Almost four years ago I was in a catastrophic car accident which left me in the hospital for three days with broken ribs and lots of bruising. I ended up hiring a personal injury attorney to help me navigate the insurance companies. My attorney explained that the purpose of insurance is to protect their insured, not to pay my medical bills. Long story short, I ended up with a significant settlement.
Thankfully Desert Husband and I mapped out a strategy to pay off some of our debt. Even though the settlement wasn’t high enough to eliminate all of our debt, we did end up paying off the following:
2nd Mortgage: $10,583.15
Auto Loan: $ 7,557.34
Student Loan: $ 4,552.58
Although this helped put us in a slightly better situation, it only eliminated about a third of our outstanding non-mortgage debt balance. We still owed $51,229 in credit card debt.
In the fall of 2013 we enrolled in a debt relief program to help settle our debts. We were paying around $800 per month to this company to negotiate settlements with our creditors. I’ve read all the blog advice that this is something we could have done ourselves. However, we needed to outsource this to help alleviate some of our insanity and stress. We had 10 creditors that we turned over for the debt relief program to settle for us. They reached settlements with 3-4 of the creditors fairly quickly.
Late 2014, I ended up losing my high paying job of ten years. This put a temporary halt to our debt payoff goal. Desert Husband and I came up with a new strategy to eliminate as much of our monthly outgo as possible. There was no way we were going to be able to afford the $800 a month payment to the debt relief program. Desert Husband ended up taking a loan against his 401(k) to give the debt relief program a large amount to reach settlements quicker. They settled a couple more debts leaving three creditors remaining.
I took the opportunity of job loss to take on bookkeeping clients. Since I wasn’t making enough income from clients to keep us afloat, I ended up taking a position as the office manager and bookkeeper at a law firm in May 2015. Although I am grateful for this job and income, it is barely enough to make ends meet. We are still looking for ways to reach our goals of eliminating our debt and making our lives better.
After several status update requests with the debt relief program, we finally cancelled the three remaining creditors and decided to settle those ourselves. We ended up with a substantial refund of the money we had turned over the prior year. This provided enough to pay off the remaining creditors and to stay afloat for a while longer.
We know there is a lot of advice out there to not borrow against a retirement fund. However, we felt we didn’t have a choice since our goal was to keep our house and to stay out of bankruptcy. We also know that an accident settlement is not typical for most folks to have at their disposal for debt reduction. We are grateful that we were able to use the accident settlement to get us going in the right direction instead of just blowing through it. I am happy to say that our only auto loan was paid off. Our goal is to pay cash for any future vehicles. Actually our goal is to pay cash for everything.
© 2016 by Marge Fox