Meet Jessica W: $15,278 in debt

As a fellow DebtKid reader, I’m honored to be joining the DebtKid writing team for a while, and I look forward to joining you all in our journey towards debt freedom. My husband and I are a young family in our late 20s and we have two daughters, ages 10 and 3. We live in the suburbs of Seattle.

Started with $75,000 in debt

I guess I’d better start by coming clean about where I’m at on my debt journey. In the past three years my husband and I have been bailing out from under about $75,000 in debt, not counting our mortgage. Two cars, and some adoption loans (we’ve adopted our two beautiful daughters), college loans, etc. The college loans and adoption loans and car loans are paid off now and all that is remaining is some adoption travel on a credit card (one month in Ethiopia) and some medical bills (all current).

Progress on paying these off was slowed when I was laid off from my regular job in December and decided to pursue writing full time (a dream I thought would have to wait for retirement), but we’re getting back on track now and we feel like we’re in the “home-stretch.”

Current Debt

Here’s where we’re at:

  • Mortgage remaining $163,000 (just refinanced into a fifteen year loan)
  • Credit card 1 $13,700
  • Credit card 2 $591
  • Medical debts $987

Total non-mortgage debt: $15,278

Total debt with mortgage: $178,278

How we’re taming this dragon is by living on a serious budget. (I’ll post about the budget later), and following the Dave Ramsey “debt snowball” program. As adoptive parents, we’ve had the benefit of claiming the adoption tax credit, (usually over two years) and applying that towards our remaining adoption debt each time. It doesn’t quite offset the entire cost, but has gotten us pretty close. Ultimately the $15,000 doesn’t seem so scary since we’ll get back between $7-10k in February.

Our goal is to be out of non-mortgage debt before the end of this year so we can start funding college savings for our oldest daughter. Realistically, it looks like it will take us until about April to be out of debt, as we have some additional medical expenses coming up.

I’ll post more soon, and look forward to getting to know you all. If you’d like to know more about my story in the meantime, you can visit my “Laid off and loving it” story at www.pennywisefamily.blogspot.com. If you’d like to know more about our adoption journeys, those are also online at www.jessc098.blogspot.com. We have a daughter from the USA and one from Ethiopia.

Ciao for now,

Jessica

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  • rd

    Going into debt in order to adopt children and give them a loving home, at least one from a developing country with serious problems. If there is anything that qualifies as going into debt for a good cause you found it. Rooting for you, and I intend to hold your feet to the fire for the April deadline.

    ~RD

  • http://www.pennywisefamily.blogspot.com jessica w

    Thanks RD, you rock!

    Going into debt to adopt kids seemed like a no-brainer until I lost my job. Now starting a business with these debts is feeling kind of oppressive, but I know this can be conquered.

    I actually have two more kids “picked out” that I met while I was there that I hope to adopt, but had to put those plans on hold as I’m out of house (no more room here) and reduced income.

    My most recent daughter is special needs–she was born with HIV, another reason that financial security is a MUST in our family now. We’ve got to keep her in health insurance, come hell or high water. Thankfully, my husband’s job provides excellent benefits.

    That’s why I won’t go into debt to adopt again, but why I’m “gazelle intense” about getting out.

  • rd

    On the health insurance note, I am both professionally and personally very familiar with the insurance industry. If you end up going back to a job with benefits it would be worth while to get your daughter double covered. We had that experience with my son being born and we were very lucky.

  • maeghen

    Jessica-
    Your post was great! I was adopted when I was 3 weeks old by my most amazing family. I like meeting people that have adopted children because I like to tell them thank you. I look forward to hearing more about your story.

    Best regards,
    Maeghen

  • http://www.pennywisefamily.blogspot.com jessica w

    Maeghen, Thanks so much for your kind post. I don’t feel that adoptive parents need thanks. Truly, it is our priviledge to parent, and to be chosen to parent our kids. I’m thrilled to have both my girls, and as soon as I’ve achieved financial freedom, I hope that more kids can join our family.

    Looking forward to following your story along too Maeghen–this will be a fun journey together!

  • http://www.debt-elimination-services.net George

    Jessice,
    Congrats on your journey towards debt freedom , it is not a fun journey but well worth it once you get there. I am curious on how you are tackling it, are you just mearily applying as much as you can monthly.? I watched a few of dave ramseys show but do not subscribe to his program so not 100% sure of his process.. What I do understand is that you pay what you can on the lowest debt then once complete roll that amout to the next until complete. Again congrats on your success so far and hope you much more going forward.

  • http://www.pennywisefamily.blogspot.com jessica w

    George, Sorry for my delay in reply. I will post soon about how exactly we go about getting out of debt.

    The trick really is to have a budget and spend every dollar before it keeps in. We kee $1,000 on hand. We sliced up our credit cards and we don’t use them.We listed our debts smallest to largest and pay them off in that order?

    Why that order when we could pay highest interest first? Here’s why:
    1. None of our interest rates exceed 9%.
    2. Paying smallest to largest means that we don’t have to worry about keeping up minimums on a smaller lower-interest debt. It seemed silly to pay off a $3,000 student loan at 2% back in February, but we did, which meant we now have an extra $110 to apply to a larger debt every month.

    It’s not necessarily more interest-efficient, but it’s faster and more rewarding to pay our debts from smallest to largest. We keep up minimums on the bigger stuff, and then we work our way up the list.

    We also apply ANY extra money to our debts. Anything at all. Underbudget for groceries in a month? Hey, an extra $30 on the old mastercard!

    We dumped out the spare change bin a while back and rolled op the coins and send another $80 to the credit card companies. Every little bit does really help and all those little steps foward really help you to feel the momentum (which feels GREAT!).

    Any found money or windfalls get applied to debt also. For instance, we have another $10,000 of adoption tax credit coming back in February from our taxes–that should pay off the very last of our credit card debt, and the balance will be sent to the mortgage company to get a little head-start there.

    Also, we budget to live off of my husband’s income. My self-employment income is more erratic, which means that we use my income only for paying off debts. I’d better stop now and save up my ideas for my next post, but for now I hope that answers your question. :) Good luck in your journey George!

  • elizabeth

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