As a single mom of 2 kids (ages 18 and 19, both in college) going through a divorce, I had accumulated debt to the point I felt like giving up. I owed the IRS over $12,000 and was on a payment plan. I had credit card debt over $27,000. I struggled paying for Christmas in 2015, trying to find a credit card that had any room on it to buy presents. I thought bankruptcy was my only way out. I would cry at night. I was having panic attacks at the thought of paying bills. I felt like I was robbing Peter to pay Paul and struggling to keep my head above water. I track my finances on Quicken and then budget them in Excel, but would update it once or twice a month. If I had to diagnose my finance strategy, I would call it the “Avoidant Dysfunctional Coping Strategy”. I couldn’t stand the stress of looking at what my finances had become
The beginning of January 2016, I saw a post on my facebook newsfeed for Dave Ramsey’s Baby Steps. Step 1, was to save $1,000. Tired of living paycheck to paycheck, unsure if I could keep my head above water, the thought of having $1,000 in savings sounded really good. The hospital I work at was short staffed, so I picked up a couple of extra shifts. Combine that with paying the credit cards that were over their credit limits, by the end of January 2016, I had completed baby step one and had my credit card balances within their limits.
Previously I had hired 2 tax accountants and 1 tax attorney to deal with the IRS issue. One of the tax accountants went to the IRS tax advocate for me. I didn’t realize, and I think most people don’t realize, the IRS has someone within the IRS that can advocate for you. Even though my tax issue was already in tax court, this tax advocate filed an appeal on my behalf. In January, I received a call from the IRS. The IRS admitted the service center was in error, I didn’t owe $12,000. I only owed $23! Not only would I get back the money they took from me, but I would get it back with interest. I finally received my $12,000 in September 2016. While that was great news, I still had $27,099.36 in debt.
I looked hard at my budget. I slowed my internet speed, discontinued the athletic club, shut off the home phone (we have cell phones), signed up for my work’s discounted cell plan, shut off all but a couple of cable channels, stopped the pest control service, and downgraded a vacation to Florida to a local vacation. I stopped going out and hardly ever stop at coffee shops anymore. I haven’t had too much protest from my kids. My child that still lives at home signed up for additional cable channels through his gaming system. I was able to speed up the internet with a new, free modem offered by my internet provider. I have been working numerous extra shifts. If there is something that I want that is not in the budget, I work for it first and use the cash to pay for it.
I monitor my finances like a hawk. I update them every few days. I also throw away all shopping catalogs I receive. I don’t want to entice myself to spend. Also, I paid off the highest interest rate cards first. I couldn’t stand seeing the amount of interest I was paying. Also, I called my credit cards to see if they could lower my rates. I kept track of my credit card balances, logging them and my FICA credit score at the end of each month in my spreadsheet.
Good finances don’t happen by accident. I have kept my nose to the grind stone and in 13 months, on February 16, 2017, I paid off my last credit card for a total of $27,099.36! My credit score increased by 150 points as well. What an amazing feeling! I like that I am also an inspiration to my friends and co-workers.
I am a full-time Trauma Surgical RN working 12-hour night shifts at a Level 2 Trauma center. I am currently going through (and have been for over 5 years) a messy divorce, and am the sole provider/care taker of my 2 kids, who are now 19 and 20 years old. They do quite a bit for themselves at this point, but I still pay for quite a bit. The divorce has already cost me $26,000 and will continue to cost me. I am in a much better place to handle it all now. I pay off my credit cards as soon as the charge shows up. All my cards have a zero balance.
Dave has helped me with inspiration. Whenever I was feeling down, avoidant, or anxious throughout this process, I would search for quotes and podcasts from him. Now that I am through step 2, I’m working on my savings. It’s a strange feeling to not have bills, but one I’m getting used to!