When we last left off, we had just welcomed our second child, and my husband had received a big boost in his pay. With our improved financial situation, we were finally able to get some important work completed on our house. We learned our lesson with the HELOC loan on our first house, so we saved instead of running out to get a loan. In the spring of 2008, we paid cash to have our roof replaced. I was so proud that we had that money saved. That feeling of being able to pay for what we needed, without freaking out, and without debt, was pretty awesome.
John and I both wanted to build a better life for our children. We were trying to be more mindful of how we spent our money, but we still had numerous credit cards and our balloon loan to contend with. It felt like we would never get rid of these debts. We continued paying what we could, but we were still not fully committed to living a debt free life style.
Then the stock market crashed. The nightly news was filled with stories of doom. Everyone was foreclosing on their houses. I remember being terrified that my husband might lose his job during this time. It really made me take a hard look at how we were living. Could we lose our house? I knew, without a doubt, that we would be facing foreclosure if we didn’t pay off our balloon loan. John’s motivation was more closely tied to his credit card. Around this same time frame, the interest rate on his card increased from 7% to 24%. We realized that we had no control over our own money while we were in debt, and we wanted to cut ties with these dishonest and untrustworthy banks!
We were finally ready to make some serious changes to our lifestyle. We were finally ready to be responsible adults.
We decided to tackle our credit card debit first. My card had the lowest balance (about $3,000), so we threw every penny at that card. Within a few months, we had that card paid off, and then we moved on to my husband’s card (about $9,000). Within a year or so, we had that card paid off too. Next we went after the balloon loan. This loan had a balance of $36,000. We started throwing every extra penny at this loan.
We were extremely frugal during this time. We stopping eating out. We shopped the clearance rack exclusively for our wardrobe. We drove our aging minivan without complaint. My husband worked overtime everyday. This wasn’t a 6 or 12 month commitment. This was literally 4 years of our life. Of course, other expenses did come up during this time. We had our 3rd child. We completed a few necessary home improvement projects. We took trips to visit family. But the important thing was that we were no longer accumulating more debt. We paid cash for everything. And our efforts were rewarded when we finally paid off our balloon loan in the summer of 2013. We both breathed a huge sigh of relief.
Next up, we will explore how we paid off our mortgage 6 years later. Of course, like everything in life, it was a little messy and not perfect.