I Hate D*BT

exclamation copy_thumbI don’t believe it’s a coincidence that “debt” is a four letter word. I’ve seen it fly out of the mouths of family members with just as much despair and pain as you would any common obscenity that comes to mind when you stub your toe or shatter a glass in the kitchen. There are many a financial guru that could break down the benefits of “good” debt and “bad” debt. I’m far from guru status, but I do know one thing: Debt can turn even the most docile budgeter into a swear-slinging mess. (Sorry Mom!)

Our “debt story” was not written with extravagant purchases or an over-the-top lifestyle, but rather a series of events that we simply didn’t prepare for or anticipate.

Over the course of ten years, my husband and I struggled with infertility. Through medical intervention we were blessed with two healthy daughters. In our tenth year we tried for a third little miracle, but medical assistance no longer worked. We couldn’t deny the feeling that our family wasn’t complete. We felt strongly that we should pursue adoption.

Our adoption experience was beautiful and terrifying and exactly what we were supposed to do to find our precious little girl. Since this is a financial blog and not a Mommy magazine, I’ll resist waxing poetic about the miracle of adoption (but I could….for days!!) and instead I will share one simple fact with you: Private adoption is really expensive.

We would do it all again and pay a million times more for our little one, but I know that if we had the structure of YNAB to cope with such a large payment, it wouldn’t have been such a financial strain. Instead, we were left with…..debt.

Two months before the adoption our eight year old Nissan Xterra decided it didn’t want to give us cool air conditioning anymore. It sputtered and groaned every time I put the key into the ignition. With our new addition on the way we needed a bit more room and a car that wouldn’t melt our baby. Although our brother-in-law helped us get an incredible deal, we hadn’t had a car payment for years. We incurred…. more debt.

Six months after our youngest was born, I came home from a day of errands to find that our fridge had leaked and soaked through our wood floors. What I thought was just a simple clean-up job in our kitchen turned into flood repair and a three month remodel with walls hacked to pieces and replacement wood for the entire first floor. And we were left with….a hefty insurance deductible.

Eight months after the birth of our baby, my husband went to his PCP for an exam. He’d been having pain in his right leg and had previously been to the ER where they diagnosed him with a “pinched nerve”. Two hours after his scheduled appointment I received a call from him saying that it wasn’t a nerve at all but a giant blood clot that had formed from his waist to his ankle. He was being rushed into emergency surgery. By the time I made it to the vascular center, his surgery was well under way. A surgeon pulled me aside and showed me the ultrasound video of my husband’s clot. He pointed to a large piece that was flapping back and forth on the screen.

“This is not good. This clot was days, maybe hours from breaking free…and taking his life.”

Over the course of six weeks my husband had three lifesaving surgeries. I could fall to my knees and sob with gratitude for the incredible team of doctors that brought my husband home to me and our three girls (and I have….for days!) but since this is a financial blog and not a Lifetime Movie, I’ll resist. I will say this: Teams of doctors send medical bills that are really expensive.

Over the course of a year we incurred more debt than we had in the previous ten. I wince a little when I think of how different things might’ve been if YNAB had been our companion a year and a half ago when all of this took place. The good thing is, we have YNAB now and a very workable plan in place to help us avoid any unladylike cursing as we take steps to heal from a very chaotic (and bank account draining) year.

Soon we’ll even be able to start saving for those “rainy days”… or floods….or emergency surgeries….

Tell me, friends, has YNAB helped you stop the bleeding and heal the wounds of debt? (What’s it like on the other side?? I imagine rainbows and running through fields of flowers!) Are you still in the trenches like us? What is your debt story? 

23 Responses to “I Hate D*BT”

  1. jennlunalucy

    Thanks so much for sharing your story and congrats for being on the other side of most of it! Your post makes me wonder though, how do you really prepare for that much unexpected debt? Even if you have a rainy day fund for medical expenses or a nice cushion in savings, it seems like maybe no one plans for that many things all in one year – BUT maybe we should? Would love to hear how others approach this!

    • christy

      I’d like to think that this past year was more the exception than the rule (oh PLEASE let it be the exception!) but my eyes have definitely been open to the old saying “hope for the best and prepare for the worst.” :) We’ve definitely taken that approach now with our YNAB budget. I’d also love to hear how others have prepared for similar circumstances!

  2. Amy Lundberg Leone

    You should plan to replace your car every ten years. You can open up a “Car” account in Betterment and make monthly deposits so you are ready. It can also be used to pay for those unexpected car service bills. Check out http://www.betterment.com.

  3. Eric Rauch

    When my wife and I married in 2009, we only had some student loan debt. I graduated within 5 months and my first job quadrupled my pay and my wife was able to work to where we were making 6 figures within our first year of marriage. I wish we had hated debt back then, we could have paid off everything before we were both 28. Instead, I chose some pretty stupid things (normally convincing my wife that we could afford it, she was always skeptical at first) to spend a lot of it on. Now, we live in an expensive area, and not by choice thanks to my job, but it also required 100 miles of driving a day for me for the first 3 years. Still, we could have paid down our debt and I wish we had.

    Instead, we bought a couple tv’s, a new car for my wife, a couple of computers, some furniture, and in general were not planning anything. I was investing in my work 401k up to the match, but we weren’t being good stewards of the gifts we had been given. In 2012 we started adding up everything and it truly shocked us. We had almost $90k in debt (nothing down on a car in 2010 and still the student loans was the bulk of it, but ~$28k in various credit card debt), it was truly shocking. Then we found out my wife was pregnant with triplets.

    I’d like to say that this completely changed me and forced me to start planning everything, but it took another year before I found YNAB. We took a loan from my 401k that we’ll be paying back through deductions from my paycheck for the next 3 years, and even after accumulating a sizable medical debt, we have now made it to $54k in debt in 2 years not including the 401k loan (if its included we still have about $65k). We have canceled all but 2 credit cards after paying them off (the other 2 have balances that we’re still paying). Still have the car and student loans, and still have $2500 in medical debt, but we’re seeing light at the end of the tunnel. It’ll be another year or 2 before we are debt free, but we have a plan and have been better at planning out purchases. Our spending habits have changed greatly.

    We dont own a home, we’re renting and recently moved to a new place to get a lower rent (saving about a third of the money each month that used to go to rent). The car was actually a good car for triplets, so while I might wish we had not spent as much, I’m glad we had it. In 2 years, we’ve lost ~$20k in take home money per year (wife had to quit her job), gained 3 wonderful kids, downsized our extraneous expenditures, and eliminated about a third of our debt. I’d make that trade every day enthusiastically. We’re on a more stable trajectory now, and can start planning for bigger things.

    • christy

      Amazing story Eric!! Thank you so much for sharing! (And congrats on the triplets!! What an incredible blessing!) I’m so inspired by the progress you’ve made in such a short amount of time. I hope you’ll continue to share your progress with YNAB on our blogs. It’s been so good for my husband and me to see the tried and true benefits of the YNAB method!

      • Eric Rauch

        Thank you for your story as well. For me it came down to not wanting to send half of my take home pay each month out the door just pay for things I couldnt afford yesterday. I hope we can keep to our plan, and stay motivated. Blogs like this help me keep in the right frame of mind and say no to things I can’t afford.

    • Lizzy

      I’m a triplet and just graduated from college. From my parent’s lessons, I’ll say it’s never too early to put a little money away for college! We split college and are all beginning to pay loans back but anything multiplied by 3 tends to be a lot bigger, as I’m sure you have found. Congratulations on the triplets! I love being one.

  4. Jesse

    Thanks for sharing this today Christy! @Jennlunalucy, we don’t know the magnitude of debt that Christy’s dealing with, and definitely not everything can be prevented. I’ll bet Christy and Co. will think differently about a car fund (every car will die!), home repairs (even with insurance!), and adoption (if that’s in their future again).

    The medical emergency, that’s a great example of catastrophic insurance really making all the difference. In mine and Julie’s case, we make sure we have enough in our emergency fund to exhaust our insurance deductibles for the year. Heaven forbid we have something ongoing, spanning several years. However, if that would be in the cards, we would deal with that as it came.

    Christy dealt with a perfect storm last year (and survived). My guess is that her next “storm” will be a bit calmer, because they’ll be working the method, where they’ve looked back and learned, and now look ahead and plan, viewed through a slightly different lens.

    Just my take. Christy, thanks again for sharing. I know many blog readers can identify with this!

    • christy

      Thank you Mr.YNAB! Start thinking now about who you’d like to play you in our Lifetime movie. I’m thinking maybe TV’s James Van Der Beek…. ;)

  5. Stephanie @ Six Figures Unders

    Wow Christy! I can’t imagine a year like that, with one thing after another! I’m so glad that your husband was able to come home to you and your girls! I would love to see the Lifetime movie when it comes out! :)

    We got ourselves in six figure of debt the simple way: by sending my husband to law school for a JD/MBA. We are working hard to get out of it asap. We are doing some crazy things (like living in my in-laws’ basement with our three little ones, for one) and being super frugal. So we’re in the trenches for sure!

    YNAB has helped us pay more on our debt than we otherwise would because we are able to budget every last penny and not have to worry about how much we need to hold back for the credit card bill that’s coming up next week. It has relieved so much stress to live on last month’s income and to budget every penny!

  6. christy

    Hi Stephanie! Happy to meet a fellow “trenchee”. ;) I’ve heard from friends how stressful those law school/med school bills can be. It sounds like you’re ahead of the game by making frugal choices and taking advantage of a less expensive living arrangement. I’m impressed and inspired to see couples like you sacrifice now so that their families will have a solid financial future.

    That definitely deserves at least a walk-on part in my Lifetime Movie! :) Thank you so much for sharing your story!!

  7. Kristina

    Jesse, I just had a bit of an epiphany when I read the second-to-last paragraph in your comment, and I’m wondering if the correlation is real, or only in my head. Is the YNAB method based on Agile/Scrum principles? Rule 3 is probably easiest to reconcile with Scrum, but maybe I can explain what I mean in general.

    In Scrum, you have a prioritized product backlog that the team is working from. On an ongoing basis, the product owner and the team work together to refine and order this backlog, based on what they’ve recently completed, and what information is coming in from outside sources (stakeholders, etc). At the start of a sprint, during sprint planning, the team commits to doing a certain amount of work, picked off the top of the backlog. They only commit to the amount that they believe they can complete within that sprint, based on experience from previous sprints, and the estimated amount of time it will take to complete each backlog item. At the end of the sprint, the work that was done is reviewed, priorities are potentially readjusted, and work for the next sprint is planned.

    How I see this in the context of YNAB: You give every dollar a job, starting with the highest priority estimated (or known) expenses. You only “commit” the amount of money you currently have available, for a set period of time: the amount you plan to spend before you next get paid. When that period is over, you evaluate how you did, readjust priorities based on anything that came up, and plan again. Not sure if I can shoehorn rule 4 in there, but I found it an interesting comparison.

    • Gina

      Kristina – That is an interesting analogy and I totally get it, having worked with agile teams in the past. Rule 4 is interesting… Not sure I can fit that one in.. will have to think about that…

  8. Bill

    Thanks for your blog post. Life and health are truly aspects to cherish.

    (And thanks Jesse and others also for reminding me to start a car fund.)

    She short version of my debt story is this:
    I made questionable past lifestyle choices mixed with low income. This essentially means I had a credit card which had multiplied at least temporarily to other credit cards.

    Most of those were short lived except for one viciously stubborn account which leeched my life away from 1990 to its joyous end this year.

    The recent pre-YNAB situation I found myself in, involved the beginning of new student loan payments, coupled with not one, but two dead cars (mine and my wife’s) to deal with all in the same year.

    The good news is we have been using YNAB now for almost two months, and we already have made significant progress. Best of all is the hope. We are earning enough to make it work, and the budgeting is empowering us to direct our income do what’s important.

    Thanks, and thanks again.

    • Christy

      Ooh- yes Bill! The hope, the “light at the end of the tunnel”, is one of the best qualities of the YNAB method! It IS empowering to be in control of your finances and see your efforts actually pay off! Thank you for that awesome reminder!

    • Bill

      Haha. Sorry for my typos – I’m blaming that on thumb typing.

      Since I’m back on here again, I’ll mention that we also recently started a Safety Net account at Betterment. We started with a very small initial deposit, and we’ll fund it automatically each month.

      I actually first learned of Betterment via the YNAB Podcast interview with Jon Stein. Then, after quite a bit of mulling it over and reading and research, I was quite satisfied that a conservative, diversified, bond-heavy mix that is still very liquid, would be a more beneficial choice than a bank savings account with barely any interest.

      The idea of building a fund that way which actually has some earning potential also makes me a bit more motivated to set aside regularly for it. I know there are many who would recommend paying down debt before building a safety net, but even the classic book, “The Richest Man In Babylon” recommends saving while repaying debts. One month’s rent set aside is a starting goal for us.

      I am interested in reading about anyone else’s experience with Betterment.


  9. Carolin

    Thank you for sharing your story, Christy, and I am amazed by how you and your family have weathered such a terrible storm with grace. I wish you all the best in the world!

    • Christy

      That’s so sweet of you Carolin!! I appreciate your kind words more than you know. :)

      • Christy

        (And though I LOVE the idea of me handling the past year “with grace”, I cannot tell a lie. I had many a tearful breakdown as well as several dates with a pint of rocky road icecream as I ate my feelings into oblivion…;) )

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