Back In Debt Again, After Being Debt Free.

This post is about how I got back in debt again, after paying off €10,000 using the Baby Steps. I am currently in debt, with no regrets.

If you have been on social media at all in recent times, you are probably aware of the debt free community. This movement aims to spread the word of debt freedom for all. It can be a very intense community to be involved in, as it encourages participants to pay off all their debt, in as short a time as possible.

As with any community online, there are different approaches. Back when I started my debt free journey, there was only one show in town, and that was the Dave Ramsey Show. I followed his baby steps faithfully for about 2 years. However, in the end, the plan no longer made sense for me. I got back in debt again. It was by choice and I have no regrets.

In this post I will cover:

Why I think Dave Ramsey’s baby steps are a great starting point for learning how to budget

How trying to stay away from borrowing was doing me more harm than good

Why taking on debt, after paying off such a large amount, feels completely different

Why immediate debt freedom is no longer my goal

So let’s get into this article, where I will tell you why I’m back in debt again, by choice after being debt free.

Why Dave Ramsey’s Baby Steps Are A Great Starting Point For Learning How To Budget.

When I paid off my debt I was in trouble. I had 2 children and I was on my own. There was a great big steaming pile of debt, with my name on it, needing to be paid off immediately. I googled, ‘how to pay off debt fast’, and quickly found Dave Ramsey and his 7 Baby steps to financial freedom.

The plan is simple. Pay off all your debt and never get into debt again except for your home mortgage, which you should aim to pay off within a maximum of 15 years. The later baby steps involve building wealth and investing.

I would recommend giving Dave a chance if you are under pressure with your debts and need a solid plan to deal with it.

These Are The 7 Baby Steps

Steps 1 and 2

Baby step 1 is build a starter emergency fund of a €1000 (£,$,etc)

Baby step 2 is pay off all your debt and except your mortgage (I paid all my debt in one year)

Steps 3,4 and 5.

Baby step 3 is about building a 3 to 6 month emergency fund (which I did the year after my no spend year)

Then, baby step 4 is about retirement and investing (not relevant to me yet)

Baby step 5 is save up for college fees for kids (I have one kid sorted in that department, and I paid for college for myself with cash in the years after paying off all my debt)

Steps 6 and 7

Baby Steps 6 and 7 are about paying off your house, while being in a position to be generous to others and to continue to build wealth.

The early baby steps are a great plan to get to grips with budgeting in my opinion, but the later ones didn’t fit my life.

How Trying To Stay Away From Borrowing Was Doing Me More Harm Than Good.

I went as far as I could with the baby steps but there was one issue that I could not fully resolve no matter how I tried.

Location.

I live in a rural area with no public transport. Moving house is not on the cards, nor is reducing my driving in the long term. No amount of ‘driving cars till their wheels fell off’ was going to fix that.

That might sound like a funny turn of phrase, but that is a Dave-ism for not buying cars with loans, and just driving old cars till you are able to afford to buy a better one outright. Such an endeavour was just not within reach for me at that time and would not be for many years, if ever.

Having maintained a weekly 680 km of essential driving in old cars for 2 years, we broke down in the flow of traffic on the school run early one morning. As the car coasted into the verge and just made it inside the line, I made the decision to get back in debt again, in a split second.

The idea of trying to remain out of debt forever was potentially doing us more harm than good at this stage.

Why Taking On Debt After Paying Off Such A Large Amount Feels Completely Different.

This wasn’t a snap decision. I had been mulling it over for a while and had ‘done the maths’. The car I wanted had been researched. I knew that my choice of car was affordable for us. It would be able to do the sort of driving I needed it to do on bad roads, in remote areas, safely and reliably. I had even taken a test drive couple of years previously at the local Dacia showroom.

This dangerous incident was the final deciding factor as to whether I could stay out of debt or not .There was no option. I needed the loan to buy a safe car for my family, and there was to be no debate about it.

By lunchtime that day I had loan approval at my Credit Union, and by the end of the week I had placed a deposit on a Dacia Duster in the dealership.

It felt so different this time, taking on debt again. I was so in control of my behaviour around money that I knew this was the responsible choice. A safe mode of travel in areas without public transport, is a life line for many rural dwellers such as myself. It is as essential as housing and utilities are.

This is where I parted ways with the debt free community of the evangelical type. No amount of YouTube videos and no spend days were going to transport me 680km per week safely, with the children who depended on me in tow.

So that is why I got back in debt again, and have no regrets about it.

Why Immediate Debt Freedom Is No Longer My Goal

People have told me I am very relaxed about money. When I speak about paying off debts or budgeting, I insist on that people open their eyes to their own situation. ‘Know your numbers’ is my mantra.

The Baby Steps is a good place to start learning about budgeting. If you choose to do it, do it with your eyes open. Online Dave Ramsey groups can be very extreme, and that’s not to knock the Baby Steps, but it is to say that sometimes Dave Ramsey himself isn’t as fervent about his own teachings as people who run such groups.

Conclusion

What I learned from all of this is, balance is key. The short sharp shock of a no spend year changed my life for the better. This way of living is means to an end for me rather than a lifestyle choice but I do plan to be completely debt free in the future all the same. My children will be adults and I will be a bit longer in the tooth, but that is ok.

Until then, I hope to share with you the story of a women on the road to debt freedom, who does not feel oppressed by her car loan.

This Post Was About Being Back In Debt Again, After Being Debt Free.

[You Might Also Like To Read: Budgeting for beginners: 7 pre-budget steps you need to know before you write your first budget.]