Recognizing a Debt Problem

blogmortgageimageThe first step in solving a problem is simply recognizing you have one, right?

Well, at some point – right about when we bought our house – I realized we had a problem. Well, more than one. Our monthly expenses were mounting, we had crazy commutes, we were accumulating credit card debt that we weren’t always able to pay off each month, and we weren’t really planning for the future at all.

Four years ago, we were living in a small town where my husband was working, and I was commuting two hours each day to teach for a school that was really not paying me very well, considering I had a Master’s degree and my National Board Certification (</brag>). On the other hand, I was super happy to be back teaching instead of the less fulfilling job I had for the previous two years since we had moved there.

We looked at our financial situation, including student debt, our Edward Jones account (which we had been contributing to monthly via automatic withdrawal), meager savings (though it did seem substantial to us at the time), and our salaries. We also examined the fact that our rent had been upped on us after our first year, and instead of moving, we accepted my parents’ generous offer of paying the difference in the monthly rent so we could stay in for six more months until the spring time.

After we examined those things, we made a decision.

Now, I’m not sure what decision I would make today…. considering H’s line of work, it isn’t easy to find a new position easily (so, no “Oh, I’ll just find a new job and we’ll move and that will improve everything” although ever since he got his job in that small town, he’s been looking for a new one and applying when just about any relevant job opens up). There are a lot of factors that, from the outside, seem pretty clear. I know what Mr. Money Mustache would do (or at least say), but I also know that I am not the same kind of person as MMM, so I can’t necessarily live my life his way. We probably made the wrong choice, but I much prefer to look ahead and try to determine how we could improve our situation.

The choice? To buy a house an hour closer to my job – and an hour farther away from H’s.

Now I have a 20-minute commute, and my husband has a one-hour commute. That’s a lot of driving: 2 hours and 40 minutes a day between the two of us. Uh, yeah. And don’t get me started on our gas budget for the month.

But really, when you come right down to it, we were commuting that much anyway (except that I was the one doing all the commuting earlier), but we were now taking on a mortgage and giving up all of our savings and money in the Edward Jones account. The actual mortgage turned out to be the same as our current rent (but remember that my parents were previously paying an extra $400 for us each month – this would mean paying it all ourselves, of course). That was a big difference to us, but we figured it was a good investment, and the housing market was still so depressed that we figured that right now we could afford more house than we could ever have afforded at any other time. We thought, “If we pounce now, we’ll get a good deal, a good low interest rate, and we’ll be making a solid investment.” We also thought, “We’ll get raises again soon, and our financial situation will keep improving.” “Better to pay money to a mortgage than to a landlord.”

Those thoughts may have all had some merit (except for the raises – NEVER, EVER, EVER COUNT ON A RAISE, as any teacher could tell you now), but we should have looked harder for a home that was in a lower price range. Location was a big deal, so that did restrict us, but if we had been more patient and been stricter with our budget, we could have certainly saved ourselves some grief the past four years.

Our house’s location is perfect (very close to the highway – easy on and off for our commutes), we have great neighbors in a tiny, non-HOA development, and the house itself is fantastic. If we had made more sacrifices (we have a guest bedroom that is only used for storage and as a guest bedroom, not actual living space, most of the time, for example), we might have been able to find something that would be a lower monthly payment and given us more money to throw at debt each month (or more money to have saved, which would have prevented us from carrying credit card balances from month to month when we had a car emergency or some other issue).

To be honest, we knew we weren’t making the best financial decision, but we decided that our everyday satisfaction was more important than our “relative financial instability” (that’s the nice way of saying it). I realized we were in a less-than-ideal financial situation before we bought the house, but we convinced ourselves that buying a house was a way to help us out of that situation (uh, what?). Then, after we were making the monthly payments for a while, I realized that we were in more intense financial straits (uh, you think?).

What would I do differently? I’m in no position to offer advice, not even to my past self. I’m looking to the future, and if we’re in a position to move, I’ll know better what kind of home to look for. I can’t be sorry I’m in a beautiful house, but I can be sorry when I look at our finances and how many years it will be before we have paid off all of our debt, including student loans.

It was time to take real action on our debt crisis.

When did you realize you had to take action on your debt crisis? Have you made decisions that you sensed were “not the best” financially, but moved forward with anyway? 

Thanks for reading…. more to come!

– M

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