Jane’s desire to move became so strong that she started pricing other apartments and looking around at condos. She definitely couldn’t afford to rent anything better than what she had, and in the last few years, her rent had gone from borderline to outright unaffordable! But she could buy something twice as big as her apartment and get a mortgage payment that was about the same or a little bit less than what she was paying in rent.
In an effort to help her reach this goal, Jane’s sister came over to her apartment one Sunday afternoon and went over her budget. When she saw the mess Jane’s finances were in, being that she was also Jane’s boss at work, she gave Jane a raise to cover her expenses, put her on a new budget that would get her out of debt in two years, and introduced her to a book called “The Total Money Makeover,” written by local finance guru Dave Ramsey.
Jane was ecstatic! It still wasn’t a ton of money, but it sure felt like a lot to Jane! When she looked over the plan, she saw that if she continued to live on what she had been making, with adjustments so that everything was covered, she could pay off her accumulated debt in one year! A number that lingered a little over $13,000.
So, Jane got gazelle intense, like Dave talks about in his book. She buckled down, ate out less, lived within her means, and looked at condos, townhouses, and little homes to keep herself motivated. She could SO do this! After all, this was the same girl that gave caffeine cold turkey back when she had a daily latte and soda habit in college.
To motivate her further, Jane’s parents offered to pay the down payment she would need to get a mortgage (which would be 3%) if she actually managed to get herself out of debt. Jane didn’t believe they actually thought she could do it, but she knew she could.
There were many times when Jane would be in a store and wanted to buy something. Then, she would think about that condo and how loud her apartment was and change her mind. It wasn’t worth it. She could relax later. Now, she had to get out of debt!
She still hadn’t used her “emergency only” credit card; it was “off limits” as far as she was concerned (though the limit was now $9.000). But she had three others that she had run up to the tune of $4,000 – $4,500 – and $5,000 dollars. She paid the smallest card off first and per the plan, applied what she was paying on that card to the next card. She threw every single extra bit of money at the debt, and she even sold a few things to make that snowball even bigger.
And in 13 months, Jane was consumer debt-free and looking to buy a townhouse!
Of course, in hindsight, though she never regretted her decision, Jane sees that she should have waited until she had an emergency fund, had paid off her student loan herself, and had actually closed all of the credit card accounts, though she did close two of them. At the very least, if she did nothing else, she should have cash flowed any purchases that she absolutely didn’t need to have before she moved. But she had house fever and all the shopping that comes along with it.
So Jane bought a townhouse in the summer of 2010 with exactly $1,000 in the bank. Before she could even move in, she was already using one of her credit cards again. “I can pay it off later,” she told herself, now that she was making more money. “These lamps are so unique, and they’re on sale! They’ll be much cheaper if I buy them now.”
She didn’t go completely overboard, but she did buy a lot of things that most definitely could have waited. Still, things were looking up for Jane!