When we last left the ‘Getting out of Debt Story’ we had proudly hit a zero net worth (See Part 1). Our next chapter opens at a new apartment where we now have some furniture – no more eating off a card table! – and two careers with incomes heading in the right direction.
We were still chipping away at the credit card debt every month, however. An eye-opener for me during this time came from a book called “Your Money or Your Life” by Joe Dominguez and Vicki Robin. A key concept in the book is: “Money is something we choose to trade our life energy for.” We have a finite number of days on this earth, and our desire for non-essential things, and need for money to buy them, requires us to spend more and more hours of our life at work. I began to look for things we could do without that were using our valuable money. One was a second car which we never used but we were paying to insure and park it. We sold it.
Another glutton for hard-earned money is interest – in this case credit card and car loan. Interest = Money we were paying because we didn’t have enough of our own money to pay for the stuff we thought we needed. My husband took a temporary second job to generate more money to put on our debt. We also became devoted users of Quicken to track all the money going into and our of our life. To this day, Quicken is the tool we use to communicate with each other about our expenses, and our budget is based on the data in Quicken.
Within about 3 years we had paid off the credit card debt and paid off a car loan, but you will see in Part 3 that we had not yet become savers.
There is an excellent, detailed and free summary of “Your Money or Your Life” on the authors’ blog