Did I Follow The Baby Steps?

The short answer in this is:  no.

There are a few reasons for this, but first let me break down (without exact numbers) the debts that I had in 2013.

I owed the IRS in back taxes for withdrawing from my IRA - roughly around $4,000 including the interest

I had a car loan which was around $10,000

I had a credit card that was maxed out at around $14,000

When I had several rounds of dental work in 2014, I ended up with around $11,000 in bills to Care Credit. 

I paid off the IRS first, with the help of a CPA.  The reason that was first?  They can garnish wages.  There were no settlements on this debt, it was paid in full.

The car loan was next to get paid off early.  The reason for this was I was also the caregiver for my Mother and there were instances when I was driving her to doctor’s appointments as well as to the emergency room on a few occasions.  I wanted to make sure the car was mine.

The Care Credit free term expired with about $4,000 still on the bill, costing me around 23% interest, so, while it took longer to pay that off with that much interest, I got it paid off.  I swore to never go through them again, and so far I’ve been able to keep that promise.

The final debt was my credit card through the financial institution I go through.  It was in the process of getting paid off when Mom passed and I was able to make the minimums while bankrolling the expenses for the monthly bills on her home and the probate costs, until I could be paid back from her estate.  That enabled me to pay off the card.

Unfortunately, that meant that the Emergency Savings account was at $15,000, but with the medical bills I got hit with this year that balance is now back down to $1,000.  The credit card balance is at around $4,000 with a Pet Scan and a Doctor’s appointment before year end, plus a dental appointment to get the implant tooth ordered the first week of January, which will cost around $1,500.00.

I using roughly 50% of my monthly pay at this point to pay that card off as quickly as I possibly can.  Thankfully, with Christmas almost behind me, that should make it easier.

So, did I follow Dave Ramsey’s Baby Step 2 as he prescribes?  No, but I had some specific reasons as to why I didn’t and, up until all of the medical bills this year (so far totaling over $20,000 for the year), I had succeeded.  My hope and prayer is that 2019 will see me getting back out of debt.