The Story, Part 6
By Ryan Healy | October 18, 2007
In Part 5, it looked like I was headed for a debt-free life. I had paid off over $20K worth of unsecured debt in 11 months. But a few things conspired to put me further in the hole.
For one, I got greedy.
You see, I love motorcycles. I commuted on one for an entire summer before our first child was born. I hadn’t had one since, and I wanted one.
I had posted up a couple pictures in my office. I looked at them every day. One picture was of a Triumph Speed Triple. The other picture was of a BMW K 1200 R.
After staring at those pictures every day for more than a year, I was ready to buy. So when I found out BMW was offering special financing, I took advantage of it. That was in December 2006. I didn’t add the motorcycle to my list of debt until May because that is when the payments finally started.
The motorcycle set me back about $16,000. But I figured I could handle it. My debt level at this point was still lower than it had been a year ago. And the debt was secured. I could always sell the motorcycle if I had to.
If the motorcycle was all I had purchased, it wouldn’t have been that bad. But here’s the thing. I had also leased a car two years prior. The lease was up in March 2007. I turned the car in, and my wife and I began car shopping.
We were looking at a few options, including a Honda CRV. But we took our time. And thank God we did! Literally days before we were about to make a decision, we found out my wife was pregnant with our third child. This immediately put us in the market for a minivan.
We went with one car for a few months while I did some research. Ultimately, we purchased a new Honda Odyssey in May. After options, the price came to about $31,000. And so our debt nearly doubled with a single purchase.
Again, I justified all of this because the debt was secured. If I found myself in a tough financial spot, I figured I could sell the motorcycle and van to cancel out the debt.
Since we’re keeping score here, you should know my total debt in September 2007 came to $72,307.59. Not a small number. Here is a snapshot for you to see…
Note where it says “Reduction” there is a positive number. That’s because my debt level increased instead of going down. If it had gone down, the “Reduction” number would have been in (parentheses). That’s how a debit is recorded in accounting.
Lately, I’ve found it difficult to keep up with all my payments. Why? Because I started paying my brother in July 2007 to work with me in my business. So far, he’s done fantastic work. But we haven’t increased cash flow. I’m paying him $2,500 a month on top of all my other expenses. At first, this was fine. But it’s catching up with me.
So now you know where I’m currently at and how I got here. Now it’s time to try to turn things around. I’ll be posting my debt level every month for you to see my progress (or lack thereof). I will also be posting advice, book reviews, and what I’m currently doing to reduce my debt.
I invite you to follow along, leave comments, and link to any articles you like. If you are in debt, then perhaps you will find the information or motivation you need to start moving in the right direction.
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Topics: Case Studies |
13 Responses to “The Story, Part 6”
Comments
« The Story, Part 5 | Home | Why I Made an Egregious Mistake »
October 18th, 2007 at 2:13 pm
I can’t believe after all you went through, you didn’t learn your lesson. You could have bought a much cheaper mini-van and you did not need the motorcycle, especially since you were about to replace the wife’s car. You can’t afford to employ your brother unless the revenues increase to cover his cost (he must be doing the work you were doing if the revenues haven’t increased…).
So, now that you stopped smoking whatever you were smoking, what are you going to do about this egregious lapse of reason?
October 18th, 2007 at 2:22 pm
Do I know you, Anonymous Reader? I can’t imagine you’d be upset with me unless you knew me and cared about me.
Anyway, keep reading because I will be sharing exactly what I’ll be doing about this “egregious lapse of reason.”
Thanks for reading, and I do appreciate your comment, even if it is a bit hard to swallow.
October 18th, 2007 at 3:46 pm
I’m sorry, I don’t know you, I’m just incredulous. Everything you said through Part 5 made perfect sense. You outlined the problems, you selected and followed a reasonable path to solving your problems, you were making great progress, and suddenly you veered off the path and fell off a cliff. I guess I will keep reading to see how you get out of this.
October 18th, 2007 at 5:14 pm
Hey Ryan,
My wife just said, “We love you Ryan! You got more debt than us!”
Don’t take that the wrong way Ryan. It makes us feel good. She’s under a lot of stress.
And, hey, Mr. Annonymous Reader, nobody’s perfect. I’ve managed talk myself into buying a few things I really didn’t need, certainly could have lived without, and didn’t have the money for, but have become too dependent on a credit card, in the hopes that I’ll clear it soon, that I did it anyways.
It’s one of the stupid things human beings do. Keeps us humble, making mistakes.
Secondly, hiring his brother on to free up time for more profitable work was a smart move. Obviously there is some wrench in the works, but the idea ws gold. I hired on extra help ($1000/month) and it, on the whole worked out fine, until I started loosing sight of what I needed her to do for profit first. (We should talk about this sometime Ryan).
Thirdly, my wife says, she “wants to thank Ryan for being so humble to put all his mistakes on the world wide web for everybody to read, and…” then she told me to put something good here. But nothing’s coming to mind, except that she’s 100% right.
Obviously Mr. Anonymous has never made a mistake in his life (except being hyper-critical).
Can’t wait to see the rest of this.
I think the Golden Rule here, is really buy only what you can afford, whenever possible. I lived by that until it meant we’d be living on the street. I broke it for as long as it made sense.
Yet I know people suffering incredible amounts of debt ($100,000 to $190,000+) and they are still living like they have all the money in the world, golf memberships, vacations, restaurants, etc. Scary stuff. Reality check is in order, pronto.
Later,
John
http://www.realitycopywriting.com
October 18th, 2007 at 9:16 pm
I would agree with anonymous reader… it seemed like you are taking concrete steps (war agaist CC debt) in part 5 but then you slipped. I couldn’t make out why…
October 19th, 2007 at 2:13 pm
I think it’s actually really common for people to make a lot of headway in paying off debt and then backslide. I know I’ve done it. You start to feel invincible with your successes, like you’re in control of your money, and you think you’re now mature enough to handle the additional expense.
Fortunately it only takes one or two serious backslides before you learn your lesson for good. I’ll be following your story. Best wishes in getting out of debt for good!
October 20th, 2007 at 5:22 am
My husband and I made the same mistake. We had our credit card debt down to $10,000. My husband just got a new job paying more money, so we deserved to treat ourselves on a luxury vacation without our children to The Biltmore Estates. We put it on our credit card. My husbands new job didn’t last long. The company failed. He was unemployed for 13 months. We did not see that coming and now our credit card debt is $25,000. So you are not alone.
October 20th, 2007 at 7:16 am
Ryan,
My husband and I know exactly what you’re going through. We never went through the marketing schemes. Our debt came from making unwise choices in our spending. We also were debt free and living in my parents garage apartment, virtually rent free. Six years later, we’ve accumulated over $250k in debt–granted some is secure debt, but debt all the same.
Good luck to you and your wife, and I will look forward to hearing more about your debt reduction.
October 20th, 2007 at 2:17 pm
There’s a lot of lessons to be learned in your posts, even if they’re the what-not-to-do kind at this point (no offense). I’ll be following your progress as it would be interesting to see how you get yourself out of this big debt. You almost did it before, I’m sure you can do it again. Good luck!
June 23rd, 2008 at 1:57 pm
Wow Ryan, I’m really impressed with the guts you displayed to be so open and honest with yourself and with the world. My hubby and I have gone through the exact same kind of thing. Thankfully we got out of debt at the end of 2006. We have backslid a little but we’re working on it and are doing much better now. I’ll be following along to hear your success story…
It was nice to catch up with ya today!
June 23rd, 2008 at 2:29 pm
@Sarah - Thank you. This blog keeps me focused and accountable.
If you want my latest debt numbers, you can click on the “Case Studies” category. Also, here is a direct link to my June update:
==> Outstanding Debt as of June 2008
September 23rd, 2008 at 11:26 pm
I have learned a lot from this blog, not only in the financial sense, but also in how to write an interesting blog.
I liked so much this series of stories about your struggle with debt. This “mistake” you made in this last part is very human, I see it more as a lesson, as you are showing others how to get out of debt.
Thanks, and I will keep posting comments and reading your stories
September 24th, 2008 at 10:35 am
Glad you liked the “Story” series, MDR.
Thanks for reading and leaving comments. It’s what makes blogging worthwhile.
Ryan