This post was prompted by my discovery of I Paid For This Twice.com (http://www.paidtwice.com). I'm new to the blog-o-sphere, but an old hand at debt reduction. Cooking for myself and my then-boyfriend-now-husband, who we will call Lincoln after the Chicago neighborhoods we lived in, was a big part of it. However, like all great undertakings, it started with one small step: getting him to kick his pre-cut fruit habit.
Nine years ago (how time flies when you have debt to pay!) Lincoln confessed to me in a car overlooking a snowy bluff in Minnesota that he was in a financial crisis. Between his credit card and student loans he was around $80K in debt. This was actually a very romantic moment because I knew I had earned his trust. "I can help you," I said, "If you really want my advice and, if you think it's sound, you will follow it." The foundation of our marriage was built on that moment.
Lincoln allowed me to do a very simple "audit" of his spending. On the consumer debt front, he had lots of little debt spread out over about four or five high-interest cards. Consolidation onto the lowest-interest card was the first obvious step. If he could afford to make two large monthly payments when he got his bi-weekly paychecks, we figured he could get out of the consumer debt in about ten months. Based on his earnings (he was a third-year at a law firm) this would not be an issue.
Lincoln was also lucky to have recently moved out of a more pricey one-bedroom into "The Club House," a town home he shared with two other guys. The place was only a moderate dump, in good enough shape not to scare the girls off, unless they looked really closely at the couch. Lincoln implemented the pay-off plan for the consumer debt immediately. Then we got down to the nitty gritty.
To pay off the student loan, we needed to maximize cash flow. There were two things that were obstructing Lincoln from paying down that staggering student loan. One was his car lease and insurance. When we added those up, his sporty little Jetta was costing him $800 per month. Throw in gas, maintenance and parking for those lifts to work he gave me (at $20 per day) and it was closer to $1,000 - double his rent. Ouch. We started taking the bus. As soon as the lease ended, Lincoln and I shared my 13-year-old Honda Civic with my sister and brother-in-law.
The other source of Lincoln's cash flow blockage was pre-cut fruit. The man was addicted to buying $4 worth of cut fruit every morning from the cafe in his office building. "Lincoln," I remember saying, "Bananas are God's pre-cut fruit."
So, there we were, eating our bananas while waiting for the bus. Not glamorous, but living in a large city, we could pretend we were traveling on the cheap in Europe. Inspired by Lincoln's rapid progress, we started going to more free events. We switched from fancy dinners to less-expensive lunches at the same fancy places. We walked more. Talked more. Soon, Lincoln put a sparkly ring on my finger that he paid for in cash. The credit card debt was gone in ten months, just in time for our wedding. We were on our way to the final showdown with the law school debt.
To save as much as possible, we lived small in a neighborhood that, increasingly, is about living very large, Chicago's Gold Coast. We often walked to our respective daily grinds in the Loop. We never took cabs. The building our one-bedroom-apartment was in had a rooftop deck with magnificent views. For his birthday, instead of a four-star-meal out, I made him one on the rooftop from ingredients I bought at the fabulous farmer's market in our neighborhood. In three years, we kissed Salley Mae goodbye.
While I got to be chief financial adviser during Lincoln's restructuring, he did not let me slack. He made me see I needed to give my financial life a tune up. Although I was not in debt, Lincoln insisted that I look at my own financial habits. Through the help of a book, "For Richer, Not Poorer" by Ruth Hayden, we examined the roots of our beliefs about money and how those formed our spending habits. I learned to live on a budget, be conscious of my spending and save for long-term, as well as short-term, goals. Although cash poor, Lincoln had taken great advantage of his company's 401K and had a good stash for retirement already socked away. As soon as I got a new job with a 401K that had a matching portion, I started contributing the maximum, as Lincoln advised. I was quite pleased when my retirement savings reached more than double my numeric age.
Lincoln and I bought a home, sold my Honda and replaced it with Lincoln's dream car - a VW Passat. We also had a child who, to date, has his first year of college paid for. And to this day, we do not buy pre-cut fruit.
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