This article is the first in a series intended to feature the Debt Free Adventures of other Personal Finance writers.
Today’s featured PF writer is Jeff from Sustainable Life Blog. Jeff created his website to share his journey to sustainability with his readers. His blog includes posts on personal finance, personal and mental health, and the environment. It has tips and hints to help stay green, stay in the green, and stay healthy during your life.
Debt. It’s an ugly thing to say, and it’s an uglier thing to be in the clutches of. Believe me, I know. I couldn’t take anyone else’s word for it though, I had to find out myself why it was so bad. I’ll tell you how I got in it, what I’ve sacrificed to get out of debt, how much debt I’ve freed myself from, and a projected date when my Debt Free Adventure will end. Hint: It’s not as soon as I’d like it to be!
Where I Started
Like everyone else in my day, I got a credit card to “build credit” (read: get used to servitude) when I was in high school. People said having a card would be good for building credit for things that I’d need in the future, like a car or a house. I used it responsibly for about 2 years, never really running up too large of a balance and paying it off regularly. I wasn’t big on saving money at this point, because I didn’t need to be. I had a credit card for emergencies. As they tend to, emergencies came up. Then a new type of emergency started to happen: one where I didn’t have the money to do something fun that I wanted to, like go on a trip. Before long, I was in the cycle of making a bit more than the minimum payments on the 2 cards that I had (thankfully I wasn’t stupid enough to sign up for more).
Every year for about 3 years, I would make it a New Years Resolution to pay off my credit cards. I failed every time for 3 years in a row. I told myself that I was failing because I was in school and didn’t have a “real” job or income, and that’s why it was so difficult. I believed that at first, and that belief led to a bit of contentment with my situation. All I would need to do was to wait until I got out of school and got a job, then I’d be able to pay them off in no time. Student loans were not even on my radar at this point. In 2008 (after once again failing at paying off my credit card resolution) I found the personal finance blogs and immediately I was hooked on sites like The Simple Dollar, Get Rich Slowly and Debt Free Adventure.
From these blogs, I learned that my previous thought on why I wasn’t able to pay off my credit cards was completely inaccurate. I was making plenty of money, I was just unable to tell myself “no, don’t buy that.” Ever so slowly, I started to get it. I was making money, and spending less than I earned, and it seemed like I had far fewer “emergencies” than I used to when I had less money. My mindset towards money had finally changed, and I started to want out of debt even more.
I took some advice I found on one of the PF Blogs and added up my total debt before I finished grad school. Even though I didn’t want to count it, I logged on to all my student loan websites and added those in too. After the mild heart attack I had when I realized I was over $30,000 in debt. At that point, I realized how dire my circumstances truly were: I owed people $30,000 and I had no way to pay them. To top all that off, the economy was tanking. The foolish visions I had of as an undergraduate came into mind. I figured I’d get a job making like $45-50k a year and I’d be fine. Tip for students: don’t assume things like that. At once, I realized my problem, and started saving some money for the first time in basically ever. I knew I was most likely going to move someplace once I found a job, and I’d need cash to do it. No more credit for this guy. After about 4 months, I had $3,000 in cash. I’d never had that much before. Even though I still had credit cards, it was a great feeling.
After a few initial setbacks, I started working full time. Boy was the money nice, but I was still having trouble getting as far ahead as I wanted. After some smooth balance transfers on my credit cards (one that netted me a free ticket). I had moved my 1 card to two and started to pay it off. I paid off a very small balance on 1 of my cards and closed it. Boy did that feel great. I wanted more of that success, but I wasn’t really getting it. It seemed like my car was always having issues. Finally, it gave up the ghost. I was really in no position to deal with, as I had been focusing on credit cards and had very little saved up for a new one. I went against the grain and took out a loan for a brand new car. It was a huge setback, but looking back on it, it has added a huge amount of stability to my situation (and dollars to my debt).
Once I saw my new debt number ($55,400) I decided it was time for some drastic action. I started using every small tip I could find. If it looked at least possible for me to do, I’d give it a try no matter what. People said get a second job. I did that. People said stop spending money. Unless it was something that was going to keep me or my truck on the road, it stayed on the shelf. I cut spending to the bone (and probably chipped a fragment off as well). I’ve started to do many of the routine maintainance tasks on my truck, stopped eating out, stopped going out on the weekends, and found free and fun entertainment in my area. I had to give up spending time with my girlfriend and dog at home to work my other job, and that’s a huge deal to me. It was something that needed to happen for me to get out of debt though. I don’t get to spend much time at home or do many fun things, but when I’m debt free, I’ll be able to spend lots of time at home, and do plenty of fun things!
How far I’ve come
I think I’ve gotten pretty far. The 1 most important thing that has happened is the change of mindset that changed the spending patterns. I realized how much money I was wasting and just had to stop. Once that happened, life seemed much easier, and my debt started dropping instead of staying at a constant pleatu.
Right now, I’ve got $40,541 in debt, and have a $1,000 emergency fund. I’ve paid off all my credit cards, and have moved on to my student loans. Once I pay off my 3 student loans (hopefully 1 by mid-october!!) I’ll begin my assault on the truck. According to my calculations, my Debt Free Adventure will end in around 1 year from now. It started in September 2009, and will have taken approximately 2 years. Debt freedom will be awesome, and I’m doing everything I can to move that date up.
If you’re stuck in debt and tired of making monthly payments to someone for something, get a budget, get a strategy and kick that debt out of your life. As you can see from my story, it has not been easy, fun or pretty, but I don’t think you can find many things that are worth doing that are not hard in some way. Good luck on your Debt Free Adventure!
Stu @ Pennywise2Pennyworth says
Nice work Jeff,
I am in a similar situation (as are countless others) and stories like this have a huge impact on my motivation to get out of debt. I’ve paid off my credit cards, but those stinkin’ student loans refuse to go away. I am having a hard time balancing my need to save with paying off the student loans. How are you balancing that out?
Congratulations on being debt free in a year and good luck!
Matt Jabs says
Hi Stu, thanks for stopping by. I’m sure Jeff will answer, but I’ll give my $0.02 on your question.
I continually struggle with how much to save and how much to put toward debt repayment. Historically I used the 75/25 method to pay off debt and save, respectively – but have recently changed my tune.
While debt repayment is still a top priority, just a few weeks back I decided to open a Slush Fund to give myself options by piling up my money for use as a lump sum payment on debt later on. This allows me to keep my money in my own account, then choose where to place it down the road. I love the options this strategy provides.
Stu @ Pennywise2Pennyworth says
Thanks for the advice Matt. I like the 75/25 approach. It is inline with my philosophy of balance and my psychological need to save. Also I am young and have compound interest on my side right? So why wouldn’t I save a little now AND pay off my debts at the same time (albeit, slower) to reap the rewards of my money making money for me down the road?
Again thanks for the advice it is much appreciated from your readers.
Matt Jabs says
It’s always important for us to take existing systems and shape them to our situation. Just make sure you keep saving and slaying debt! Cheers.
Jeff – you are everywhere today! Good job with all the guest posts and getting closer to being debt free!
Thanks for sharing! I love reading other debt adventures! My story is actually very similar to yours. The only difference is that I have only one credit card. I have since paid it off, and have now recently gotten a new one.. to start building my credit again (looking to buy a house within a few years). I’ve been rolling on my debt snowball for some time now… That’s actually how I paid off my credit card, father, grad school tuition, and one of my student loans. All I’ve got left is two student loans and it’s an AMAZING feeling! you are making excellent progress! Keep up the good work!
Thanks Jeff for the most insightful blog post on debt reduction that I have read in quite some time!
I am frugal – or at least I thought I was. However, it wasn’t until I read one statement in your post that was the most profound and yet simple statement ever:
“At that point, I realized how dire my circumstances truly were: I owed people $30,000 and I had no way to pay them.”
As obvious as it seems, I never realized, consciously, that I owe those people money and have no way to pay them. I always put a corporate face on those I owe money to and never thought about how I actually owe money to “people” – as if taking money from a person I know and saying “I owe you”.
Thank you a thousand times over! I now get it and plan on spending the coming weekend writing down everything I owe to realize the full extent of my debt and do what I need to in order to get rid of the evil monster!
Maria Barker says
Hello. I have watched Matt for a time now, but just read your post tonight. Thank you for sharing, I love gathering motivation. Our drive to be debt-free is not much of a love of money itself, but I want time and freedom to do more that matters to me, like sustainable living “things”!
I enjoyed your offering, but take issue with 1 point, and it is a point that you share with Matt, so I know I am in the minority here. You said, “…my Debt Free Adventure will end in around 1 year from now.” If I understand your position, I would submit to you, that in fact your debt free adventure will only begin in around one year from now! When you are truly debt free, is when you will find how adventurous debt free adventures are. Until then, you, and Matt, and I, are having a different kind of adventure, that of ACHIEVING THE STATUS of being debt free. Just as adventurous, but a misnomer, nevertheless. Can’t have a debt free adventure if you are in Debt.