Overcoming “But What If I Need That Money?”

by Jackie Beck

This debt payoff story is from Ashley Barnett, who is a 36 year old married mother of two.

She currently works from home doing office management for a landscaping company. She’s been writing about personal finance at Money Talks Coaching for 6 years and loves it!

Let’s hear her story.

What kind of debt did you pay off, and how much was it?

I had mostly car loans and some credit card debt. In total it was $38,139.

What prompted you to get out of debt?

The credit card debt was dumb. I landscaped my backyard with a credit card and had always planned on having it paid off before the zero percent interest rate ran out. I learned that’s harder than it seems.

As far as the car loans… I had always been in the mindset that a car payment was just a part of life. Everyone has a car payment, right? But when I looked ahead at my future and just saw car loan after car loan…always sucking up money and never allowing us to really get started on saving for retirement I just wanted to break that cycle so badly! I knew if things kept going like they were we would never get ahead.

You mentioned you started a business during this?

Yes, we were actually really lucky, an opportunity came up to potentially make a lot of money and we took it. I took out a $24,000 second mortgage on my house to start a business.

Yes, it was a huge risk and I was a financial blogger at the time so I got a lot of heat about it. In fact, that heat is what caused me to shut down my first personal finance site. People were really mean about it and it was very upsetting. They didn’t feel that I should be taking on additional debt and taking so much risk when my real goal was to get out of debt. But this was an opportunity I just couldn’t pass up.

Looking back, I wish I had been stronger when the resistance came and kept going with my original site. But I did what I had to do at the time. It’s really hard and scary to buck the system and go against what your peers think you should do.

18 months later we had paid off all our non-mortgage debt, including the second mortgage, and put $40,000 into a rental property. I think it was the best thing I ever did financially. I believe that starting a business is an AWESOME way to make extra money to pay towards debt. (Although taking on extra debt to do it isn’t for everyone!)

What was your plan if borrowing to invest in a business opportunity hadn’t worked out successfully?

We didn’t really have a plan if it didn’t work out. I guess we would have just had more debt to dig through. But it was a calculated risk, we are generally not risk takers and we knew exactly what we were getting into. There were some start up costs (about $2,000) that we wouldn’t have been able to recover if it had gone bad.

However, most of what we had to borrow was used to actually perform the work we were hired to do. (payroll and such) So the worst thing that could have happened would have been if our client didn’t pay us. I guess we could have then taken them to court. That would have been messy but we felt confident that they would pay…and they did.

How did you feel during the 18 months you were paying back the debt?

I felt good. I felt like I was taking care of old business that had been weighing me down. It was always hard to send in those extra payments. I would think “But what if I need that money?” But once it was mailed I knew I did the right thing. It was very freeing to then have real control over what you do with your money. No one has any right to my money anymore. I can finally use my money to get ahead instead of always paying for the past.

And how did you go about paying off your debt?

We really didn’t use any particular method. It was kind of a compromise between my husband and I between keeping the money on hand and using it to pay off debt. We would save up the money we were going to pay towards debt until we had enough to pay it off in one swoop.

We paid off the credit card first and then the second mortgage. The cars came much later. I wasn’t very interested in paying off the cars. I guess I still figured that car debt is ok…part of life. We had saved up and wanted to buy a rental property. They wouldn’t give us the mortgage with the car debt so I had no choice but to pay it off. I’m so glad I did.

But even as I sent in that last chunk, which was $7,000, I still had that feeling of “what if I need this money!”. But as soon as I mailed it and realized that meant we were debt free (except for the mortgage) it was awesome and I was so glad it was done!

What would you tell people who are struggling to pay off debt?

Just keep going. Don’t give up. It’s so worth it at the end to be free of creditors. Free of people who have their hands in your paycheck before you even earn it.

Follow debt free blogs and surround yourself with others who are on the same path. There is so much support out there, take advantage of it!

Do you have any tips for others who are paying off debt?

I think Dave Ramsey’s snowball is the best way. Smallest balance to largest balance. Don’t get caught up in the interest rates because if you really do the math it makes very little difference in the end.

I just worked with one couple who has quite a bit of debt, with interest rates ranging from 0% to 24%. They wanted to know if they should pay it off by starting with the highest interest rate or smallest balance.

We did the math and the difference in interest payments between the two methods was only $100 over 10 years. $10 a year. If it costs you an extra $10 per year in interest to stay motivated and see progress… I think that’s a small price to pay.

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