What I learned from being in 105,000 of debt

Share This Post


What I learned by being in $105,878.64 of debt.

Nothing is easier than piling on debt. It literally takes seconds to charge something to your credit card or minutes to be approved for a consumer loan.

I, like many of you, fell into the cycle of charging impulse purchases on credit, and I found myself in debt up to my eyeballs in a matter of months.

Debt has a way of luring us in with ease, only to whip us with monthly payments for what feels like eternity. It traps us into a cycle that causes us to live paycheck to paycheck.

Our debt experience

I’ve been in debt two times in my lifetime. The first time started when I was a freshman in college. In my first few weeks on campus, I was approved for 3 credit cards and had no idea what I was doing.

I ended up maxing out all the cards in a matter of 6 months and found myself owing more many than I could afford. I proceeded to fix the problem, but made it worse by taking out student loans to cover the debt.

What happened next may shock you.

I didn’t end up paying off the cards, instead, I used the new found money I got from the student loans to buy even more stuff.

I found myself in over $15,000 in debt with no real plan on how I would pay it back.

Those early decisions haunted me until I was about 23 and up for a promotion in my first real job.

Instead of getting the promotion, I was fired because of my bad credit history. More on this story here. 

My husband and I scrambled to get all my debt paid off and had to go through a lot of collection agencies as a result.

Here are tips on how to properly deal with collection debt. 

in more debt to purchase our dream home

Fast forward to 2012, we purchased our dream home. It was a 50-year old house with a beautiful layout, a remodeled kitchen and lots of space for our family. It was also in a great neighborhood.

house debt

Before buying the house, we lived in our first property, which was a small condo we bought right before the housing bubble burst in 2008.

Needless to say, we were currently upside down on our mortgage and were coming up on the adjustable rate mortgage phase of our loan.

So, we sold it as a short sale, cut our losses and bought our forever home when the price was right.

getting into debt to Make our house a “home”

And because a forever home can’t really feel like “home” until we put our “special touch”, we did a lot of unnecessary renovations early on.

Looking back, I realize that we totally bought into the idea of renovation and spending as a form of making our house a home.

That’s essentially how the Home Improvement market thrives. They sell this idea to new home owners, who have no clue that most of the cosmetic renovation are costly and mostly unnecessary.

At the very least, they aren’t urgent enough to go into debt for.

getting into debt fast

We went right on that bandwagon and felt like somehow it wasn’t enough to live in a new house and simply decorate it with our things.

No, we needed to buy new things, change walls, makeover rooms, flooring, fixtures, façade, etc.

And we walked right into over $100,000 of debt.

From the first day we moved in, the hubs hired an electrician to change all of the outlets and put in recessed lighting in the living room. Total Spent: around $600

this was the gateway to our massive debt undertaking.

Suddenly, our furniture didn’t quite “fit” our vision for what our home should look like. So, we went and bought a house full of furniture on credit.

We bought a living room set, a dining room set (fit for 8, when we are just 4 people), a new bedroom set, rugs, end tables, dressers, mirrors, everything.

Total spent: around $6,000

We moved in during February, which is pretty cold for us Californians. So, naturally, the house was cold because the windows leaked air and were too old to be fixed.

So, we went out and bought all new top of the line, double-paned windows.

Total Spent: about $7,000

Then, one day it started raining. We had no leaks at all, but since the home inspector told us that the roof needed to be changed in the next few years during our escrow process, we decided to do it sooner rather than later.

Even though we didn’t have the cash for it, somehow it still seemed like a great idea to do it right then and there. Smart, right?

Total spent: about $18,000

renovation debt

Then, our friends would comment on our peculiar looking wood façade. It literally looked like we had a termite infestation.

I don’t know, I kind of liked the strange way it looked. It was different.

But hubs did not like it at all.

He quickly found a company to update the entire façade, with stones halfway up and smooth stucco on the top half.

Total Spent: around $8,000

Getting tired of adding all the debt?

Yeah, me too. But, let’s keep going.

Then, there was the garage door, the patio and pavers out in the backyard, installing large glossy tiles, indoor paint and crown molding.

Total spent: $13,000

Our spending didn’t stop there

You’d think at this point, we’d be scared straight back to our senses and stop the remodeling spree, right?

We were in a trance, I tell ya. We just kept going, building on more and more debt.

My husband’s car totally died, the engine on his 5 year old car was not fixable.

New-ish car added a whopping $18,000 to our debt.

When it rains, it pours

Right when it started getting hot, our 25-year old AC burned out, but instead of shopping around, we decided paying more would mean quality, so we coughed up another $12,000.

Trust me, I’m exhausted just reliving every dollar I’m sharing with you here. Bear with me, we’re almost at the finish line.

We got a new fence out front and had to remove a bunch of trees from the backyard.

That was another $8,000 spent.


One unexpected (and major) expense

After all this impulsive spending, we had one unexpected expense that hit us hard during the holidays.

There was a massive plumbing leak that was under our house. We either had to completely changing the current plumbing and update our foundation or re-route our plumbing altogether.

We chose the easier and more affordable way, but more affordable didn’t mean we could actually afford it.

To our surprise, our home insurance found a loophole because the leak was technically under the house, deeming it outside their coverage area, so they didn’t cover any of the cost.

So, we got slapped with another $15,000 bill.

Are you angry by reading this?

I completely understand. I’m angry as I write this.

Who the heck did we think we were? Apparently, the Joneses. And they were broke. But, I’d bet they weren’t as broke as we were in that moment.

Let me clarify one thing.

All of this debt was accumulated and paid off within a span of two to three years.

We would charge a few things, up to $20,000-$25,000 and then once we paid it off, we’d start all over again.

It was a horrible cycle. We should have saved the money and cash-flowed the upgrades.

It would have been much less risky and stressful.

We didn’t have any emergency savings so we put ourselves in a really vulnerable place.

I can’t even imagine what would have happened if one of us lost our job. We got lucky.

We finally made a change

After we finally woke up from our trance, we realized the damage.

We quickly realized that we racked up more than $105,000 of debt in such a small period of time. We were out of control and not being responsible.

How we Fixed our finances

The steps we took helped us pay off our debt in 5 years, on two accountant salaries. They weren’t always easy to enforce, but we knew that we had to stay disciplined in order to to pay off our debt and stop living paycheck to paycheck.

Many moments felt like the walls were closing in.

why i’m sharing my debt story

To show you that it’s ridiculously easy to drown in debt. So, if you’re in the same boat, either by making bad choices or by horrible circumstances, know that you are not alone….and there is hope.

hope of beocoming debt free

Start today. Take just one action that improves your finances. Transfer $25 into your savings. Pay more than the minimum on your debt. Negotiate your bills with your lenders.

Whatever you decide to do, know that each action you take will help you ultimately fix your finances.

It may be a longer road, but you’ll get there with consistency, discipline, and building good habits along the way.

We’ve been debt free since January 2018. It’s been amazing how much we gained by staying in control of our finances and making more sound decisions.

We now plan and save for the things we want.

We became more mindful of how we spend our money.

It took us 5 years to become debt-free, but we’ll never go back to where we were.

If you’re in debt and want a way out, grab the free starter guide.

It’s what we used to get out of debt without feeling overwhelmed.

What’s one thing you want to do once you’re debt free?

More To Explore

5 Responses

Leave a Reply

Your email address will not be published. Required fields are marked *