11 Ways We Dove into Debt and How We’re Digging Out

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It was not all that long ago that our ‘Debt Free’ Adventure was more like a ‘who cares how much debt we have’ adventure.  I suppose we were semi-responsible in that we never made ourselves house poor, nor did we ever go hog wild on gadgets or toys.  In fact, the reason we accumulated debt at all is simple… up until January of 2009 we never understood how powerful a prison of debt can be.

Now that we do understand the power of debt slavery, we avoid it like the plague.

Mindset of the chronically indebted

Before I get into specifics, it is important to touch on a few “thinking problems” we had that are commonly shared by those in deb, you have to change your mindset:

  1. We just didn’t care – By far the biggest personal finance problem for us was simply our lack of responsible money management.  If we would have taken control of our financial reigns from day one we would be in a much better position.  Oh well, since we can’t change the past we focus on doing the right thing going forward.
  2. Influenced by culture – One of the biggest reasons we slowly let ourselves get into debt was because we did not purpose to think for ourselves.  Rather than responsibly determining our purchases based on actual savings and income, we bought according to cultural norms.
  3. We make decent money – We figured because we were both college educated, working professionals that we should be able to have certain things.  Rather than responsibly determining our purchases based on actual savings and income, we presumed our income would always be there and leveraged against future income.
  4. We deserve nice things – Because we sacrificed and worked hard all the way through school, we felt as if we deserved to buy nice things the day we began earning rather than the day we had actually accumulated the savings.  Rather than responsibly determining our purchases based on actual savings and income, we felt as though we deserved nice things before we actually earned those nice things.

Ways our debt accumulated

Here are a few specific ways our debt built up over the years:

  1. We ate out constantly – Before analyzing food costs we rarely planned or prepared meals in advance, instead we would just eat out whenever we felt like it.  Now we set a strict budget for groceries and dining out and are careful to stick to it every month.  Not only do we save thousands of dollars each year, but we have also lost around 60 combined pounds.
  2. We never used a budget – Rather than telling our money where to go, our money would just seem to vanish into thin air.  This always happened, regardless of how much money we made.  Now we give every dollar a job rather than wondering where it all goes… and boy does it feel great!
  3. Credit cards as an emergency fund – Rather than save money for emergencies, we chose to go into high interest debt each time we had an emergency.  Saving for emergencies was a personal finance fundamental we lacked in times past but have since adopted… and we feel much more secure because of it.
  4. I fell for the HDTV craze – I take full responsibility for all our financial irresponsibility… but this particular purchase deserves a special mention.  Against her better judgment, my wife gracefully went along with my decision to purchase a $2,000 television – bless her heart.  This was obviously a terribly unnecessary purchase decision on my part.  We had a 27″ television that worked perfectly fine, but for whatever reason I just had to have a fancy new boob tube.  I would sell it in a heartbeat if I weren’t sure to lose my tail on it… so we just keep it and plan on having it for a loooooooong time.  🙂
  5. Bank fees – Oh my word… I hate talking about this because it makes me feel like such a D-bag.  Before we started our debt free adventure it was not super uncommon for me to be hit with bank fees.  Both over-the-limit fees and late fees were things that ate up a good amount of our money over the years.  Never again I say… never again!  Next to responsible management of our money the best move we made to avoid bank fees was switching to Capital One 360 Bank – they treat us so much better than any bank in the past.
  6. Just swipe it – We used to just swipe our debit cards for everything with the only requirement being a positive balance in our checking account – and even that was ignored sometimes.  Now-a-days we use cash envelopes for our five most easily abused budget categories:  groceries, miscellaneous, dining out, entertainment, and clothing are all kept under tight reigns by limited amounts of cash each month.
  7. Alcoholic beverages – Rather than waiting until we were home to enjoy a beer or glass of wine for much cheaper, we would order drinks with dinner.  A lot of people talk about the latte factor, but I wonder if the less popular alcohol factor eats up just as much or more of the average American family budget.  Now-a-days if we want an occasional beer or glass of wine we just wait until we get home.

Of course there are other factors that contributed to the debt we battle so fervently today… but this list gives you a good idea of what not to do if you want to win with money.

Ways you got into debt

What are some specific things you have changed or need to change in order to avoid future debt and help dig your way out of existing debt?

photo by Joe Shlabotnik

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1 Mike Lutter

I’m amazed that other people fell into the same patterns that I did. I can relate exactly with the “mindset of the chronically indebted” as you say. It’s exactly the trap I fell into.

The only way to get out of the trap is to break old habits and change old behaviors. Quit spending on stupid stuff and start saving for what matters.

2 Awareness Home Funding

No matter I have been looking and reading as of late the concept of personal responsibility has been creaping in. Yeah! While ‘life’ does happen, the individual still needs to be accountable for their actions. While there are programs to help bridge the gaps that ‘life’ creates, it is till the individual that must take the necessary steps. It can be done. It’s not always easy or fun, but the pride of taking control of your money, rather than the alternative is so rewarding.

3 Matt Jabs

PR is incredibly important – here is my view on personal responsibility.

4 Lakita (PFJourney)


This sounds all too familiar! I would also say that there are experiences from childhood that influence our adult money behavior….rather these experiences were good, bad, or even non existent. It impacts how we treat finances.

5 Matt Jabs

Yeah, upbringing & education definitely play a role.

6 Awareness Home Funding

I completely agree Lakita. We teach our children in other areas of life – being safe, chosing good friends, being healthy … How to be financially responsible is must as well.

7 Mrs. Money

I’m guilty of eating out too much. I agree with you- that when you make “good money” you feel like you deserve better things. It’s crazy how we think sometimes 🙂

8 RainyDaySaver

While I’ve been lucky to never have had major credit card debt (we’re paying off hubby’s cards, down to the last $2500 now), I cannot stress enough to people the importance of having an emergency fund and paying for things in cash. If you don’t have the cash on hand to pay for that $2K HDTV, you should not buy it! Of course, that is much easier said than done! It’s all about changing your mindset, just like you have, Matt.

9 Matt Jabs

Yeah, people often write to me about how to best sustain the motivation. It is hard for me to fully comprehend slipping back into my old habits because of my fundamental shift in mindset. I would argue that until this occurs, the motivation will always elude.

10 karyn

I have the same problem with money as I do with food – it’s just a little bit, it won’t hurt, I’ll start “behaving” on Monday – and then that thinking kicks me whenever I get on the scale or see my bank statement. It’s been hard for me to learn how to persevere everyday, day after day.

11 Matt Jabs

I challenge you to calculate how much your debt costs you each month. Then break that down into daily amounts. For example, we currently pay $40.13/day just in interest on our debt… knowing that provides strong daily motivation.

Use my ‘how much your debt costs spreadsheet‘ to calculate your amounts.

12 FinancialBondage

eating out is expensive. I was buying breakfast and lunch out weekly. I was spending $50 a week easy. It is always cheaper to eat at home.

13 Elle

Great posts; many of your thoughts expressed my situation. Ignoring my debt was my biggest mistake. I figured if I could afford the credit card payment, it was a smart buy. (Haha!) It takes time, but you can change habits.

14 Matt Jabs

Yep, it’s crazy how we used to turn a blind eye to our debt isn’t it.

15 Ronnie

I definitely fell for the I make good money, I deserve to treat myself trap. Part of that was jealously over others and their perceived situations. I was jealous of my coworker and boss who could eat out everyday while I couldn’t. Umm, hello! They’re married with two incomes and my boss and my coworkers husband both make at least 5 times my salary. I’m single with a bunch of debt and no one else was contributing to my expenses. Once I hit that realization things got better.

I still suffer from looking at those around me and what they’re doing and comparing myself to it. Now I’m much better at reminding myself of WHY I don’t do certain things, and where my money is going–thank you budget!–and don’t fall into the trap like I used to.

16 Matt Jabs

Oh my word… having an actual working budget is sooooo important. It helps us eliminate emotion from the equation.

17 LeanLifeCoach

Ways you got into debt?

Like many, we were guilty of many of the issues you listed… however…What sent us over the edge was a lifestyle change before we were financially prepared. My wife became a SAHM and I took a job that had benefits but also a 20% reduction in income. All together it was just short of a 50% reduction in family income while still living large! We had to change everything.

18 Matt Jabs

Yeah, one of our goals is to live entirely on my salary. If we cut out the huge monthly debt payments we have been making and just consider our budget… I think we’re already there – it feels great & adds an enormous level of security.

19 Dollars Not Debt

In my blog, I talk about my debt free path and how far I have come. Pay yourself first is a great rule of thumb.

20 Matt Jabs

I agree. That is why I employ the 75/25 method of debt repayment & savings.

21 Financial Samurai

Gotta say, my vacation property in the mountains is quite a luxury. I never plan to sell it, but it does cost quite a lot of money. Need to enjoy the place more, instead of just renting it out, otherwise, what’s the point?

It’s really the big stuff. If you can control the big debt stuff… or focus on making a good deal more money while keeping your debt level, that’s what counts.

22 Olivia aka the frugal bohemian

We’re not a good example, we’re a warning. My mom often said, “An education is expensive.” Like many, I worked a decent paying job and thought keeping $1000 in the bank was plenty. Where did the rest go? Memorable dining experiences, exotic vacations? Hardly. It just evaporated.

I met my soul mate and spent the thousand on our wedding, so we had nothing. (My husband was a poor seminarian. My dad was a poor artist, so he couldn’t kick in much.) I figured we’d make it up, as we both worked. Hah! Once our first born came along with developmental issues, I couldn’t freelance anymore, and dear sweetie was only making $10,700 plus housing. So reality reigned us in. It took ten years to pay off a $3000 plus interest seminary loan and various medical expenses for the kidlet.

I say this is to encourage you all to stay the course. You got your wake up call early, take advantage of it.

23 Matt Jabs

“I say this is to encourage you all to stay the course. You got your wake up call early, take advantage of it.”

Well said Olivia… thanks.

24 Michelle

Yes…we fall into all those categories. We (as young marrieds, no kids) were pulling in 6 figures…and spending next year’s money all the time – since we’ll just make enough later to pay off today’s spending, right? Then the bottom fell out of DH’s industry and household income became $70K, then $50K before he was able to transition into a new career. Those 2 years he was struggling to find work were really a wake-up call. Not only should you NOT spend future dollars, but you can’t rely on them. You have to save (have an emergency fund) and you have to live BELOW your means, otherwise when life happens, you’re going to make bad (financial) decisions. Thanks for the great article!

25 Matt Jabs

Awesome points Michelle. Unfortunately, in today’s world presuming upon our future ability to earn is FAR too common! We all need to scale back, reduce debt, and learn to live on one income. Preparation before disaster is always far better than scrambling for solutions after disaster strikes!

26 Kate

First – I love the picture! Second, I felt like I was just reading about my life. I did recently buy a new TV but I did it with some of my annual bonus and it is one of my favorite things about my place. Suddenly my place is the go to for all friendly gatherings when the TV will be used.
I try to use cash for many things, but never thought about pulling out a certain amount for groceries, entertainment, etc. It is something I am going to start doing – at least starting out with the groceries and then moving on to the other areas. I do tend to use my cash for eating out already so that should help.

Great Post!

27 Matt Jabs

Thanks Kate… I REALLY need to write an article on how we use our cash envelopes. I hope to do that by the end of next week. 🙂

28 Ken

Yeah..we got married and within a month we put a new living room suite and couch/sofa on credit cards…the mountain of debt was off to a grand start….we made mistakes with 0’s on the end….experience and bad decisions were our teachers..live and learn.

29 Alice

As a young single woman (27) I find the eating out and drinking, as well as gifts the hardest to control spending on. All my friends are getting married, having babies, and there is always a reason to celebrate with dinner/drinks. I live in the city so it is so easy to spend some money on dinner, drinks and then a taxi. This year I got really serious about my finances, I need to pay cash for a remodel and then need to save $9k to refinance my mortgage. I have told my friends I am in money saving mode and the sky did not fall out. We will hang out at each others houses, and when we go out for birthdays we will get the specials. I also instituted Mary Hunt’s Freedom Fund idea: saving for gifts/weddings in advance ($100 per month) since I am at an age when does occur frequently. While it is hard to say no to social events (I am a very social person), say no buying clothes, etc it need to be done in order to live within our means. I don’t even want to mention the cost of dating! Married people are lucky not to have that expense any more 🙂
Best of luck to you guys on your goals. I am sure you will make it!

30 Matt Jabs

Way to buck the cultural norms for more responsible behavior Alice… I commend you.

31 Single Mom, Single Money

Swiper, no swiping!!! I, too, am a swiper. I don’t really carry any cash, so I tend to swipe my debit card until I can’t swipe no more. I am climbing back on the wagon and sticking to my budget. I am finding if I spend every dime on paper and transfer it out to savings, debt payments, whatever, then I am more likely to stick to my budget.

32 One shovelful at a time

Our debt load has many contributing events that led up to it- the most damaging being several injuries my husband suffered at work and surgeries/recovery periods that followed those, immediately followed by a broken wrist then some other substantial health events that required hospitalization. He has a physical job so each event was a toll on our resources. You never know when it’s going to rain on your parade and just keep on raining. We never have lived high off the hog or chased after expensive toys or even bought new clothes to speak of. Our minimalist lifestyle has made it easy enough to buckle down and tackle the debt. What I have learned from all of this is to have a multi-level emergency fund and, if you’re a couple, to jockey yourselves into a position where you *could* live off of the income of one or the other if necessary in order to prevent yourselves from racking up the debt to begin with should one of you become sick or injured. By multi-level emergency fund, I mean dividing it up into several buckets. One bit in a savings account attached to the checking to cover unexpected expenses. A second, less accessible, savings account that pays a little better for level 2, equal to a week’s pay. Series I Savings Bonds equal to a week’s pay for level 3. These are a little less liquid than a savings account but pay better. If you’re cashing those in, there better be a real emergency going on. Level 4 is a CD ladder to get you through three months of unemployment. I’m working on building this emergency fund plan while simultaneously working to erase the debt. I think it’s important to pursue both since I feel like I don’t know when I’ll be out charging the pain medications he’s just got to have again and the emergency fund will keep us from digging in deeper. Hopefully his remarkable streak of bad luck is over but you never know when all this stuff you never could have guessed would happen just keeps happening back to back. Now we’re paying *a lot* of interest because we figured we were young and didn’t really need much of an emergency fund. That’s all stuff that happens to other people but not us, right?

33 Matt Jabs

The lessons you’re learning by living minimally and by saving and by reducing debt and by building up emergency savings are valuable lessons you will carry with you for the rest of your lives… I wish you all the best.

34 Donna

Keeping a budget really helps big time to keep you out of debt. And if possible at all to live without them, cut those plastic cards.

35 Rhonda

My husband and I did all of the same things you talked about until we ended up in a huge financial & emotional mess. We lost our house and nearly everything else we could not really afford & had to move in with my parents before finding a place to rent. I was humilated with my bad decisions and had that permanent shift in thinking you talked about. Unfortunately my husband did not. Things got really ugly from then on & we fought constantly about finances until we separated after 14 years of marriage and then divorced 4 years later.

Today, I am nearly debt free. I paid off the judgement and miscellaneous debts from our car being repossed and worked with the bank to release the house in liew of forclosure. (similiar to a short sale) I have some student loans from returning to college after the separation & I recently purchased a house for me and the kids. My ex-husband continues to rack up debt and currently owes over $5000 in back child support. I still pray for him & have tremendous guilt for my part in our debt slavery

36 Matt Jabs

Wow, congrats on your perseverance Rhonda! If you have confessed before God, asked for forgiveness, and changed your ways there is no reason to carry guilt.

37 Rhonda

The guilt comes when I see my teenaged girls beginning to go down the same path as they make financial decisions. In some ways, though, they have an advantage over many of their friends that the are able to see both ways of living and managing finances. Hiding from what happened would send the wrong message to my girls. Now I talk about financial matters all the time.

38 Matt Jabs

Well, nobody’s perfect. What’s important is whether or not we change when we know we should. 🙂

39 Rye @PPI Claims/Reclaims

Although I am not mired in debt I have not really saved any either because of being guilty of quite a few of the items mentioned. I am specially guilty of eating out too much because of the mentality that I deserve better – not really that I have things bad normally. It’s just that I want to reward myself for the hard work. But I think what I lack is contentment and that’s what most of us lack that’s why we spend and spend more than we can afford to.

40 Matt Jabs

Yeah, as a whole we tend to put out recreation ahead of our freedom from debt. Playing golf is a good example for me. Before our Debt Free Adventure began I used to play a lot. Then after we got started I made the decision to forego the game until I paid off all debt. It’s tough but it’s another piece of motivation I use to get DEBT FREE! God bless Rye.

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