smoking, and before that, cigarette-smoking was the new alcohol-drinking, and before that, alcohol-drinking was the new whoremongering” (Atwood, 41). We’re a species bent on destructive self-medication in one form or another. As you face down your indebtedness, you’ll be shoved face-to-face with powerful opposing forces from within. Do you struggle with the need to keep up with the Joneses? Are you invested in an image of affluence or generosity? Is it hard for you to say “No” to expensive social or family traditions? Are meals out or shopping sprees a vital source of comfort? Do you have money guilt? To soldier through your forces of inner-sabotage, be prepared to undergo some discomfort and some deep-seated paradigm shifts.
Lesson #4: Master the discipline of measured spending.
I remember a local story about a group of men who worked together winning the lottery. Each received about $400,000, and as far as I know, the first thing that every one of them did was to pay off his mortgage. I’m pretty sure that if I won $400,000, I would immediately eliminate our debt. But I’m not counting on a lottery win. The practice of measured spending and gradual repayment is difficult to acquire in this all-or-nothing age of instant gratification, but it is possible.
Lesson #5: Let go and let God.
This advice seems to fly in the face of lessons #1 and #2, but it doesn’t. Sometimes, even when you’re focused and taking care of all the details, events beyond your control stop your progress. 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.
DH and I are encouraged by our first year. 60% of Canadians retire in debt, but we’re hoping to beat the odds. There are no guarantees, and I’m sure there are many more lessons to learn, but we’re on our way.