Neither my husband nor I work traditional W2 jobs. Our irregular income stream can make budgeting a bit tricky.
My husband is a general contractor. I am a realtor.
We also own a portfolio of four Airbnb rentals. We have partners for these rentals. My husband and I do the management on these and charge the business a management fee.
My husband and I also own one Airbnb rental property on our own.
As you can see, the income streams can be incredibly varied throughout the month, depending on what all of these different things are doing.
Up until recently, most of the debt my husband and I carried was on high-interest credit cards.
In 2014 my husband was diagnosed with Hodgkins Lymphoma. It is a type of blood cancer.
I intend to write a longer blog post going over the details of this. Also, addressing the financial implications of something like this when you are self-employed.
I know that is a bit of a curveball to throw at you — the reason I bring this up.
When my husband was sick, we did not have disability insurance. At that time, we also had excellent credit, with little to no debt.
In one day, we were able to obtain $60,000 worth of 0% interest credit cards between the two fo us.
We planned to use the cards intermittently to supplement the loss of income from my husband not working. Once my husband was able to work, we would then pay the cards down before the interest kicked in.
We told ourselves we would use them judiciously. We told ourselves we would only use the cards on essential to supplement the loss of income.
Our spending plan all went according to plan, and we paid down all of the credit cards before the interest kicked in.
Things did not go according to plan.
Here is the thing; we are human. We did primarily use the cards to supplement the loss of income.
But things were hard. Really fucking hard. We were overwhelmed and stressed and sad.
We were not diligently crunching numbers. We were holding onto one another as tightly as possible, for as long as possible.
My husband’s treatments wrapped up in the early part of 2015. I am thrilled to report he is currently healthy, happy, and the world’s best husband and dad!
When the dust settled from all of this, we were left with a mountain of debt.
It took us a while to get in the swing of things and begin addressing the debt.
Two months before my husband’s diagnosis, we had purchased a large and expensive home. At the time, it seemed like the right decision. I rationalized that we would need the large house for the family we planned on having.
Fortunately, the home we purchased came with an additional parcel of land that was a little over a 1/3 of an acre. We had a good relationship with our banker. He allowed us to borrow against the land to pay down some of the credits cards. We were able to borrow around $20,000.
We were shocked at how little of a dent the $20,000 made. The debt was so massive. It seemed to be never-ending. My husband and I joked that our bank account was a black hole, continually sucking up money with no idea where it was going. Try as we might, we were always behind.
We decided we needed to take much more drastic measures. At the time we were renovating a small home that we were planning on renting out.
The home we lived in at the time was 2820 sq ft, not including the finished basement. The house we were renovating was 992 sq ft, and the basement was a nightmare.
We downsized. We sold the large house and moved into the smallish house.
I felt like by making the sacrifice and moving into the smaller home somehow our debt would magically disappear in a matter of months. Much to my dismay, this was of course, not the case.
It was not until the tail end of 2017 that we REALLY got serious about eliminating the debt.
We made a spreadsheet. It was terrifying. Honestly, looking at it makes me anxious.
The best way to eat an elephant is one bite at a time.
We bought Total Money Makeover and started to build our debt snowball slowly.
Paying off the credit cards was at times, very encouraging at others horrendously daunting. We did it the way Dave Ramsay suggested. Paying off the cards with the lowest balance first. This does give you the momentum and encouragement to push through when things are seeming overwhelming.
At the end of 2018, we had the opportunity to do a debt consolidation of all of our credit card debt. This was an incredible opportunity and a pivotal turning point for us in our journey.
For pure Dave Ramsay devotees, I know this is something he strongly advocates against. My husband and I never really had a spending problem. Almost all of our debt was the result of a single event. That is not to say that we did not make poor decisions with the cards, but we felt very confident that once paid off, we would not incur new debt.
That pretty much brings us up to date. So our current debt situation is as follows.
We also currently have two mortgages. I have not included in this post. I will address those in a later post.
That is where we are at currently. We are in the process of trying to put something together that would turn our debt snowball into a debt avalanche.
As always, I would love to hear from you!
Where are you currently with your finances. Do you feel you have a good handle on your finances? Have you heard of or read any Dave Ramsay?