Think you can't get out of debt? Check out my story.

Many people think they will never get out of debt. They may be right, but I believe that if you can put yourself in debt, then you can get yourself out. Just a few years ago my husband and I were spendthrifts. We had been relying on our credit cards since we moved in together. We had always been able to pay our bills on time, but after the bills were paid we didn’t have much if anything left over. We would purchase groceries, gas, and anything else we decided that we “needed” with plastic. About a year after we purchased our house, we refinanced to consolidate our debt and we did this process three times in five years. I also spent frivolously on clothing, a $5000 shopping trip to Florida, brand new riding lawn mower, and various other things. One day, I looked at our check book and it only had $0.30 in it and we didn’t get paid for another 5 days. I decided at that moment that I had to do something to correct our financial situation before we went bankrupt. We had $10,000 in credit card debt, $1,000 a month in vehicle payments, $913 mortgage payment and numerous other monthly payments for computer financing, cell phones, satellite TV, etc. and a take home pay that barely covered it all.

In early July 2006, I decided that this was no way to live and we would have no future if we didn't do something to correct it. I purchased two very good books, The Complete Tightwad Gazette by Amy Dazycyn and Dining on a Dime by Kellam and Cooper. These two books have helped me stay motivated, but I will get more into that later on. I created a budget on a Microsoft Excel Spreadsheet. The spreadsheet helped me see exactly where our money was going. It was not pretty, after bills, groceries, diapers, and daycare; we were only left with less than $100 a month for unexpected expenses. I had to make some difficult decisions; I had to cut some of our conveniences if we were going to be able to go without credit cards. I started reading The Complete Tightwad Gazette and realized I was grocery shopping all wrong. I had been a loyal shopper to a particular chain super store, but after making a price book and scanning sale ads, I decided that my loyalty was not paying off. I could get items for much cheaper elsewhere. However, I still shop at that store because they match competitor ads. Also by reading the before mentioned book, I started doing things I never thought I would, like reusing dryer sheets and plastic baggies. After a few months of watching our spending, I was able to make large payments on each of our 4 credit cards. I then took a look at our other bills. I decided that we no longer needed premium channels and we got rid of one of our cell phone plans which saved us about $35 per month. I also raised the deductible on our automobile insurance on both vehicles which saved us an additional $20 per month. Even after all those deductions, I was determined to save us more money. I turned towards our mortgage. The last time we refinanced (February of 2006) our Loan to Value ratio exceeded 80% so we were paying Private Mortgage Insurance. In March 06, we enclosed our attached carport and made it into a two car garage and we had just put on a new roof, so I decided to get an appraisal to see if we could get rid of the PMI. Luckily, the appraisal was successful and our LTV dropped to 68% and in September, our mortgage payment dropped $40 per month to $874. (Unfortunately, our taxes increased due to the increase in value and our payment increased to $892 in October.) I also thought about the gas I was using to drive to work every day. I started keeping track of my mileage and found a route that was actually 8 miles shorter. Even though there are several more stop lights, the traffic is less heavy and I don’t speed as much, so that saves on gasoline as well. I noticed my new shopping techniques had started to pay off and we only spent a total of $700 in groceries and other consumables. I also had my husband put up a clothes line to use the dryer less and if I do use the dryer, it is just to soften the laundry.

I finished The Complete Tightwad Gazette in early October '06 and although I realized that I did a lot of the things in it, like gardening, freezing, and cooking at home, it had a lot of suggestions that I wouldn’t have even thought of. I have learned to really power shop and use coupons on sale items to get the best possible price. I have also learned to hunt for rebates and sign up for frequent shopper programs, if they are free. I was able to completely pay off our credit cards by May 2007 which was just 9 months after my financial reality check. So, with a few small changes and some cutting back on things, we were able to get out of debt. It is amazing what a little analysis can do.