Credit card payment hit today: $301 toward principal. So that's $801 down, $649 to go on my July goal, and $53,478 to go on my Big-Picture Goal.

Got a bit of a shock when I checked my checking account today: AS's direct deposit came in $256.98 lower than usual. She checked into it, and it seems she's reached the point where her free tuition surpassed a certain dollar value, so the remainder must be taxed as income. The next five paychecks will be hit the same way, so that's a $1541.88 shortfall over the next three months.

Sigh. The sucker punches just keep coming, it seems. I'll have to rework my budget, but I know where this is going to hit hardest--our debt repayment. I just checked our tickets to Virginia, and the fare is nonrefundable. Guess canceling our trip isn't the way to make this up.

Ironically, AS's raise was also reflected in this paycheck. It probably kept this shortfall back by $30. Hard to see it as a plus at this point, though.

As soon as this shortfall ends, two student loans will start coming due, probably not at that rate but close. So really we're just starting the process a few months early.

Hmm...

Well, it's a good thing I'm relating my whole past history, because comparatively speaking this isn't that bad a blow. It just feels like one.

OK. In the last chapter I'd managed to get on a budget, but not much else.

So in late May 2007, about 2 months after we started, I finally sat down and figured out mine and AS's total debt. (NT's was still a mystery, and we were both avoiding it right now.) It was a bit of a shock to say the least: We had $40,803 in credit card debt, $32,118 in student loan debt, and $201,847 in home debt. The grand total? $274,768! I calculated how much our minimum payments would pay off, and it was a little over a thousand a month. At this rate I wouldn't be out of debt for 22 years.

In June 2007 I consolidated some of my credit card debts. I also rolled my $10,000 HELOC into it; the variable interest rate was at 11% and the payments didn't encourage me to pay more than the interest each month. Plus it didn't really qualify as home debt; I'd bought furniture and a computer with it. So my credit card debt went up and my home debt went down.

That same month, I dealt with the issue of the England trip we were determined to take the next year. I decided, rather than saving up for it, to add $5,000 to my debt total, then try to pay other, high-interest debts down more aggressively, to the tune of $5,000 extra before our trip. Then we'd at least break even on the trip. I started putting every bit that NT made as a temp toward debt. He got paid weekly, so even though the amounts were variable, at least I could see progress often.

July started out a good month because I completed my first monthly debt-payoff challenge, and NT got his full-time job. We still were getting very little spending money and only putting $500 extra toward debt each month, but I knew that would get better soon.

But the good news didn't last for long. Once NT had confirmed his new job, he felt able to let me in on his finances. He said he couldn't face it before, when he wasn't able to contribute at all.

It turned out he had not checked his account since he'd come to America. He had rental income getting direct-deposited and bills getting directly debited from that account. And he was pretty sure that the rental income was not covering the bills.

We logged in to his account and he was right; he was actually a few pounds away from reaching the limit on his overdraft account. His rental income was about $400 short of covering the minimum bills. His debts included $19,382 of credit debt (on four cards plus the overdraft) and $121,548 in home debt (a main mortgage plus two home-equity loans). We also knew he was going to college soon, and I estimated the tuition for four years would be about $40,000. So I went ahead and added that to his debt in my mind, bringing his total debt to $180,930, and our household total to $457,714.

So, to my rather glum thinking, after about four months of buckling down, I had paid off about $500 above the minimum but accrued $186,000 in debt and a new $400 monthly bill (to cover our minimum bills in England). Actually $450, because it cost $50 to do an international wire transfer. And my little family was nearly a half-million dollars in debt. Suddenly NT's great new job didn't seem like it would make a dent in our financial misery.

Whew! It's crazy even writing it down. Stay tuned for chapter 3, when we begin to claw our way out of the hole.

I've been noticing some new members joining SA blogs recently who are pretty freaked out by their financial situations. I thought it would help if I reintroduced myself and spilled my gruesome financial saga. It's not exactly a success story yet, but I have made some progress and gotten more upbeat about my finances!

If you have your own personal horror stories that have happy endings (or are headed that way), maybe you could share on your own blogs so these new members know they're not alone and that there's a light at the end of the tunnel (and that it's not the proverbial freight train bearing down on them)!

I just pulled my own head out of the sand about my finances 15 months ago. I was in charge of finances for both me and my partner AS. I'd tried off and on to keep a budget and pay down debts with little success over the years, and saving seemed impossible. I would transfer credit card balances around thinking that would help me pay them off faster, but all it would do was encourage us to charge up the first card again.

I was naive about finances and, like many other Americans, assumed that when I earned more I would be able to straighten everything out. Of course our raises would cover cost-of-living increases and little else, so the debt never really went away. Worst of all, even though we were charging on credit cards pretty freely much of the time, I never felt as if we were living well. I never felt prosperous, so the spending wasn't even comforting, and the bills were awful. But I wasn't sure how to stop.

Then my 2nd partner NT moved in. He wanted to decorate the condo and we wanted to let him, because we'd never done anything with it and it wasn't very nice. NT wasn't working at first, and AS had an inconsistent income from a freelance job where the employer kept stringing her along saying she'd hire her full-time soon. Eventually she left that and got a full-time job that also paid for her grad school, so things got a little better. Then NT got his work permit and started getting some temp work.

Still, we were all spending in different directions with no plan, no budget and no one in charge of finances (besides me making sure I paid bills on time, even if it meant dipping into the line of credit on our checking account). And those months with only one steady income had really put us further in the hole. One day in March 2007, I had a scary moment where I realized we were nearing the limit on our line of credit. I did a rough estimate of our monthly income and bills and saw that we only had enough income to cover basic bills yet were all spending what we wanted, whether it was me getting drinks after work, or NT buying furniture and housewares, or AS eating fast food every day for lunch.

I put the brakes on and let the other two know that we had to change our living, fast. I looked at our past month's statements and showed them we spent over $1200 on eating and drinking out. That shocked us all. Then I did a budget and showed them that we barely had enough income to cover bills and groceries, and that we'd have to quit all frivolous spending until we had more income coming in.

There were a few hitches, but generally we all buckled down and stopped spending. It was a huge lifestyle change for all of us. Luckily NT and I already liked to cook, so we were able to get by without going out at all. We would still get a bit of spending money here and there, whenever we had covered all our bills and had any money left over, but it wasn't much. It was kind of embarrassing the rare times we did go out with friends because they could see us discussing whether we could each afford one beer or two, and meanwhile everyone else is ordering three or four drinks plus food. But for the first time I had determination fueled by desperation. I really felt like if we didn't change this time, we were going to go under.

So I had our spending under control, and it wasn't fun but it was working. But there were so many unknowns in my financial world that were lurking around, worrying me. I didn't have a grasp of our total debt; I hadn't calculated it in over a year. And I knew there were some lingering financial activities going on in the UK for NT: I didn't know what they were and sort of assumed he was taking care of them, but I didn't know any of the details yet. And most of all, I knew deep down that just paying the minimums wasn't going to make our debt (however much it was) go away, but I didn't have a plan for paying it down. Also, NT was planning to go to college soon, and we'd already committed to visiting England for his sister's wedding in the future. Those were two big bills that I had no idea how I was going to pay.

How's that for a grim picture? Tune in to the next chapter when I calculate our huge debt totals and nearly have a heart attack!

Our four mortgage payments hit today:
US: $297 to principal
UK #1: $141 to principal
UK #2: $30 to principal
UK #3: $32 to principal
Total: $500 went to principal.

So that's $500 down, $950 to go on my July goal. No progress on my Big-Picture Goal, of course.

Good news: My UK mortgages had already gone down a bit due to an interest reduction. When I looked ahead on my US mortgage, I saw that next month's bill will be about $15 less, because apparently our escrow payment got reduced. Don't know why, it usually goes up, but I'm not complaining! I'm putting a little of the surplus into our education-expenses category and the rest into our travel savings.

I also put about $5 into savings today because AS got some medical reimbursement direct-deposited. I was also able to put about $35 into travel savings yesterday, because NT got a bit of OT pay and I received $5 from a survey company. (We have a lot to raise before our trip in October, so I'm putting every extra cent I can find into that fund.)