There is no quick fix

Just before the economy took a huge dump on everyone my husband and I both thought we were doing the wise thing by becoming entrepreneurs and small business owners. We both bought pre-existing companies with good histories and reputations in their perspective communities. It was a giant leap of faith and one that sadly, due to the economy, left us in a horrible financial place.

We discovered, after the fact, that one of the companies (my husbands) actually had around $8000.00 in debt to vendors and I cringe to say it…the Department of Revenue.  Who the heck wants to be under scrutiny from a governement agency? NOT US!  Then what little money we had as operating capital was taken right out of bank account by Child Support Services. Why? Well…when my husband walked away from his good paying job his automatic child support payments stopped and in the month between when he left his job and we actually started receiving payment from the new business they decided to just take the money. (Side note here…we have paid child support every two weeks for years.) Who knew they could arbitrarily just do that? WE DIDN’T! Then we discovered that the clients for this long established business were used to paying whenever they wanted. We could never count on money coming in from them on a regular basis. That is not a way to operate a business let alone support a family.

Then we discovered that in the other company (my business), our third partner was embezelling money, had completely screwed up the accounting books, racked up $133,000.00 in credit card debt and penalty fees with several government agencies for not submitting reports and payments on time. We terminated her as a partner but as of January last year I have been unable to take any kind of pay from the company even though I need to work it full time just to pay it’s debts.

So with last year’s economic crisis I decided I should take a serious look at our income vs. expense ratio and how best to fix it.  In other words, I wanted to figure out how to get rid of some of our debt. Overnight we went from a two income household to a single income household and the financial repercussions were, to say the least, devestating. We lost our car because we couldn’t amke the payments. We lost out home and had to live with family for almost two months because we couldn’t pay rent. We got behind on all of our bills and most things had gone to collections.

What I discovered by reading several books on the subject of getting out of debt was that we got ourselves into this financial mess and no amount of wishful thinking or prayers for quick fixes was going  to get us out of it. I guess this is where the secret hope that we would win the lottery needed to face the light of day and die a quick death so we could focus on the reality of our situation.

Did you know that according to several sources I read that it takes the average american two years to get themselves out of debt? Now, that isn’t two years of inaction. That is two years of hard work and diligence. That is getting rid of all the excesses in your spending. I mean do you really need those Starbuck’s latte’s? Then you have to create a payment plan to pay off all your debt. The most recommended way of doing this is by listing all your bills, total owed, minimum payments, how many months to pay it off etc. Then prioritize them by the fastest ones to pay off to the longest. Take all the minimum payments and add them into your budget. Of course one would think it would go without saying that you have to stop spending on credit cards, lines of credit etc. but not everyone realizes they actually have to start living without those fast track to debt options.Worse yet, not everyone thinks they can.

We had no other option then to face the bleakness of our finances. So here we are a year later taking a look at how much further we need to go but proud of how far we have come. My husband’s business has supported us for a year even with losing our car and house.  We have often had to humble ourselves and “fall on our swords” begging for our vendors and debtors to work with less than minimum payments just to get by. We’ve cut excess things out of our budget. We moved into a smaller house for less rent and cheaper utilities. We are sharing a car until we can save up enough money to buy a second car cash and believe me it isn’t going to be fancy.

We eat at home (with the rare exception) and we look at every penny that comes in and goes out making sure we are adhering to our financial plan. That being said, we have managed to buy a new television and a new washing machine and things are starting to feel like we have a handle on them financially. I don’t think we are even close to being out of debt anytime soon but at least I can see progress from the disaster our life has been. I think we are going to be okayas long as we remember that there is no such thing as a quick fix and that we got ourselves intothis mess so we can get ourselves out of it too.