Debt: How it happened, how we'll get out of it

It's my secret shame, Mr. Trillwing's and my financial debt. But I need to write about it, to tell people about it, because it's blocking some of my other creative energies at the moment.

Where we are today
I won't share specific numbers here. Let's just say that if you add up student loans, the debt Mr. Trillwing brought into our relationship, and the credit card debt we racked up when I was in grad school and we needed emergency dentistry, car repairs, or veterinary surgery, we're up to our eyeballs in debt. Over the past 6 years, we've probably paid off more than $50,000 in consumer debt (largely Mr. Trillwing's debt, and largely paid off by cashing out his profit-sharing account from a previous employer).

Yet despite those payments (monthly and lump sum), we have more debt now that when we made that first giant payment from his retirement account. Our three major sources of debt are (in order of largest stress--but not largest amount--to smallest stress) one credit card's debt, a loan from my parents, and student loan debt.

How I initially got into consumer debt, and how things got worse quickly
Before starting my Ph.D. here, I always paid off my credit card balance in full. But the move to our current fair city cost us $500 more than we had at the time, and that amount went on the credit card. That was the start of The Shame and The Stress I now carry. We couldn't pay it off that month, or the next one. Both of us took big pay cuts when I came up here to grad school. My income was slashed in half; Mr. T lost nearly a third of his. And our cost of living here is higher than it was in Long Beach.

Then almost immediately Mr. T's 10 years of meth use (in the 1980s, loooong before I arrived on the scene and could chastise him) came back to haunt us in the form of necessary dental care (and Mr. T's $1000/year dental coverage wasn't going to cut it. The dentist declared he needed about $40,000 worth of work. So far we've put in about $8,000-$10,000, and that's just to keep up with the deterioration, not to get him any new teeth).

Our tactics
We borrowed money from my parents to pay down the rest of Mr. T's high-interest credit card and bank debt that he brought into the relationship. We've paid off about 1/3 of that amount, but I was hoping to have it all paid off within the next two years. That's not going to happen. It's embarrassing to me and, I think, to my parents that we haven't been paying as much each month as I had proposed. My parents don't need the money, but I need to preserve my veneer of financial responsibility.

We have had a few successes. When I was working two jobs plus freelancing, I managed to put away enough money into stocks and mutual funds each month to eventually cover the several thousand dollars I had to pay for Luke's birth.

More setbacks
I thought when I finished the Ph.D. and took a staff job, we'd be out of the woods. But then because I was working full time, we had to put Luke in daycare. We also needed to move into a bigger place because no one was getting quality sleep when we shared a bedroom with Lucas. So my shiny new salary was eaten up almost immediately by daycare costs and higher rent.

And still the credit card debt mounts. We don't charge groceries or anything like that on it--strictly some small monthly bills and emergencies.

Plus now my student loans are due. I started with the graduated repayment plan, which means I pay only $200/month. But even that is a stretch.

Looking ahead
Because of my museum studies job, I'm able to put a lot more money toward the credit card (my primary debt headache) this month, in November, and in December than I have been for quite a while.

And my parents recently GAVE us their very nice older car (a Toyota Avalon), which means we can sell our Camry. My mechanic says to list it for slightly above Blue Book because Camrys sell well in this area.

If we get the full amount for the Camry, and if I put 75% of my take-home museum studies pay toward the credit card, I'll have paid off 63% of my credit card debt by the end of the year from those sources alone. Another reimbursement check I'm expecting will bring that amount to 69%. A freelance project I'm working on will raise it to 74%.

The remainder will have to come, I think, from selling other stuff, unless Mr. T's one remaining freelance client needs a lot of design work done, in which case we might be able to actually pay off the damn thing by the end of January, at which point I would hope to begin paying back my debt to my parents with much greater speed.

My goal is to be debt-free, except for student loans, by mid-2009, as well as to each month set aside some cash to recreate the emergency savings I had before I started grad school. It's a crazy goal, actually, considering the amount. And this assumes we don't have another baby before then, or any other financial emergencies (unlikely!).

How I'm keeping motivated
Seeing the credit card statement shrink is a fine motivation. But reading personal finance and frugality blogs also is giving me some good ideas for economizing. I also am totally inspired by bloggers' stories of paying down huge debts--much larger than my own--within a couple of years.

The take-home message
I was pretty certain of my ability to manage my finances throughout grad school. After all, I'd never had any debt except for student loans (which were always in deferment, since I was still in school) and car payments (which I paid off during grad school).

But I was totally unprepared for the amount of money that is needed to (a) sustain the health of a partner whose health insurance was less than stellar, (b) care for a middle-aged (now senior) dog, and (c) birth a child, let alone live moderately comfortably in this town. It just isn't possible to do so with one partner in grad school and one making an average salary.

I wish someone had warned me that grad school was such a debt trap, and that the older you get, the more of a debt trap it can be (because of partner issues, children, changing needs, job search, etc.). I knew I'd be racking up student loan debt, but consumer debt? Never! Not me!

So if you're just beginning grad school, please, please learn from my example. Keep a wary eye out for looming financial emergencies, and economize whenever and wherever possible so that you do have savings for those human, pet, and auto care needs.

I also welcome your suggestions to speed my debt pay-down, especially if you've been where I am now. I'm already doing the usual things--calling for a lower interest rate, selling books on Amazon, etc.--but if you have creative methods for generating some quick cash that don't involve selling bodily fluids or ova or euthanizing the dog (whose care is a major cash sink), I'd love to hear about them. Leave 'em in the comments.