I was looking at some old files today and found my debt spreadsheet from 2010. It was a stark reminder of just how far we’ve come since our bankruptcy ten years ago, illustrated most clearly by my shocking realization in red font. This was the moment I knew we were in trouble:
As embarrassing as this is to admit, at the time I had $35,000 in credit card debt alone. Including the mortgage, student loan, and my car loan brought the total to $433,000. Adding in Tony’s credit card debt and car loan, it totaled close to $500k, a crazy amount given my 5-figure income and Tony’s unemployment at the time. We had just $2k in savings, which wasn’t enough to cover a household emergency like the surprise A/C repair we needed that summer. Somehow we were never past due on anything until we filed for bankruptcy; we managed to keep up with all the minimums, in good conscience, until we couldn’t any more. But I’ve written a bunch of other posts about that.
What I want to do today is look at how far we’ve come.
- Instead of being half a million dollars in debt, we have about half a million in savings. It’s not really a net gain of $1M, but still, wow.
- We’re totally debt free. Our bills are limited to day to day living: rent, utilities, insurance, etc. This is HUGE.
- Our only credit cards never carry balances. We use them for cash back benefits and pay them off every week or two.
- We have limited physical assets — no house and just one car — but we live in a great place with no surprise maintenance costs, and the car is safe and reliable.
- We have a lot less stuff. This is partly because we have less space in an apartment than we did in a house, but we’re both much clearer on want vs. need than we used to be.
- My credit score is 733 right now, compared with 579 right after we filed for bankruptcy. I don’t pay a lot of attention to this (no need for new credit) but do keep an eye on it in case of identity theft. I’m interested in seeing how it changes after the bankruptcy falls off my credit report, which should be in just a few months.
As a result of all of this, I sleep better at night, knowing that when another recession happens (and it will, we just don’t know when), we will be OK. If it happens before FI we’ll have to make some changes, but even at just half-FI, we wouldn’t be living in a cardboard box.
I want to mention that we’ve made as much progress as we have only because Chapter 7 bankruptcy was available to us – despite the best efforts of the GW Bush administration. A lot of people still avoid this solution at any cost and genuinely believe it’s always a disaster, but for us it was exactly the right choice and I have no regrets. Having the ability to hit that reset button, learn from our mistakes, and change our behavior was priceless. It’s hard to estimate where we’d be if that hadn’t been an option, but I feel confident that FI would not even be on the horizon.