No Longer Debt-Free | An Update on our Current Financial Situation

Hello, welcome back to my channel. My name is Kristen and I'm back on the road to remonetizing my YouTube channel. I will share a lot more about that journey in some upcoming videos, but today I want to bring you up to speed and give you an update on where our finances are since we last chatted about our finances more than two years ago. So if you're new here, I used to do videos all about personal finance and I shared a lot about my own personal financial journey from being almost $55,000 in debt to paying it all off in just under 20 months. That was a while ago at this point. I believe we officially became debt free in 2018 and since then I swore no matter what happened, I would never go back into debt again. Yet here we are. We are back in debt. So recently YouTube demonetized my channel because I was inactive for so long and I did make a couple of videos about it. So if you're curious what happened there, you can go ahead and watch this video when we're done here. But last week I decided that I am going to try and get my channel remonetized and when I made that decision, the first video idea that popped in my head was explaining how the heck we got back into debt. But honestly I was really hesitant about whether or not I wanted to share that info here on my channel because so many of my videos in the past were geared to why you need to get out of debt. Raising debt is so bad. Everything we were doing to try and pay off our mountain of debt to allow us to have a more financially free lifestyle. And now fast forward a couple of years later that we have found ourselves back in tens of thousands of dollars of debt again. I just didn't know how that would be received. But the thing is I've always tried to be honest here on my channel and honest with you and this is honestly where we're at. Our finances right now. So in this video today I'm going to explain how we got here, why we made the choices that we made to put us here and what our plan is moving forward to deal with this debt. So let's get into it. As I mentioned in my intro when we last left off with our debt journey, we were completely debt free except for our mortgage. We had worked our butt off and paid off all of our debt and we were a loving life and working on building as big of an emergency fund as possible. Fast forward to just a couple of months ago and my husband's car was having a ton of issues. We had been putting way too much money into it. Thankful of course that we had the money to put into it and you know, keep it running and on the road. But it had become clear that at this point we were just kind of putting more money into a sinking ship. The car was just too old and it was just falling apart and it was time to get a different car for my husband. Now you may or may not know, but in the beginning of our debt free journey, I was a devout Dave Ramsey follower. So I had it in my head that no matter what, I would never do one of two things. I would never buy another brand new car off the lot ever. Only another new to me car, meaning it was used. And I would never, ever, ever take out a car loan and go back in debt just to drive a car. So I broke both of those rules, both of them. My husband and I had gone back and forth for months and months and months about the state of this car and what our plan was going to be to replace it when the time came to do so. And we could not get on the same page no matter what we did. We both just had different takes on it. See my husband never really was adamantly against debt like I was. I was more so the driving force and wanting and needing to get rid of all of it and say no to debt for the rest of our lives. While he definitely wanted to get out of debt and pay off the debt we were in, he wasn't necessarily as opposed to ever taking out another loan or going into debt again in our future. So when it came down to it, are you going to leave this time? My cat keeps wanting to get out. We both began searching for used cars to purchase and we weren't finding too much in our price range in the year we were looking for that had the features we are looking for and we were kind of at an impasse. So he wanted to just go take a look at a specific car and we did. He had done his research and found that this car in particular got about 40 miles to the gallon. He really liked the car. What was most important to him was having the full entire vehicle under warranty for at least a couple of years. So we weren't hit with any unexpected vehicle maintenance bills and that it got really, really good gas mileage because he mostly drives back and forth to work and he wanted to be able to have this car for a very long time and not worry about how the car may or may not have been taken care of before it was in his possession. I, on the other hand, wanted to find a used car that would meet all of our needs and was still in great shape and go that route. When we looked at the financing, financing a used vehicle, of course the interest rate was so much higher than they were offering for the new vehicle. Before we went to the dealership that day, I did do some research on the specific make and model of vehicle and I had a pretty good idea of what used vehicles were available either at the specific dealership or just in the area or even on Carvana. We went to go look at the car and he really liked it. He wanted this car, but I did not want to get a brand new car. We ended up discussing it on the lot and then we left the car lot and went and go had lunch and talked about everything and kind of went, did a quick little money meeting to talk about our finances and how this may impact us. And in the end we bought the car, we bought a brand new car off the lot and we financed it in full. To get a model within the past two years that's in really good shape with low mileage, it wasn't that much cheaper than the deal we got for the brand new vehicle. Here comes the part where you're probably going to judge my financial choices and wonder why you ever watched any video I ever made talking about getting out of debt or managing your money or any of the like, and that's okay. I completely understand that. You can let me have it in the comments. I'm ready for it all because what it comes down to is I have a lot of anxiety and I still to this day have a lot of anxiety about money and spending money. No, no, lay down. We did work really hard to build our emergency fund and grow our savings as much as possible in the past couple of years. So we were able to pay for this car in full from our savings, which was the original plan. I said, whatever car we purchased, we are not taking out a loan. We are going to pay for the car. That was always the plan. That's what we had been saving towards. However, my business has been way, way, way down this year. My revenue is down substantially from last year. I haven't paid myself much in the past year at all. Only a fraction of what I earned last year. I have been holding on to that emergency fund savings fund for dear life and it's been the only thing that has kept me sane and calm ish throughout this past year of wild prices and I could not bring myself to take that much money out of our savings and deplete it so substantially. I knew it would throw me into like an anxiety ridden tailspin and I just couldn't do it. I could not do it. So we ended up getting the loan. We did not put any money down because we really weren't sure if we wanted to turn around and pay this off in full in a month, in two months, in a week, in a year. We weren't sure. I took a look at our bank account and this is where, and I'm not recommending this course of action for anybody else and the way I'm justifying this in my head, don't come at me finance bros, but we earn more money and interest on our money being in our savings each month than we pay each month on our car loan. So that doesn't make this a good financial move, right? It doesn't make it a smart move because I'm still paying additional interest that we don't need to pay. If I would just take the money out and buy the car free and clear, we wouldn't be paying any additional interest on this car. But I just, I'm just not in a position right now where I can feel safe and confident and secure in taking that much money out of our savings account. So we are back in debt. I'm not really sure our course of action. Hey, stop. The only thing I am sure of at this time is that we will put chunks of money on the loan as principal payments as our finances allow along the way. We have discussed just paying it off in full once we get through Christmas. We have discussed paying it off in full come tax time. We have discussed paying it off in full now. I don't know. I second guess this decision every week, but right now I would rather spend a little extra money each month for peace of mind and for not feeling incredible financial stress and overwhelm when my income is down so far. And again, we could change our minds at any time, but for right now today at 1207 this is the right decision for us. And while we don't really have all the details figured out, our big picture goal is to be able to pay this car off in full within a year's time. And whether that results in us just taking the majority of it out of savings and paying it off or making those big payments throughout the year that remains to be seen. One thing I will mention is in a really weird way, I don't even feel like we're back in debt. I have none of the feelings of like that weight on my shoulders that I did before when we were buried in debt. And I'm sure that a big part of that is just knowing that we can take the money out of savings and pay the loan off in full anytime we choose. But I also believe that the other part of that is we're just in a completely different place in our life and our finances and our money mindset and just overall better knowing how to manage our money than we were years ago when we were buried in debt. And you may think we're complete idiots. That's okay. You are completely entitled to your opinion, but this is the decision we made and we're feeling quite comfortable with it at the moment. My husband's loving his new car. He's loving not worrying about what the next thing is that's going to break and cost us hundreds or thousands of dollars. And he just is really enjoying that security. And I am enjoying the security of knowing that for now, at least our emergency fund and savings account is still intact and we are still prepared if another type of emergency were to pop up. That is a story of how we found ourselves back in debt. Be gentle to me in the comments, but I would love to hear your thoughts on everything. If you're out of debt, would you ever consider going back into debt? Let me know. I love hearing from you guys. I appreciate you so much for watching this video and in the next video we're going to chat about my plans for this channel moving forward and I really hope you'll join me. Thanks so much for watching and I'll see you in the next one.