February 28, 2018
How To Get Out of Debt and Start Over: Part Two
This is the second post about people tackling financial problems and getting their life back on track. Laura, a fellow blogger, tells the story of a scary financial meltdown and the steps she and husband, Brett, took to become whole again. During that journey they decided to completely reinvent their lives, sell many of their belongings and move to an island. But, that is not the end of the story....
Brett came home from work one Friday evening in late October 2008 and said his pay was being cut. About a third of his income would disappear, but he had not been laid off, which had happened and would happen to others. We knew we were lucky that hadn’t been his fate. Also, his company announced there would be no Christmas bonus that year and several other company-provided benefits were being cut.
We were worried, but felt that by cutting back some and judiciously using our savings we could weather what was coming. Instead, we became the proverbial frogs in the pot, with the water turned up underneath up and us slowly boiling to death. As the months continued there was just never quite enough, and eventually our non-retirement savings disappeared and our credit card balances began to grow. At the end of 2009 we knew we were in big trouble, and our debt unsustainable.
Our first step was to sit down and go over everything and add up what we owed. It was frankly shocking. We decided we would pay off smaller balances first and then “snowball” the extra onto the next smallest balance. We had two credit cards and they were put away. If we could not afford something we would go without unless it was an emergency.
Then, we sat down with our daughters and told them honestly about the situation we were in, and the changes that were going to be made. They were afraid we were going to become homeless, but that was actually the one thing we could reassure them about. Brett’s military retirement would always cover our mortgage.
Paying off debt was a long, hard slog. According to the “experts,” with our repayment plan our debt should have been gone by the end of 2011. But as we quickly learned, debt repayment was a not a smooth, easy path, but one where we encountered seemingly insurmountable peaks, deep valleys, and plenty of obstacles along the way.
It seemed that everything that could have gone wrong in 2010 went wrong, from our furnace quitting, our car developing engine trouble to our beloved dog dying the day after Christmas. It was a horrible year. But, we kept plugging along in spite of setbacks. We knew what our goal was and what we needed to do to get there and we stuck at it even though we felt beyond discouraged at times.
We all adapted our lifestyle and made changes, like keeping our thermostat at 58 degrees at night and a maximum of 64 degrees during the day in winter, and spent our days bundled up in sweaters and under extra blankets. We turned off lights, cut way back on our water use, and we combined errands whenever possible to save gas.
We sold one of our cars, and Brett used public transportation to get to and from work. We sold other things we could live without. High school students received free bus passes, and our two older daughters took the city bus to and from school each day.
I had “retired” from teaching in 2006, but found work again as a substitute which brought in a little extra each month. We cut back our food budget and I did all our food shopping with cash and stopped buying “extras” or “stocking up.” The girls became experts at shopping at thrift stores on a limited budget, and to this day still prefer shopping thrift versus buying new.
Absolutely every expense was put under the microscope, and we focused on needs versus wants even though it was difficult at times. We learned to live well below our means on a lower income while still enjoying a satisfactory quality of life and paying off debt. We also discovered that in many ways we had actually been living quite frugally all along, and all we had to change was doing those frugal things a little more efficiently. Little by little, but faster and faster, our debt began to disappear.
Brett had thought he would have to work well into his 70s, but we could all see he was tired. In 2011 (he was 61) we discovered that Social Security provided additional family income for dependents under 18. We were surprised to discover that when we put together his navy retirement, a small pension he would receive from work, and the extra Social Security income for a few years along with being debt free we could afford for him to retire.
We set a target date of June 2013, and applied ourselves even more diligently to getting rid of the last of the debt. There were of course setbacks - in the summer of 2011 the engine blew up in our car, and as a one-car family we had to buy another. We didn’t have the funds to pay cash and needed something reliable, so we ended up with a used minivan and another car payment. But, by this time we were able to fit the payment into our budget and it barely slowed us down.
In 2011 we also began talking about where we wanted to retire. We had lived in Portland by then for over 20 years, but both Brett and I were ready for a change, and had grown tired of the damp, dreary, cold winters and longed for someplace warmer and sunnier. We came up with a list of nine things we were looking for in a retirement location, made a spreadsheet, and researched different locations. Many locations were in Southern California, where I had grown up, but we also added Arizona, New Mexico, and Florida. Hawai’i was added to the list as a joke.
Some of those locations came off the list fairly quickly, but to our surprise Hawai’i met eight of the nine criteria: sunny weather, ocean nearby, mountains nearby, military facilities nearby, a substantial Asian population, low taxes for retirees, OK schools, and proximity to Japan, where our son and his family lived.
The only mark against it was the high cost of living, but we begin to wonder if that was something we could figure out and deal with because others certainly did. We knew how to live frugally and simply at that point and we would have my student loan payment (from graduate school) as our only debt. Brett and I were also ready for a major change - we longed for a simpler, slower life in a warmer location, and felt Hawai’i might be just the place to find it.
After doing LOTS of research, and deciding the island of Kaua’i would be the best fit for us, we committed to making the move in 2014. We knew from years of experience with military moves that staying positive was key, and that it was possible for our teenagers to adjust to a new location. We sold our house in early 2014, sold or got rid of most of our things, shipping only 4500 pounds over to Kaua’i. The adjustment to island living was surprisingly easy, but again it helped that our time in the military had prepared us well for the ups and downs of settling in to a new location.
Without hesitation, the move here has been a positive one for all of us, and we’ve yet to grow tired of life here or suffer from “rock fever.” Brett enjoys hiking, and we both enjoy exploring the island - after four years here there’s plenty still left to discover. We brought the just right amount of things with us to live comfortably and have bought very little. We appreciate that life here is far less materialistic than it was back on the mainland, as well as the focus on family and community.
Now, we are now looking forward to our big travel adventure next year: a nine-month around the world journey, including a three-month stay living nearby our son and family in Tokyo. Once again we’re saving and downsizing and looking forward to another big change in our lives. We’re grateful and fortunate that we’re able to make what’s been a big dream for us come true.
The joy of being retired and debt free, and not currently tied down (for now) with home ownership is that we can take our time to decide what we want to do next and where. With all honesty though, leaving Kaua’i, even if it ends up being for only a few months, will be extremely difficult. I feel great sadness when I think about it. I’ve never felt so blessed to live someplace in my life, especially a place as beautiful as here.
From being in serious financial trouble, to living on an island paradise, to planning a nine-month around the world journey is an amazing story. She and her husband's realistic acceptance of what had become a nightmare shows the power of each of us to stop a financial slide and turn our life around.
Thanks to Laura and Brett for sharing. Laura's blog, The Occasional Nomads, is one I read regularly. Being a lover of all things Hawaii, Laura provides my island fix.
How about you? Did Barbara and Laura's story inspire you to shake things up, face your financial situation head on and plan for the life you really want?
Or, if you are doing well, what tips can you share to help us all?