A Journey to the Middle-Class (With a Detour through Debt)

Meet my colleague, John! A great English teacher, John is also a doting husband and father of two. Recently, he came into work and said to me, his face all aglow, “Prudence Debtfree will like this!” (That’s my blog name.) And I did like it. I liked it so much, I asked John if he would consider being featured on Fruclassity. I’m so grateful that he said “Yes.”
I remember you said to me once, about your big student debt, “We were two kids from working-class families, and this is what it took to get our post-secondary education.” How would your describe your “working-class” upbringing in terms of what it gave you? As a child and adolescent, did you ever feel that you were doing without?
 
My dad stopped travelling to Alberta, where he had a high-paying job, in order to be home more to help my mom, who had to stop working due to a physical disability. That meant that money was very tight in my house for most of my childhood up until I left for university. Money worries were ever-present, though my dad worked hard as a house painter and my mom took in sewing at home. My dad’s decision as a loving father and husband to be home more, and my parents’ work ethic are among the great things my upbringing gave me.
 
I’m sure I was typically selfish as a kid and adolescent. I wanted the latest toys, games and, later, the trendy clothes. Looking back, I got a lot of what I wanted, but at the cost of debt and stress on my parents’ part. As I got older, I recognized that we didn’t have the money my friends did, and scaled back my expectations for what I had or could get.
 
What messages about money did you absorb as you grew up? Include spoken as well as unspoken messages.
 
Money was not something we talked about in my family. Every once in  a while, my parents would lose patience with something wasteful we’d done, or some request we’d made and show some stress, but generally, it was a topic we avoided.
 
You left home to attend university, making it that much more expensive. Was it your only option?
 
No, I could have attended the local university. I chose to leave for the city, but at a high cost, for sure.
 
What was the grand total of your student debt by the time you graduated?
 
Carol and I were married by the time we graduated, and our combined student loans were $80,000.
 
What other debts have you taken on over the years?
 
We were so stupid with credit! After graduating from university and starting on good jobs, we were so thrilled to be offered credit from everyone! We took full advantage of “no-payments for a year” plans for things like furniture. We also took on car loans and later, a mortgage. 
Do you think that part of the reason why you spent so much on credit after you graduated, despite having significant student debt, was that you were “high” on the middle-class dream?
I’m sure the middle class aspirations played a role. I also think there was the high one gets from indulging cravings and wants. I still have to struggle not to improve my mood on a bad day by buying something. My particular weakness is camping and fishing  gear.
Has debt ever been a point of stress for you? Did you have the experience of “aha!” moments or turning points along the way? Or have you just had a steady, peaceful approach to debt repayment?
 
Debt has been a constant irritant, though only infrequently a major point of stress. We’ve been lucky (and it was luck, really) to have steady employment with increasing pay, so we were fine. We were, though, one instance of bad luck from financial trouble. We had no cushion, with the way money came in and went out of the house.
 
We knew for a long time that we had to get our house in order, but we kept putting it off. It was like when you had to clean your room as a kid, but it was so messy you didn’t know where to start, so you pushed the mess into the closet and called it clean.
 
When we moved to Nova Scotia for a couple of years, Carol left her public service job and we paid off several cards with some of her severance, and that felt really good, so I think that was a catalyst moment for us.
 
You said to me last year that you had tracked your expenses and come to the realization that you were spending too much on meals out. What made you track your expenses? Have you been intentional about spending less on restaurant food?
 
When Carol left the feds, her pension money had to go to private accounts, and that meant we had a financial planner, who had us track our expenses as an exercise. It showed in hard numbers what we kind of knew all along- we were burning money in embarrassing amounts!
 
We have become more intentional in spending in all areas. We talk much more about our money, and call each other on our waste much more. We are much more proactive than reactive now.
 
What strategies have you used to pay off debt? 
 
We focused on building some savings first, so that, if our luck ran out, we wouldn’t sink our little boat.
 
We then started increasing our payments on existing credit cards, focusing on the highest rates, but it was going to take forever, so we recently negotiated a consolidation loan at a much, much lower interest rate to pay it off much sooner.
 
Are you confident that you won’t be tempted to fill up the room on your credit cards now that you’ve consolidated?
 
We’ve cut up the cards as we zeroed the accounts, so they’re gone. We kept one card, jointly held, for emergencies and for hotel rooms, and those other things you need a card for. We can’t make sneaky purchases on a joint card, so we can continue to watch each other for slipping into old habits.
How long did it take you to pay off all student debt?
13 years. Ouch.
When you bought your house, you were surprised by how much money the bank was willing to lend to you for a mortgage. Describe that situation and the decision you made about the size of mortgage you would take on.
 
With our income, and the secure nature of our jobs, the bank was willing to loan us an absurd amount of money. We could have paid the mortgage bill at their total, but we’d have been house-poor.
 We’ve never been hung up on the “dream house” ideal, so we chose a modest townhouse that fits our family at nearly $200,000 less than the bank was willing to lend us.
 
What are your financial goals moving forward?
 
With our stupid credit debt under control, and gone in three years, we can get aggressive on our mortgage.
 
We’re also looking at some longer-term planning for Carol’s retirement and the girls’ education. With our income, there’s no reason either of them should finish with student debt, which would be a huge head-start for them going into their independent lives.
 
What do you hope to teach your children about personal finances?
 
We are open about money in our home. We give the girls a small allowance to help them learn to save and plan. It’s tempting to bail them out when they blow their money on something dumb and then something shiny comes along, but we resist (most of the time 🙂 
 
We talk about saving for the fence we’ll need to pay for in the spring, and how that affects our ability to pay for a wanted minor reno to the house, so it has to wait. We try to show them the mechanics behind those decisions, so money isn’t some unseen, magical thing, but a resource, like water and electricity, to be used carefully and conserved.
 
Just this weekend, my younger daughter was bored because her friends were all out at the time, and she asked to go to Cosmic Adventures or Fun Haven or some other money pit. I had no issue going online to show her the cost of that trip, as well as what it had cost to go to the movies, our recent big splurge, of no more than two days ago. I explained that the dinner and the movies was our mad money splurge for the month and that Cosmic didn’t fit our plans. She moped a bit, like a kid would, but then remembered that she had not finished the Christmas shopping that she had saved allowance for. We checked her little budget for gifts, decided what she could buy that day, and went to the store. Watching her calculate how much the gift would be, with tax, and decide on an option that was thoughtful and economical was cute.
 
I want them to know that they are lucky to have been born into a family that has what they need, and most of what they want, and that it takes care and attention to maintain that. I don’t want to worry them too much – they are kids – but they need to know that money comes in through work, and that they can control how much goes out and how much stays.

14 comments on “A Journey to the Middle-Class (With a Detour through Debt)

  1. Continued success John and Carol. Appears you are on the right track. I can appreciate the lesson you are teaching your children. Something every child should understand “they need to know that money comes in through work, and that they can control how much goes out and how much stays.”

    1. I can also appreciate that lesson, Brian. Like John, I grew up in a household where money was not discussed. I got the sense it was impolite to talk about it. My own kids would say we talk about money way too much. Hmmm…. There must be a happy medium in there 🙂

    1. I too am touched by the way John and Carol are modelling finances for their daughters and talking them through their spending and saving. They are great parents. Thanks Kay : )

  2. Thanks for sharing this story. It proves that finance is a journey with many stops along the way. You’ve had many stops and there will surely be many more that you’ll learn from and that that you can teach your children.

    1. Thanks, Mr. Money Beagle. That’s what I notice about John and Carol’s story too. There was not one single turn-around moment – there were “stops along the way” as you say. Some of us seem to need the more dramatic crashing halt to get going in the right direction.

    1. Thank you, Mackenzie! I really appreciate your comment : ) I LOVE finding stories in other people’s lives. And I never cease to be amazed at how many there are.

    1. John is one of the most doting dads I know. He will make sure his daughters learn everything that he has learned about managing money. I’m glad you love this story, Amy : )

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