Staying in debt is easier than it should be. After all, to stay in debt, we basically do not have to do anything. Give it a try for a month. Do not pay any bills, add charges to your cards and just have fun, let your hair down. Nevermind that night out on the town that you charged for $433 will take you 6 years of minimum payments to pay off, after all, having fun is more important, right? OK, now that we are back from Cool World, let’s take a look at this logically.

Flashback: Circa 1979: I was 10 years old. When I did chores (ie: mowing the yard, raking leaves, etc), I received a small allowance. My parents were instilling in me a basic fact of life: you will be paid for hardwork. Unfortunately, while Dad was OUTSTANDING with managing money himself, bluntly, he did not effectively pass this knowledge on very well (my other two sisters have had debt problems as well). Dad’s idea of teaching his children to save money was by asking “where did all of your money go” after it was all gone. See the fatal flaw in that one? Oops on Pops! That is why I challenge you right now, at this very second, to make a concerted effort to teach your children proper money skills. It is up to YOU to stop the cycle or your son or daughter very may well follow you down the path of debt.

Flash forward to 1983: 14 years old, working during the summe with a relative primarily mowing yards. In four months, I made about #3,000, a tidy sum for a cash poor high school freshman. This was a relative fortune that was spent almost as quickly as it was made. Where did it go? Like other debt throughout my life, you tell me and we will both know.

August 1988: My first foray into credit. As an American serviceman stationed overseas, it was a lonely life for a 19 year old kid. I obtained an AT&T phone card. Limit on the card? $100 and the balance had to be paid in full at the end of each month or the card would be cut off. It took a week to max the card out. No problem, I called AT&T and they gladly bumped my limit up to a $300 limit without receiving a payment. Woo-Hoo! Two weeks later, yep, maxed out again, but that was ok. I was single, stationed far from home and was making $900 a month…..hmmm, AT&T was receiving a full third of my monthly take home? Yup…..until I had the limit bumped up again to $600. They never laughed, said forget it or even acted like they thought I was truly crazy. So, two months into a 24 month term, I am shipping two-thirds of my take home pay to dear old AT&T. Heck, I was single and would have only spent it on booze any way. Having no savings skills nearly killed me. It took about 8 months for me to open my eyes and ask myself what the heck I was doing to myself. I could not maintain that type of lifestyle. This was not a credit card, the balance had to be paid in full each month and I was tired of writing that $600 check. So did I quit? Nope, just fell behind on the payment. Eventually, they turned the card off. It took approximately six months to finally pay the thing off….and about two months to max it out again. I can look back now and say what happened next was a turning point in my life. When I re-maxed my phone card out for the umpteenth time, what happened? I received my first piece of plastic in the mail. Credit limit you ask? Why $600 of course, how convenient. So, with the 22% credit card in hand, I paid off my phone card. Ooooops, HUGE mistake. It took 3 years of paying ahead to pay off my $600 phone card. Including interest and late fees, it cost me approximately $1900 or so. Did I learn from this mistake? Lets’s take a look:

1995: I have been married for a year. Together we find 5 acres of lake view/mountain view property for $10k (yes, an OUTSTANDING deal). We make a 20% cash downpayment, with no real bills we easily obtain the down payment in less than a month. We finance the balance ($8k) on a 9% personal loan through our credit union. This loan is payed off in about a year. We now own 5 acres of prime land FREE AND CLEAR. We were on our way with a very solid start. Instead of building a home (my wife was a college student at the time), we decided to purchase a mobile home. We find a repossessed mobile home for $19k (book value was $26k), yet another good deal. Our initial mortgage was $180 per month. I wish I could say that we saved a ton of money and are living on a sizeable nest egg, but we aren’t. We did not pre-pay my wife’s college which we could have afforded, so like most Americans we went the student loan route. To improve our land (we own horses) we obtained a credit card. Since we had outstanding credit, the credit line was $10k. Uh-oh. Unfortunately, we were like a lot of other people, we wanted stuff and we wanted it THEN and not later. $9600 of a $10k limit later, we had much of what we thought we wanted. We needed a barn, so I took out an $8k loan against my 401(k). In less than 2 months, we had gone from financially responsible to in over our heads. We had gone from taking two weekend trips a month to barely being able to afford the minimum payments on our “stuff”. Looking back, I can not tell you one thing that we bought. All I know is that we bought. Shortly thereafter, we obtained a $5k limit card and a $2500 limit card…..yep, maxed them both out. After college, my wife struggled to find employment and we somehow scraped by. We had easily made the transitition of living on cash to living on plastic and we never noticed it at the time. I am the head of my household, it was my fault. I can say that now, 13 years later; however, at the time, I never noticed it.

It took my wife 3 years after college to find employment. We had used credit cards to pay debts on other cards (numerous times). We had about $1900 worth of monthly bills against $1700 of monthly net pay….not good. We got another credit card to buy groceries with. Then when all seemed lost, I obtained a pay raise and she found a higher paying job. Dry beans and rice appeared to be behind us. Eventhough we made more than the tally of our bills, we felt the pressure and saw no way out. Through our credit union, we rolled $20k of debt into a consolidation loan. At the time, it was the best thing to happen to us, because we had to surrender all of our plastic. We had managed to lower our monthly bill total to roughly $400 below our take home pay. Then we refinanced our mobile home. We managed to take a $180 per month mortgage + a $600 month personal loan and come out with a $365 payment. Whew! Light at the end of the tunnel. Then we obtained yet another Platinum card ($15k limit) and a Sears card with a $3k limit…….yep, you know it. I lost my job and cashed in my 401(k). Instead of rolling it over, we lived off of it. Big mistake #10256456. We sold our home and property to a neighbor for $60k and paid off the mobile home, netting about $38k. I received a $25k settlement from an auto accident. My wife received a settlement for $8k. Together, we had $71k in the bank and still had a ton of bills and needed to find another home. We bought my mother-in-law’s home and property (4 acres)….a dream for my wife because every woman wants to own the home they grew up in. Before we had looked up, we had sank $60k+ in home repairs into the house, financed (lol) $8k worth of siding, and $8k worth of furniture……we looked up and we were farther in debt than ever before. The home is old enough to be considered “historical” and we did receive a fantastic deal on the home ($50k for a $225k home and property). Currently, we both have good jobs for our area and bring home around $4600 per month. By living the “American Dream”, we have approximately $5k in bills per month. We have looked at all of the “quick fix” schemes that abound on the net. We talked to a lawyer about Bankruptcy. We have decided to stiffen our back and dig our way out of this hole on our own. At this point, I am still laying the blue print, but we will become debt free. Join us on our journey to becoming debt free. When we do this, just two regular folks with children, it will prove that ANYONE can do it.