What is the breakdown of paying the debt back?

To understand it better, let me start with the arrangement we had. We leased a 3,500 square foot end cap in a brand new shopping center. Our infill construction cost was approximately $170,000 with $88,000 of that being covered by an infill allowance. We purchased approximately $95,000 of equipment; primarily from two different vendors. To do all of this, we had $30,000 cash and an SBA secured loan for $122,500.

Anyone who has ever obtained an SBA loan is probably familiar with all the ways they attach themselves to you in exchange for their money. First they attach themselves as a second lien on your house. They also require that they have first lien on all equipment and business assets, and they supersede any other agreements in this respect.

When we closed The Lazy Susan, we were only a few days late on our SBA payment; however, with the inevitability of us to not be able to repay the loan and the many other debts, we voluntarily put ourselves in default on the loan at the request of our bank. This may or may not have been our best option; but everything was very difficult at the time. We fought for the ability to sell our own equipment in order to receive more money and avoid some fees; however, the bank denied us that option and auctioned all of our equipment and business assets themselves.

The net result of this auction after all fees were paid was $38,000 toward our SBA loan. Much of the equipment they auctioned off was not paid for; in fact two vendors we owed approximately $40,000 combined; and we no longer had any assets to secure the debt with. This is the point where most people would have filed bankruptcy.

Next we decided to sell our house pro-actively in lieu of having the SBA foreclose on it and auction it. We received permission from the bank to do this, and after several months on the market, successfully sold it. After all the fees were paid there, we netted $103,000 toward our total debt on a house we originally paid $89,500 for. All of the equity went toward the SBA loan. At this point we now had nothing left that someone who was to sue us could attach themselves to. That meant after one year, we were finally in total control of our finances.

Since late December of 2005 we have been actively using the Dave Ramsey system. Part of this is good communication with those we owe money and also doing settlements in full when possible. We have done several of these settlements and have also had three vendors forgive the debt we owed because of our circumstances. These two combined have eliminated about $7,000 of debt we would have owed.

That means of the debt we paid off, $148,000 of it has been paid through three major events that took work to accomplish. The rest has been paid back by working two and three jobs and selling all kinds of small miscellaneous items. God willing, we will be debt free just 48 months after we started on this journey with $556,848.35 of debt!

Amy reminded me that I forgot to mention the cars. Amy’s car that we still owed about $7,000 on was rear ended and totaled last year. We did a good job buying that car, so we had some equity in it; something that is very rare in a car. The insurance company gave us $9,400 for it which we used to pay off the loan and buy our current car for cash. I also sold my truck for what I owed on it last November when I mobilized; that knocked out another $5,000.