I rarely write about other people, but this is a story from another message boarder who is determined to get out of debt. After hitting rock bottom last year, he’s finally started turning it around. I found his story inspiring and since they don’t make much money, around the national average, I thought it would be more interesting than the common…I make $100k and paid off debt in 1 year story. So here is Mr. Inkstain’s story.
Mrs. Inkstain and I have been married for almost six years now and out of college for the last five.
We spent the first five years of our marriage messing up our personal finances to a degree I never thought possible. We thought we were living frugally, but we had very, very low incomes for college grads (around $30k/year combined), and living like you make $35k/year when you really make $30k will leave you every bit as broke. It’s like drowning in six inches of water. (My new favorite quote)
In March/April of 2008, things finally hit the point where we just couldn’t juggle any longer. I was laid off, and though I got unemployment, it was still a cut in pay. We had already been falling further and further behind on bills. We were paying lots of overdraft fees, and we had a rotating “payday advance” from our bank that meant we paid $550 for $500 every two weeks.
In early April, my paycheck wasn’t even enough to cover the amount our checking account was overdrafted. The next day, my mother-in-law went in the hospital and we literally couldn’t scrape up enough cash to be sure that we had the gas to drive three hours down there to see her. We just pointed the car in that direction, prayed it was enough and hoped to bum some money off family while we weredown there, which was quite embarrassing.
At the same time all this is happening, we’d fallen so far behind on all of our bills that we were on the phone almost every day trying to keep the utilities on and the car in our possession. The rent was only a month behind, but everything else was much more than that. We were about $2,500 behind in ordinary household bills. Student loans hadn’t been paid in over a year.
Then my dad gives me the advice that changes everything: “Sometimes, you just have to quit juggling, let it all fall, and pick up the pieces.”
The next paycheck, I cashed it at Wal-Mart and let the bank close the checking account with a negative balance. Tough choice, but better than having utilities shut off.
We treaded water for awhile, and in late August I finally found a job in my field halfway across the country. We moved on a shoestring budget (nothing but what we could fit in our car came with us), and through an amazing stroke of luck a job in the same company opened up for my wife on my second day. Our combined income went from about $30k to about $42k. We absolutely committed ourselves to simple living in our new life, to spending less than we make.
Flashforward from late August to early May, essentially 8.5 months. Every bill we were behind on has been paid back, along with the money owed on the saved checking account. The student loans are caught up. The car that was threatened with repossession is now on pace to be paid off in August, a full year before the loan is due. We have roughly 3 months expenses in our savings account in cash, our e-fund.
We’re snowballing fast and furious, and to my astonishment we went from a net worth of -$45k when we moved last August (most of the debt is student loans) to -$32.5k today, and the pace at which we are saving and paying debts puts us on pace to be in the positive nine months before I turn 30 (positive net worth before 30 had been a major personal goal of mine coming out of college, I had almost forgotten it).
And most importantly, in the newfound lack of stress over finances, the infertility problems we’d been assuming we had for four years – but didn’t want to pay a doctor to confirm – suddenly cleared themselves up, and our first child is due in late August of this year!
All I can say is wow. That’s it exactly. There is a point I think people get to where there seems no other way out than going bankrupt. But perhaps there is. Even if you don’t make much there is still opportunity to move forward. Keep moving forward, with purpose!
9 responses so far ↓
1 JoeP // May 13, 2009 at 10:13 am
Great story, but I have to question the wisdom of trying to conceive when finances are in such a shambles. Even as they come out of this, a child is only going to add to the stress level, and possibly undermine the financial situation they have worked so hard to control. It is still pretty unbelievable to me that he’s talking about a positive net worth by age 30.
2 Inkstain // May 13, 2009 at 10:33 am
Well, to be honest, we weren’t particularly “trying.” We’d tried for a couple years and nothing happened, so we just assumed it couldn’t and weren’t really thinking about it other than perhaps wistfully once in awhile.
3 Roshawn @ Watson Inc // May 13, 2009 at 11:16 am
Very motivating story. One thing that particularly got me was how you cashed the paycheck at Wal-Mart and let the bank close the checking account with a negative balance to avoid having utilities shut off.
4 Meg // May 13, 2009 at 1:40 pm
LAL – This story is ironically EXACTLY like the ones you said in the intro you try to avoid. Basically their story is “we increased our income by 40% and got out of debt.” We were just talking about smaller numbers.
And forgive me for offending, but just how on earth do two college grads only manage to make $30K a year combined? You could each work minimum wage and exceed that income if you work 40 hours a week.
5 Inkstain // May 13, 2009 at 2:37 pm
“Basically their story is “we increased our income by 40% and got out of debt.”
Very true. But increasing our income wouldn’t have helped a bit if we hadn’t learned from our previous mistakes. We would have just gotten into bigger debts chasing a bigger lifestyle.
“And forgive me for offending, but just how on earth do two college grads only manage to make $30K a year combined? You could each work minimum wage and exceed that income if you work 40 hours a week.”
No offense taken.
I worked full-time as a copy editor at a newspaper and made just under 20k/year.
She worked part-time at a deli and part-time freelancing for the newspaper.
Journalism degrees are generally the least lucrative college option. Oops.
6 Michelle // May 13, 2009 at 3:37 pm
Meg, you offended me! Math: $6.55 * 2080 hours per year * 2 persons = $27,248, gross pay. and gross as a way of life, too – been there! Perhaps you jumped forward in time to July, when it increases to $7.25 per hour and the 2 person, 2080 year would gross the couple $30,160?
In either case, I believe the point of the story is that Inkstain had a wake-up call regarding prioritization and attacking the issue head-on. He was underemployed and needed to make several changes to get out of the situation – move to get better job, attack bills one-at-a-time rather than swatting the nearest fly, etc. I’m proud of him and the Mrs. for making the leap.
Good luck, Inkstain & congrats on the new member of the family – fertility is WEIRD. That exact thing happened to DH and I – tried for a while, figured we weren’t capable, got tested and pursued medical intervention options that were unsuccessful and expensive, ended up preggers 5 years later without planning or help!
7 fengshui // May 14, 2009 at 9:49 pm
I’m glad that you decided to have this story on here. I feel that it is a REAL LIFE example of how things go. It is BORING to only read comment after comment about how “I haven’t paid a cent of interest in 20 years” over and over. Real people, real salaries, real life experience is what I like hearing about. Sure, I get great tips from all of the frugal bloggers, but as someone who still has a negative net worth at 32, I’m inspired by stories like this one. Thank you for sharing
8 pamela // May 16, 2009 at 12:57 pm
Great story. Do you have your own blog?
9 LAL // May 20, 2009 at 10:13 pm
Actually Meg, I don’t like people who make $100k and are in debt and wonder how. I think that when you make so much, $100k, $200k it’s easy to cut and still have a “Lifestyle”.
When you are like these guys, I can tell you honestly you don’t have a lifestyle! Making $40k between two people isn’t much. And I know they lived better than my DH and I since we lived in a HCOLA, but still it’s not much money!
I think that the point is you can drown in debt making $30k as easily as $100k though!
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