Here's a story of how quickly things can turn around. I want to tell this partially to give hope to people who are in bad circumstances, and partially to say "thank you" to sites such as this one where I learned a lot about personal finances.
Mrs. Inkstain and I have been married for almost six years now, and out of college for the last five.
We spent the first five years of our marriage messing up our personal finances to degrees I never thought possible. We thought we were living frugally. But we had very, very low incomes for college grads (around 30k/year combined), and living like you make 35k/year when you really make 30k will leave you every bit as broke. It's like drowning in six inches of water.
Things finally hit the point where we just couldn't juggle any longer in March/April of 2008. I was laid off, and though I got unemployment it was still a cut in pay. We had already been falling further and further behind on bills and paying lots of overdraft fees, and we had a rotating "payday advance" from our bank that essentially we paid $550 for $500 every two weeks.
In early April, my paycheck wasn't even enough to cover the amount our account was overdrafted, and the next day my mother-in-law went in the hospital and we literally couldn't scrape up enough cash to be sure that we had the gas to drive three hours down there to see her. We just pointed the car in that direction and prayed it was enough and hoped to bum some money off family while down there, which was quite embarrassing.
At the same time all this is happening, we'd fallen so far behind on all of our bills that we were on the phone almost every day trying to keep the utilities on and the car in our possession. The rent was only a month behind, but everything else was much more than that, we were about $2,500 behind in ordinary household bills. Student loans hadn't been paid in over a year.
My dad gives me the advice that changes everything: "Sometimes, you just have to quit juggling, let it all fall, and pick up the pieces." The next paycheck, I cashed it at Wal-Mart and let the bank close the checking account with a negative balance. Tough choice, but better than having utilities shut off.
We treaded water for awhile, and in late August, I finally found a job in my field (journalism) halfway across the country. We moved on a shoestring budget (nothing but what we could fit in our car came with us), and through an amazing stroke of luck a job in the same company opened up for my wife on my second day. Our combined income went from about $30k to about $42k. We absolutely committed ourselves to simple living in our new life, to spending less than we make.
Flashforward from late August to early May, essentially 8.5 months. Every bill we were behind on has been paid back, along with the money owed on the saved checking account. The student loans are caught up. The car that was threatened with repossession is now on pace to be paid off in August, a full year before the loan is due. We have roughly 3 months expenses in our savings account in cash, our e-fund. We're snowballing fast and furious, and to my astonishment we went from a net worth of -$45k when we moved last August (most of the debt is student loans) to -$33.5k today, and the pace at which we are saving and paying debts puts us on pace to be in the positive nine months before I turn 30 (positive net worth before 30 had been a major personal goal of mine coming out of college, I had almost forgotten it).
And most importantly, in the newfound lack of stress over finances, the infertility problems we'd been assuming we had for four years but didn't want to pay a doctor to confirm suddenly cleared themselves up and our first child is due in late August of this year!
Sorry if that got a little wordy, just thought I'd share a success story and let everyone in debt and dire circumstances know that committing to the simple plan of setting a budget and spending less than you make can turn around even the worst financial circumstances.
Spending less than you make - it works
