Walking the Tightrope between Debt and Leverage
What is a good balance between debt and leverage?
The biggest mistakes I have made were when I assumed I was strong enough to overcome the psychological effects of dealing with debt.
Last year (just after I was on the Money Podcast) I found myself with two vacant rentals where I was paying both mortgages and utilities, not only that but I had yet to refinance the one that was a BRRRR and I had used credit cards to pay the $25,000 in renovations. I was getting eaten alive in interest.
But it gets worse, I was self funding my wedding and honeymoon so I put that on credit as well.
Finally I made the dumb move of buying a new personal residence in the middle of it all. So I was paying 3 mortgages and 3 sets of utilities.
After the wedding I also took on my wife’s $30,000+ in miscellaneous debts.
Here I was, a guy who was on the Money Podcast and I was drowning in debt.......
Needless to say I decided to get back to basics. I thought I was smarter than that and I screwed up, but I knew I could fix this mess. I quickly got both of my rentals rented. Next up I completed the refinance and used the money to pay off all of the credit card debt.
Next things got really interesting. I re-read Dave Ramsey’s Total Money Makeover and started listening to his podcast daily again. I realized the debt trap I had fallen into had nearly drowned me.
My wife and I put all of our debts on paper and decided that we were no longer using debt for our personal finances.
We got married last August and since then we paid off all our debts:
$17,000 Wife’s Student loan
$25,000 Credit card debt on one card
$3509 credit card #2
$500 credit card #3
$3000 HELOC
$12,000 car loan
$8000 another car loan
$4000 funeral expenses
I did it the old fashioned way, lots of hard work and sacrifice. I worked 60-70 hours a week and spent months out of town. We stuck to a budget and did the debt snowball as written.
Embarrassing lesson learned, and I really had to swallow my pride to post this here.