Wednesday, February 10, 2010

The old me - Keepin up with the Jones's

Welcome to my Blog! I wanted to start out my sharing how we go to this place.

Ten years ago me and my husband were in our early 20's with an infant and a toddler. We had bought our first home two years earlier pre kids and had decided it was not large enough for our growing family. We were excited to be approved for a loan to build a new home. We never thought about "how much more is this going to cost us?", we just figured the bank is not going to loan us money we cannot afford to pay back. At closing we found out we were going from a house payment of $600 per month to a payment of $1300 per month. I did panick a little but in the excitement of moving into our new home thought "we will find a way to make it work".

Since we had this brand new home we needed brand new furniture to go along with it, a brand new truck to park in the driveway, and since dh got to get a new truck I could get a new minivan. We also had to get a new tv and sorround sound so it looked good with our new furniture. All of this of course on credit cards and new loans taken out. But again the thoughts were we would not be approved for all this credit if we could not afford it. As long as we could make the minimums every month we could afford it in my way of thinking.

Fast forward 2 years later to a pregnancy with complications. I was on bedrest during the end of the pregnancy and lost my income. After our youngest child was born we realized daycare is going to be really expensive for 3 kids under age 4. So I worked very part time a few evenings a week and on weekends at retail jobs. We made enough to pay our bills every month and nothing extra.

During the next year we made a valiant effort to hang on, paying minimums on loans and paying the minimum amount to not get a utility shut off, but also racked up more credit card debt.

Then our escrow statement came with the new figures for the following year. Our property taxes went way up which would increase our house payment $250 per month. Once that happened it was a downward spiral that quickly went out of control. We had always heard make sure you pay your house payment first so we concentrated on that. During the next 6 months we got the new truck repossessed, sold the van to a relative who gave us an older car to drive in its place, relied on the food shelf to feed our family, had utility shut off notices monthly, and tried credit consolidation.

We still could not pay our payments and decided to sell the house. This was much harder on dh than me. He really tried hard to keep it and kept putting off calling a realtor. I finally said I could no longer live this way - this house is a prison to me.

We sold the house and took the small proceed we got and paid off about half of our credit card debt. We rented a two bedroom house and concentrated on saving up money and fixing our credit score. During the two years we rented we did take on some credit card debt and a loan for a used car.

Dh hated renting and wanted to buy a house again. We worked with the same realtor who sold our previous home and knew our history and the trouble we had gotten into. I am so thankful for her, she really educated us and said she would not allow us to get in the same situation we were in before. First rule was that we were going to get qualified on only my dh's income and when the suggested loan amount number came in we were going to look below that. I am so thankful to her for that because I never ever wanted to be in a position again that me and my dh both had to work fulltime in order to pay the house payment. We bought an older home that was mechanically sound but needed to be updated-everything in it was from the 1970's. The best part is that my dh could afford it only with his income!

When we first moved in I really wanted to update right away but my dh was against it (for obvious reasons). Slowly over the past five years I would apply for a new credit card and start making little purchases. We purchased a used vehicle to replace the old junker a family member had given to us and then we decided I needed a minivan again and bought an older one. So we definitely were making some bad financial decisions again.

Last year I realized we were in trouble and had done the same thing again. We had credit cards again, we had two vehicles with loans, we had a boat and two ATV's that we had taken out a $5000 loan to buy. I think we got in the trap that as long as we were no longer buying new and taking out huge loans we were ok.

One day while paying bills I got angry, angry that me and my dh both worked fulltime but each payday our entire checks came in and went to all of our creditors in one day! We never even saw any of the money unless you counted the 24 hours in our bank account before my online payments were taken out.

So it has been a year of making hard choices, trying to cure my "stuffitis", and working towards being debt free. Join me on my journey as I share things that I found worked and things that ah,did not work out so well LOL. We have made progress but also have had bumps along the way.

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