Digging out of Debt: Fire Under My Ass [Part 4]

Part 1 – Poor Attitude: My early money blunders

Part 2 – The Pit: How I got myself into the financial hole

Part 3 – Treading Water: 2 Years of No Progress

Part 4 – Fire Under My Ass: The wake-up call  (Now Reading)

Part 5 – The Final Push: How I finally dug out, and what I’m doing to stay in the black.

This is a series of articles explaining how I personally got myself nearly $20k into debt over the course of 4 years, and then out in just under 2.  For the next week, I’ll post one article a day going through one particular phase of the process, and either how I screwed myself over, or how I started on the road to recovery.

Fire Under My Ass

Financial responsibility is one of those things where you’re either born with it and you’re just naturally a saver and careful with your income, or it’s something that only happens when you finally become motivated enough to buckle down and do the hard work to fix things.

2008 was the year where it all suddenly clicked for me, and I realized how incredibly important it was that I get my act together, pay off my debt and start to actually save as much as I possibly could.

Three things happened in 2008 that were a wake-up call for me:

1.  The Economy Collapsed

I know it’s bad that it took something as severe as a global recession to spook me into curbing my spending and increasing my savings, but it did.  As fears of a worsening economy grew, I slowly spent less, and saved a little bit more with each passing paycheck. 

Up until mid-2008, it was a sort of jittery decline that didn’t happen all at once.  So I wasn’t too concerned with it immediately.  Then the housing market deepened its decline, and then the bottom fell out of the market entirely in the fall.

On top of all of that, by Thanksgiving there was serious talk over whether or not The Big 3 would still be in business come the new year.  Now, that may not be scary to you, but I live in Michigan, the state whose population is almost wholly dependent on the auto industry.  Between direct employees, and all of those employed in supporting fields, any one of the three going under would have disastrous effects on the state and everyone living in it.

Thankfully I work for a company that has nothing to do with the auto industry, so the ills of the state don’t directly impact me.  However, if things got bad enough nationally, even those of us safely distanced from the car companies would suffer. 

So there I was, staring down a mountain of debt, no savings at all, and watching the economy take a nose-dive.  I realized that I didn’t want to be one of those guys moving back in with his parents at age 27+ because I lost my job and didn’t have a dollar to my name.

2.  I Wanted to Become Proactive Instead of Reactive

When you’re throwing every spare dollar at paying down debt, you’re not able to get out ahead of things.  I had some car repairs coming up that I realized I couldn’t pay for without adding more to my debt, and it got me thinking about what would happen if the car totally died, or if my computer shorted out, or if any number of other essential tools in my life broke down and needed to be replaced/have expensive work done on them.  There was no way I could deal with even the slightest financial crisis.

There was also the fact that I want to travel, that I don’t always want to live in a shitty apartment with crappy hand-me-down furniture and drive an old used car.  With no spare money to put into savings towards improving my life or doing the things I really want to, I was basically always playing catch-up with bills and finance charges. 

3.  I Met the Woman of my Dreams

Ok, this is the really cheesy/corny part where I talk about how meeting the right woman made the stars align and provided me with a crystal clear view of the future.  Toss in a few angels singing, maybe a ray from heaven and we’ve completed the cliché. 

In reality it wasn’t one of those earth-shattering moments.  While everything did just seem to magically click almost immediately, the realization was a gradual process, but by Thanksgiving 2008 I was thinking about things long-term.  This was a huge shift in focus for me, especially as I was now having to consider another person in my plans.  Before dating Elisa, every decision I made regarding my life, my situation, my purchases, was focused solely on me.  Job offer 1200 miles away?  Take it, worry about the girlfriend later.  Looking for apartments?  Pick one I like, where I like, and whoever I’m dating can deal with whatever that is (note: I’ve never lived with anyone I’ve dated).

My life was led by my terms, for my own purposes and enjoyment.  Now though, I was thinking of adding another person permanently to the mix, and that right there was the eye-opener.

So there I was, Thanksgiving 2008 watching the economy fall apart around us, being tired of always reacting to life’s costs and not getting ahead anywhere, and asking myself if Elisa was the woman I wanted to spend the rest of my life with.  Looking at where I was, and where I wanted to be, I just couldn’t see how to get there. 

Thankfully, I had set myself up to recover pretty quickly.  The consolidated credit cards, some creative tax work, and a previously unrecognized nest egg set the stage for what would become an incredibly aggressive debt pay-down plan.

But we’ll save all of that for Friday.