The Holy Sh!t Moment
We finished the basement apartment three months after moving in and got tenants right away. The unit was bringing in $1300 each month, everything included. It sure felt good to see that first check. We could finally put a dent in our debt.
A few months later, we got pregnant with our first child. Although we were a little scared of the money situation, we knew we were more than able to make the minimum payments and continue to live our life as usual. We were just happy to have this extra income during our parental leave.
When we both went back to work full time, the cost of daycare each month was the exact same amount as the rent. We would just transfer the money from one account to the other and we were good to go.
But then it happened.
We got pregnant again.
Only 9 months after our son was born, we discovered that we would welcome another little bundle of joy into the world. We were ecstatic - and terrified. How could we possibly afford to pay over $2300 per month in childcare without going bankrupt? We frantically started to add up all of our debts, for the first time in our life.
It was the end of December 2016. We still had $65K to pay off. Carrying this weight was not sustainable and it was not what we were hoping to leave as a legacy for our children. We needed to "adult" really quickly, write a will, get on a financial plan - and get really serious about it.
After doing some research online, we came across Dave Ramsey and his baby steps. We watched a couple of videos on Youtube and for the first time in years, we felt hopeful and confident that we could tackle this debt. Together. If we followed the plan, it would take exactly 3 years. Three. Long. Years.
We printed a success map to track our progress. It was a big flower made out of one hundred petals. Each petal was worth $100 and every time we made a payment towards the debt, we coloured a petal.
We listed our debts from the smallest to the largest and started tackling the first one like our life depended on it. For us, the debt snowball (paying the smallest amount first) made way more sense then the debt avalanche (paying the highest interest first). It was more motivational because we needed to see results quickly.
We saved that first $1000 (baby step 1) to make sure that we would not go back into credit card debt. Then, we started tracking our expenses down and went on a "cash only" budget. We were doing everything manually at first, which was time consuming and a little discouraging. Eventually, we got on the app Everydollar, which made it easier to track our spending without too much effort.
We paid off the first $10 000 in six months and two weeks. The second $10 000 took us five months and six days. Then we paid another $10 000 in exactly five months. We had never been so excited to do some colouring! Our debt was now significantly lower ($35k) and we felt like we could breathe a little better. We had no idea how long the journey would be, but we were winning... or so we thought. The hardest part about this whole process is to stay motivated and not relapse.