Tuesday, October 14, 2014

How we Got out of Debt: Filled to the point of overflow



Three years ago, my husband and I were in our young twenties and sitting in approximately $70 000 of debt. Some was necessary at the time, some was intended to propel business growth, some was just for fun, and a good heavy chunk of it was in an attempt to accrue points on our VISA card by putting gas and groceries on it and forgetting to pay it back.

All of it was sitting heavily on our shoulders, but we didn't know it.

Fast forward to winter of 2012: new parents to a less-than-one year old old baby, prepared with a downpayment and ready to buy a house (more on that here), and feeling a crazy stirring in our hearts that something's not sitting right. God began to lift the weight from our shoulders by showing us this debt that we'd ignored for so long was right there. Looking back, Aslan was on the move.

Friends of ours were hosting the first-ever Canadian CAP Course and invited us to join, and more in an effort to support them than to help ourselves, we went and invited my mom and her boyfriend. There, we learned things we had never heard (or let sink in): you can live on cash, you can own your car, you can have a realistic budget, and you can live your life freely too. At the same time, my dad gave us the book Total Money Makeover by Dave Ramsey and in an effort to become students of money management (and maybe contribute a little something to the CAP Course), we picked it up to read. Although Ramsey came at us hard (a lot of use of the word "stupid"... ouch), we realized that we were on a crash course toward bankruptcy if we continued on this path where we were living with the money the bank told us we could have, rather than the money we really did have.

Before this time in our lives, we never sat to crunch the numbers of where our debt really stood - but then we did: $42 000 in student debt, $10 000 (!) in credit card debt, and $19 000 in a car loan.

And then we both knew - God was calling us to pay off our debt. We took a deep breath, surrendered the idea of home ownership (for now), and made an action plan. I'm going to be completely candid with you about how all of this went down because I believe that if God calls you to do something, He will make a way for you to do it, and as crazy (or normal) as our story is, it happened and it's ours.

First of all, we already had around $21 000 sitting in a bank account ready to be used for a downpayment. We took this and sold / paid off car ($14 500 owing - you can read about the car debt removal process in detail here), purchased a new one ($4500), paid off our credit card ($10 000), and took a vacation ($2000). It was hard earned money and it was a hard sacrifice so we felt the vacay was well worth it. In the next season of our lives we endured a miscarriage, so having the vacation in our back pocket as a good memory was really nice to hold onto during a rough period of depression we both faced - we're glad we did it.

Getting out of Car Debt
Now, paying the car off wasn't a move I'd first suggest across the board as it was technically our "cheapest" debt: the interest on it was front loaded, meaning it didn't matter when we paid it off - now or later - the cost for the car would have been the same. But, losing the $270 / month car payment was really nice and freed up $270 a month to "snowball" into our other debts and the idea of truly owning something was really empowering.

Getting out / and in / and out of Credit Card Debt
We next turned our attention to our credit card debt, which we had unknowingly (this is why Ramsey calls us stupid I think) racked up to $10 000. Like I mentioned above, a really good chunk of this was a grocery shop or a gas fill-up that was charged to the VISA "for points" and never repaid, despite all good intentions. There were other big expenses for our business, but in all truth we could have paid those back much sooner than we did. This was a tough debt to get out of because every time we would would pay some debt off on the card, we would find the balance still swiftly getting higher and higher. We actually tried to pay off the credit card debt first (and we did), but it got racked up again! It's a revolving debt and for a few months we were frustrated with ourselves for not being able to kick these bad-habit shopping and grocery trips that could have been paid back at the time (we had the money planned in our budget) but didn't. We weren't fully living on cash yet and this really convinced us that no matter how many points your credit card offers you, you'll have more money in your pocket if you save the card for big purchases that you already can afford.

It was a period of 6 months to a year (somewhere around there) of breaking the bad habits we had with the credit card and living on cash, or at least in the non-overdraft portion of our debit account, and we now are in a good habit of either paying back the credit card on a weekly basis if it's used (sometimes it's necessary - online purchases and what have you), or saving up our money completely, booking something big (like our trip to Newfoundland back in June), and paying it back immediately. I honestly can't tell you how good it feels to have a VISA balance of zero. Ironically, after our balance was zero for a little while, VISA increased our limit to something outrageous. Good thing God captured our hearts before things could get really bad, huh?

Getting out of John's Student Debt
As of January 2014 (around 1 year after our debt-payoff journey began), we still owed around $6000 to John's student debt + $21 000 of my student debt. We had been snowballing major payments onto it as often as possible while still maintaining my minimum OSAP payments of $300 a month. His minimum had been $100 a month, plus the $270 snowballed from the car loan, plus extra cash from bigger jobs or leftover money or even sacrifices from regular expenditures going into his debt. Around this time, we had an influx of deposits for weddings (a lot of people getting engaged around Christmas time, go figure) and a payment for a summer 2014 wedding - something I wanted to hoard and use as a safe cushion for the expectedly slow months of February, March and April (every year February to April is a squeeze). But John, being the dedicated man he is, offered the suggestion that we use the influx to pay off the remainder of his debt: instead of having a nice cushion to feel comfortably provided for the next three months, we instead trusted in God's provision, believed God wants us to be debt-free and dropped the cushion cash into his debt - we got a letter in early March to tell us that his loan was paid in full!

Needless to say, February, March and April were tough and at times very, very tight (and I got very, very good at baking bread and cooking soup, cheap meals) but we pulled through and met May with strength and moved forward toward paying off the remaining $21 000 of my student loan. We pushed it hard - having had a few tight months we just kept living like we were still in the midst of a tight month even if it was an abundant one, and dropped the amount owing to $19 621 by July 14th.

Getting out of My Student Debt
John always said that he believed our debt would be fully paid before our upcoming 4-month trip to Nicaragua. It was just something he knew that he knew, and he pursued that commitment to believing it even in the hardest moments when I didn't want to drop an extra $20 into student debt, I wanted to go out for dinner. He would coach me through it as I cried to him that this debt would never leave us. He kept believing it even when it seemed as though we might not even be able to afford our trip. And on July 22, the night we found out we had a house fire, we watched it all come together and (as distressed as we were) laughed our whole way home. (More on that here). We had house contents insurance. God had us in his hand.

The house fire itself didn't destroy everything; there were many items in the kitchen and living room that were damaged from being near to the situation but more than that, we had a slow moving insurance company who didn't actually get into the building to have an inspection until weeks after the fire. It was frustrating, annoying and absolutely discouraging - many tears were shed from yours truly - but because the smoke lingered for so long without our items being cleaned or removed, and because the basement flooded and made most of our stored belongings mouldy during the wait, a good 95% of everything we owned was counted as lost - and we got a cheque for replacement value.

A cheque that we received today and a cheque that just covers my remaining student debt, and a little something extra we felt God urging us to do back in June, but simply couldn't see a way to make it happen.

Today I cashed that cheque in the bank; today I called National Student Loans Service; today we became debt free. It feels so unreal that I felt I had to write it down.

In July 2013, I wrote a post called "Why We're Getting out of Debt: (Or, Why Drive when You Can Walk?)". I asked readers at the end to pray with us that getting out of debt would be a reality in our lives - and I want to thank you for doing that, because I know you have. I know that our debt-erasing journey has been fast tracked because of God's grace, your prayers, and because we have been called to leave this country, even if for a short time, owing nobody anything. I know that obedience has been blessed. I know that Aslan was, and is, always on the move.

That God never tells us to do something we won't be able to do.

I wrote the following words back in January and I had no sweet clue what was coming when I wrote it. Keep in mind now that we, now a family of 4, have been living in a bachelor apartment for the last 2.5 months and are preparing to pack what we have left of our belongings in 4 suitcases and head to Nicaragua over the winter:

"Each time God pursues us it feels as though we have less and less "stuff" to pour out, as though He is wringing us in His hands like a dirty towel to clean us from everything that we don't really need and yet again filling us to the point of overflow with love and peace and patience, and oh mama you should see the kind of man my husband is turning into and the peace I'm learning to embrace."

Truer now than ever. Amen and amen. Thank you Lord.

Monday, October 6, 2014

Small Space Living: How we Fit 4 People into a 1 Bedroom Apartment And Lived to Tell the Tale

Well, friends, we've just about done it: 3 months, a family of 4, and a 1-bedroom apartment. 

This accidental happening into small-space living has forever changed our perspective on what we really need to live well and fully. We always thought that our upcoming trip to Nicaragua would serve as a line in the sand between what we need / what we want, but that line has been drawn as we lost most of our stuff, re-purchased the things we really like, and crammed our little family into approximately 600 square feet of space since July. That's a guess, I have no idea how big this place is.

Here's how we muddled through it:

1. We tucked the notion of privacy into a box that we subsequently burned on the bonfire of reality. (Enough drama for you?)

2. We set up our shared bedroom: John and I on a queen bed, The Caterpillar on the bottom half of a trundle, and Little Bear in the Pack'n'Play. We all fit. It's a big room. And usually by 4 AM things end up with all of us in the 1 bed. I present to you Attachment Parenting to the extreme. Dr Sears has yet to endorse our family, but I know he will.

2. We sorted out storage solutions, mainly using friends' garages / basements. There were a few larger wooden furniture items that were salvageable and a few boxes of memories or random appliances that made it through or were worth saving, and our friends have been gracious enough to hold onto them for us. We love you guys.

3. We selected a few high quality must-have kitchen items in stainless steel. I like stainless steel. We decided that our cast iron cookware was worth saving (obviously), and purchased a

  • KitchenAid knife block, 
  • 1 cutting board,
  • a stove-top kettle, 
  • a set of 4 plates, 
  • 4 mugs, 
  • 1 Ikea set of cutlery, 
  • 1 spatula, soup spoon, wooden spoon, potato masher, 
  • a toaster,
  • a snobby coffee maker, 
  • a salad spinner, 
  • set of mixing bowls, 
  • a popcorn maker (non-negotiable), 
  • and a set of measuring cups. 
And that's it. It sounds like a lot, but there are moments when I think, "if only I had.. this.." and remember how many kitchen appliances / baking tools I once owned.

[Once we received the KitchenAid mixer back from the cleaner's (cool, right?) we stored it. If we were staying longer we might find a space for it.]


4. We purchased a rug: We've had the same green rug since The Caterpillar was born and got another duplicate one from Ikea. That made us feel right at home. We love this rug.

5. We gathered toys / had a big Toy Shopping Day and were selective about what we added into our home. That was so fun! We also just recently added 4 full size Frozen movie posters to our house: in the living room, the bathroom, and 2 in the bedroom. It really looks like a girl-child runs this joint. At least it feels like hers.

6. We came to terms with the concept of 1 single room serving as our office, living room, kitchen, dining room, gym, and play room. There have been times when this has been incredibly rewarding and times when this has been incredibly challenging. It's rewarding when one of us is working and the other is playing with the girls and we basically don't miss a moment of their growth. It's challenging when everyone is losing it and a client is on the phone and the fire alarm is going off. Both of those things happen a lot. (John has made a lot of bacon in the last month and a half and it makes our fire alarm go off. He literally just discovered that he likes bacon toward the end of the summer. He'll get over it.)

7. We wrestled with sleep training: sharing a bedroom isn't so bad when everyone's asleep, but what happens when one struggles getting to sleep or wakes up loudly? The answer: the pack n play fits in the bathroom. Hold your pee, sir. (Just kidding, there's another bathroom we can use).

8. Prayer. Lots of it. Often desperate.

Although it's been a challenge to live in a small space, it's been a joy, and I think we could do it again (but maybe on a slightly larger scale).

We've learned that effective storage solutions are key, minimizing actual items is crucial, and that life without grace is impossible.