The Pandemic of 2020 created one of the worst crises our country has experienced since the Great Depression of 1929. The world has been forced to stay indoors under quarantine for the unforeseeable future and our current lifestyles have changed significantly. Stores were forced to close and many are declaring bankruptcy during these times, like JCrew and Bloomindales. Unemployment rates have also reached record-breaking highs at about 30 million Americans without jobs.
COVID-19 has plagued our society in ways we had only read about in books. I had been reading The Stand by Stephen King prior to this and had to put it down because the virus described in the book was so similar to our reality it gave me chills. It’s a scary time now, and even more so for those actually afflicted with the virus. My Father in-law was one of the unlucky ones to have gotten the coronavirus and had been hospitalized for a week to help recover. His oxygen levels were devastatingly low and had pneumonia on top of that. We were very lucky he has since recovered and is at home with his family. The world seems to be falling apart and only seems to be getting worse.
The stock market had crashed and can no longer be predicted at this time. If you have read the title of this blog post you may be confused. The world seems to be ending, so how did I become debt free? Let me explain.
My wife and I have been married for a year as of May 11th. We held a weekend-long wedding in Pennsylvania and spent a fortune. It was the happiest weekend of my life and I regret nothing. If anything, I wish we could have added another week or two on top of that! But that expense as well as several years worth of living a life full of memories and experiences in New York left us in a very large mountain of debt.
Not even including our school loans, we were drowning in our monthly payments. We were able to make every monthly payment, but never more than the minimum amount, which meant little to no progress was made for a few years. Our American Express alone had a balance that exceeded our monthly income. This meant we were forced to constantly cycle other credit around to make that payment each month, so we were essentially at a standstill.
It was a crushing amount and has really held us back in life. Stress ruled our lives and it was a constant reminder of something we couldn’t get out of. But I will say this each time; I regret nothing. This amount was the cause of vacations together, a perfect weekend Wedding with our friends and family, and just years of being together. We were happy and lived our life to the fullest; and then some. But if we wanted to take this life to the next level, such as purchasing a home and starting a family, we needed to figure out a way out of this debt.
My wife is a blogger and does well for herself. I am an illustrator for a graphic design business we both own and run together. Working on our own means our income fluctuates each month, which makes planning and budgeting more difficult than others. We’ve been trying to find the best path to rescue ourselves from drowning in this debt, but were a bit stuck. That’s when the epidemic struck.
The world seemed to be standing still now. Companies were now coming out with inventive ways to help their customers deal with this crisis, keeping in mind millions were now unemployed. This is where the credit card companies came in.
My wife was isolated at her parent’s house caring for her Father when the bill for our Amex was due. She didn’t have the time or the mental capacity to even think about work when the health of her Father was in question. So I did something we never wanted to do. Call American Express and tell them I couldn’t make the payment this month. My poor credit score would plummet even further.
To my surprise, once I explained my situation, they were unexpectedly beyond helpful. I was given a grace period until the next pay cycle and would not get any late fee. My credit score was safe and a huge weight was lifted off our shoulders.
With the pressure to pay off this huge sum taken away, we were able to see our debt in a whole new light. This was a wake up call to take this opportunity and turn it into something that would help us climb out of debt.
At this time, my wife finally came home and we could start hustling in our businesses once again. We wanted to use this time to save up as much money as we could and really make a dent. By the time our due date came around for American Express, we were able to pay it in full, taking off that large chunk in our total debt. This was our large sum that kept getting cycled around until the next month and so forth. We could finally see a path to become debt free and aim towards a house.
We decided to sit down and do the one thing we were dreading. Taking a look at all of our debt. It was a long list, but something absolutely necessary if we wanted out of debt. A disgustingly large amount was still remaining. It was definitely a scary amount, but after tackling that large Amex bill, this was a walk in the park.
I had one maxed out credit card. It was my largest balance and had one of the highest APR among all of our cards. The plan was so take out this large sum in one go the following month then proceed with the debt Avalanche method, addressing all of our larger cards then working our way down to the many smaller cards.
My wife has more credit cards, but all with smaller balances. I have four credit cards, all with large balances. By removing my largest card balance my credit score was estimated to jump up by 70 points. Getting a good interest rate in purchasing a house didn’t seem like a dream anymore. But that was going to wait until we had little to no debt.
We are still a few months out from being truly debt-free, but we are on the path and there is no stopping us. Having an extra grace period to help us save up a large amount of money was the turning point in our lives. The next step after paying off our credit cards is to arrange a better deal handling our student loan debt and begin with stocking up our emergency fund. We really want to start saving for a house by the end of the year, but if there was something we learned through all of this is to not rush and do everything in the right order. Budgeting is now our priority.
I have a lot of plans for our future, from purchasing a new home to securing financial independence. We have no plans to ever retire, but we want to be in a place where we never have that gut wrenching feeling of debt hanging over us. We have a budget in mind that will let us reach our goals and also continue to live our life full of happiness and memories. But this time we would do it smarter. This is the start of our journey.
