Using debt in a crisis.
An essay on using debt during life's difficult situations.
I have noticed that I go through phases of spending.
I seem to be able to keep my spending under control most of the time. I am typically putting Costco trips and extra needs that pop up on the credit card each month, but its always paid off in one to two weeks’ time. When I start to feel more stressed about money is when more and more expenses are tossed on the credit card, and its not paid off by the end of the month.
I know that the debt will be paid off eventually, but the entire time there is a remaining balance on the card I vacillate between being ultra frugal and paying it off as soon as possible, and rationalizing more expenses because the balance becomes an excuse to just add a few more purchases to the card.
At times in my life, I have relied heavily on debt.
When I reflect on the times in my life when I have used debt, I have used it knowingly. It has not always been blind overspending, but using it for a purpose. I have traded some of my calm for some debt.
One of these times was when we had made an inter-provincial move and it was a very trying time for our family.
In 2021, my spouse and I were struggling. Our marriage was fraying at the ends, we had two very young children, and were attempting to emerge from the fog that was rolling Covid lockdowns with a non-napping two-year-old and a rambunctious, challenging five-year-old. My spouse had been running a fledgling business during the pandemic, and I was attempting to overcome an overall sense of hopelessness from living life feeling so alone.
When we were very young, my spouse and I met on a gulf island in British Columbia. It was a euphoric time in both of our lives when our relationship started and grew, and where we were surrounded by the stunning beauty of the Straight of Georgia. Our closest friends were doing life alongside us, and we both felt fulfilled and never wanted to leave.
Things didn’t go as planned, and for many reasons we started our married life elsewhere. But the deep desire to go back to where it all began never went away. So, in 2021 when we felt that we needed a change, we sold our house and all of its contents and moved back to British Columbia. The promise of community, shared housing, and a life of service was what we felt was missing from our lives. So, we did it. We moved and attempted to start our new life back on the Island.
As we spent more time at our new home, some unfortunate, unforeseeable realities set in. Details spared, our promised housing arrangement fell through and our rented furnished accommodation that was only meant to be temporary was no longer able to support our family’s needs. I spent eight months looking for alternative housing, but in an unprecedented housing crisis, we found nothing. We explored every traditional and non-traditional housing arrangement we could think of, and every idea fell through.
Money that we was owed to us from the sale of my spouse’s business was suddenly no longer going to be paid back.
We had to find a place to live soon and we were getting desperate. So, we hastily moved back to the very town that we were do desperate to escape from. My spouse got a last-minute job offer, and we were able to find a rental within a week.
After an emotionally tumultuous year, I was wrecked. But, I had two kids to take care of and I had to carry on. We had no furniture after our move, so in an effort to fix the problems the past year had presented, my subconscious had found a purpose in solving our furniture-less dilemma.
We had nothing. No chairs, tables, bed frames, or couches. In our gusto to start our new life in British Columbia, we parted with a lot of belongings I wish we had kept. With only our mattresses laid out on the floor, I set about making sure that our new rental felt like a home. With every IKEA trip, I put more and more expenses on our credit card. When the credit card maxed out, I paid it off with our line of credit. My spouse needed to purchase equipment and vehicles to run his side-business and those expenses went on the line of credit as well. For months we worked on setting up our new life back in the town we so strongly disliked, and we had racked up over $40,000.00 of debt.
In an effort to follow traditional personal finance advice, we used all of our savings to pay down some of that debt. Savings that in retrospect, could have been used to purchase a home before prices skyrocketed.
I often think back to this time and I sometimes think that I should have furnished our house with items only as and when we had the cash. Only purchase items within our means, no matter what. Or, maybe I should have only bought second-hand items that were utilitarian, but ugly. Perhaps we shouldn’t have moved in the first place, let alone sell our home and our things. After all, our move wasn’t made to improve our financial situation—it was to balm our souls.
According to modern traditional finance advice, we shouldn’t done any of it. We weren’t saving anything at the time, we had no investments, and were living off a very small income when we returned. As
of the Money with Katie podcast said, “Are you saving 5% to 10% minimum? Are you investing 5% to 10% minimum? If the answer is yes, and you have the money there in the budget, yeah, you can afford it. If the answer is no, you can't. It's very simple.”However simple it sounds, our life situation didn’t fit into that black and white scenario Ramit Sethi recommends, even if we spent as minimally as possible. It’s easy to allocate money when you have it. It’s easy to follow financial formulas when you have money.
There is no denying that paying off our debt will take years. Our debt amounts and payments constantly buzz around in the back of my brain. But when you have mistakes and live off a small income, there’s not always one right way to move forward.