We're in debt and what we should have done differently

on Wednesday, December 3, 2008

We are not ashamed of admitting we are in debt but certainly not proud of it either. We are in the camp that no debt is good debt. We feel at least we got something useful for our student loan debt we don't think it is something to keep around forever just because of low interest rates. In fact, our interest rates aren't all that low so the sooner we pay them off the better.

Let's tackle why we are in debt:
Basically it boils down to we should have waited to get married. We planned on getting married at some point but set a date without fulling thinking through the financial implications of this decision. This did not allow us enough time to save up enough money to pay for the whole thing in cash as we had hoped. We know this was a dumb decision and we are paying for it (literally) now.

The baby has proven to be slightly more expensive than we budgeted due to some medical issues (with myself) and I'm trying to pick up overtime to make up the difference but the wedding and medical bills keep piling up. We are looking for bargains and getting married during the off-season but the total bill will push $10,000. The medical bills... who knows what the final bill will be for those. We can only hope they are not close to the wedding bill.

So what are we doing about it?
The wedding is approaching rather quickly. The major expenses are yet to come when the hall rental payments are due in January and March. We also have the remainder of some of our vendors to pay.
Our goal is to not add anything new to the credit card come January. Yes, we are going to continue to live beyond our means for December. We know this is a horrible decision but feel it is the right one for us at this time. We are cutting our spending as much as possible but because of the lack of e-fund prior to these medical issues being discovered and wedding plans started rolling we are pretty much screwed. I am picking up two overtime shifts this month and get holiday pay for Christmas. I hate picking up overtime and working holidays because it is less time I get to spend at home with O. S will begin working at his seasonal job on December 14 and then we'll have two full-time incomes until January 24 when he goes back to college full-time.

What we should have had in place to avoid this mess:
1) Emergency Fund! - Our goal for this account $10,000. At this point in our lives this is about 3.5 months take home pay.
2) S should have picked up more hours at his part-time job this semester but we felt his grades were more important.
3) We should have bought more O less things and what we did buy we should have tried to get second-hand. I insisted on a new big ticket items that we could have gotten much cheaper I'm sure.
4) A budget we could stick to! Our budget is unrealistic. We need to sit down in the next few weeks and create a better budget we can stick to for the upcoming new year.
and 5) Priorities in order! We shouldn't have been in a rush to get married. If we knew we sat down and had a budget meeting before hand we would never have been in this situation or at least not as deep.