First Steps

If I'm going to share this journey with others, this is the time to come clean. Ann Gillmore is not my real name. Personal embarrassment is not the intent of sharing this journey. Trust me, I already feel the shame. By not identifying my true self, I will be able to be more honest in my disclosures.

Moving on, the first thing that I did was create a list of monthly bills with amounts due each month and separated them into pay periods - and to my surprise, there was enough to pay bills, but not much left over for food, gas, and other necessary items.

Then came the hard part. I called each customer service number for each credit card creditor, auto creditor, and other creditor to learn my exact outstanding balances. I wrote each number on my list of monthly bills next to the appropriate creditor.

The grand total (minus my student loan) totaled $160,948.00. Believe it or not, I did not feel overwhelmed. I actually felt inspired and determined to be free again. I shared my thoughts, and the numbers, with my boyfriend. We have been together for a few years and our finances are co-mingled. He was very supportive and also felt inspired. We wrote "161" in big numbers on a chalkboard in the kitchen to represent our debt.

The breakdown of the debt was as follows: $105,775 in unsecured debt ($74,700 in credit card debt and $31.055 in other debt) and $55,193 in automobile loans. We decided to approach this thing in steps. Dave Ramsey would probably recommend that we sell the cars and purchase what we can pay cash. The problem is that we don't have the cash. So, for now, we will continue with the car payments.

We decided to focus on the unsecured debt with the highest interest rate. We decided to make minimum payments on everything except for a credit card with an outstanding balance of $9,500 with an interest rate of 29.99%. Every penny that we have extra goes to that debt. What could we possibly have extra? Not much, so we made a very tough decision to temporarily stop funding our 401k's and put the money toward debt. The reasoning behind this decision is that we realized, at the rate we were going, we would end up retiring in the same position as we were, and still are, that is, owing a lot of money.

We chose to suffer short-term so that we could pay off the debt and then save for the future. We rationalized that our current debt crisis was determining our future and that we could not possibly save and retire comfortably on the current plan of making minimum payments. By such drastic action of eliminating our retirement savings, we would provide great incentive to ensure that all extra money goes toward paying off bills -- as our futures were, and are, at stake. We will bring home an estimated extra $1300 per month by eliminating our current retirement contributions.

All of this occurred almost two weeks ago. Since then, my boyfriend received a bonus. We used most of it to pay current bills and were able to send about $1500 to the credit card we are focusing on paying off first. Not even two weeks later, with the bonus payment plus reduction based on minimum payments, we were able to reduce the "161" on the chalkboard to "159". We are on the right path and it feels good.