Year One…

Join me as I share three things we did in each year of our debt free journey to help make progress towards our final goal.

Year one for us was 2018, we hit rock bottom and we were forced into a desperate position where we had to act.

The three things I did back then to get started was:

1. Consolidating all of our debt into our mortgage (via refinance)
2. Micromanaging our spending and budget for the first time
3. Joining the Debt Free Community on instagram

Back then I was literally getting about eight phone calls a day from companies chasing payment for overdue accounts. We had four credit cards, two personal loans, a mortgage, and it was a daily battle to stay on top of payments for all of them. This was just normal for us though, and had been normal for me most of my adult life. I’d always earned good money, over $100,000 a year since my mid-20’s, and I was more than happy spending it without too much care for the consequences.

The wake-up call for me was when our 2yo daughter needed medical tests, and we didn’t have the money at hand to pay. All our credit cards were overdrawn, and we had no cash until payday. I was able to make it work and get the tests done, but it was that moment I realised that I needed to make permanent changes so she didn’t grow up the way I did – without money at hand to pay for the basics.

So I started looking at options – I considered a second job, selling our belongings, and other craziness, but I also noticed that the value of our house had shot up, so I thought we could refinance our mortgage, consolidate our debt into the new mortgage and give ourselves some breathing space to get ahead. Great idea! But in order to get approved for a refinance, we needed to have three months of good conduct – no overdrawn accounts, no late fees, and no new credit enquiries on our account.

So I hunkered down, I drew up our budget and told my husband what was going to happen. He might not care about our financial peril (and why would he – he wasn’t the one getting all those phone calls), but I did, and I was determined to get us out of it. I wrote up a weekly budget, and started methodically micro-managing our money. I checked every day to make sure we weren’t overdrawing, and made sure bills were paid a week in advance so there was no chance of late fees.

It was really hard. I had a 2yo, I was working in a high pressure job, and the weight of managing the household, budget, finances, food, everything, was entirely on my shoulders. But I got there, and after two months of micro-managing every aspect of our financial lives I was on home straight, and getting ready to start filling out our application for the refinance. Then my husband went and overdrew the account, triggering fees and resetting the clock completely. I still remember the day he did it, I think he spent it on Red Rooster, and when I confronted him about it, he said “I WAS HUNGRY!”

It put us back to square one… he had reset the clock, and as I sat there sobbing my heart out on the couch he completely ignored me and watched TV. In that moment I realised I really was alone, and there have been many times, even now, when I’ve still felt completely alone on this journey… or at best like I was dragging a man sized weight behind me as I fought for my family’s financial future.

After that I had to get even more intense, reverting to cash allowances and checking our accounts multiple times a day. It was exhausting, and frustrating, but it was worth it. Finally, we were able to put in the finance application. For me, it was an opportunity to consolidate our debts into one much smaller payment and finally build up an emergency find, and for my husband, well, he wanted a new car so apparently I needed to ask for extra money to cover that (the bank said no, and rightly so).

Our refinance went through in June 2018, the same month I started posting on HotMessMoney. The first thing I did was put some of the cash back bonuses aside, and for the first time ever we officially had an emergency fund!

Our repayments were only slightly higher than before, and I quickly paid off the personal loans and credit cards. I chopped up all but one of them (which was a huge mistake because we did end up maxing it out again – another tale for another time), and closed all of the accounts down. I also continued to do our fortnightly budgets, sitting down every second week to track spending, forecast outgoing costs, and make sure everything was paid on time. Late fees were no longer a feature in our life, my phone had stopped ringing, and the next time we had unexpected medical expenses, we were able to cover them. While things weren’t perfect, they were definitely better than before, and I had the Debt Free Community behind me every step of the way!

Year two was probably the biggest in terms of major changes – my husband lost his job and we were forced to really reconsider our approachto budgeting and spending, but more on that later!