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How I Paid Off $11K in Debt

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DebtPicA Back Story about Scott’s Debt

Before I delve into the how I got rid of it, I’ll provide a bit of a background on how I got it in the first place. I was working and making my own spending money from the age of 7 (yes paper routes count as jobs). I had a knack for saving money up for the things I wanted to buy – big ticket items like Super Nintendo and a trip with my cousin to Orlando. Then something incredibly horrible happened, I was approved for a credit card. Suddenly the anticipation of saving up for months was no longer required, instant satisfaction was now the best way to go. A small limit of $500.00 was a great starting point for this mentality. It meant that my minimum payments would never be out of line with what I was making so I wouldn’t have to worry about missing a deadline. I built up my credit score by making consistent payments and spending using my card. The banks love it when you carry a balance, even a small amount of debt counts. To show their appreciation for my payment history, and the interest payments I was generating my credit limit started to creep up. First to a couple of thousand, then a few more until my limit was over $10,000.00. I wasn’t making more money, so I didn’t increase my frivolous spending habits to match the limit – they weren’t going to get me there. The problem came when I wanted to purchase my first car.

I hadn’t been keeping up the old good habits of saving up for something I wanted – and now I had a credit limit that was able to handle a few thousand bucks for a beautiful Pontiac Sunfire. After that purchase my credit limit was also able to handle a few more thousand in repairs and maintenance. I did not adjust my spending habits to account for these large expenses, and now the minimum payments were higher. I carried that balance for a couple of years until my car transitioned from road worthy to recycled goods. So now I have several thousand dollars of debt, and no car. No problem – I still have several thousand available in credit which was the easiest answer I had available without putting in any actual effort. So I bought myself a VW Jetta – again with money I didn’t actually have. And that’s where this story transitions from what I did, to what I did about it.

A change in thinking was the only way out of this mess I had put myself in. I pride myself on being a fairly intelligent person yet I had made some astoundingly stupid decisions, it was an equation that didn’t make any sense. 2 + 2 is 4, and 2 + 4 – 2 is still 4; no matter what the equation was the answer was still the same but I was trying to make it equal 0. The only way I was going to get the result I wanted was to start working with different numbers. This wasn’t when I discovered how to form a proper budget, that came later.

The first step is to write down your absolute essential expenses, not what you can get by on and not the social commitments you might have – we are talking barebones. What amount of money do you need to survive – you can still consider this a budget but without any type of decision making on where to put your money. This might not be what you are going to live on while paying off debt – but it gets rid of all the hooey about why you can’t pay down what you owe. This isn’t something you owe anyone else, it isn’t an answer you need to give to your parents, your friends or the bank. It is a vital step in this process to stop making excuses on why you can’t and figure out how you are going to.

My debt carried with it a level of shame, this was actually a helpful tool in getting rid of it because pride is a motivator in progress. Instead of spending unnecessary amounts of money on material things to make myself feel better making the problem worse; I would feel even better if my actions made the problem better. This is where the power of your pride comes in, nobody is impressed by the size of your debt, or how quickly you managed to amass it. Forbes does not have a top 100 indebted individuals list because that isn’t an achievement. Sarah and I will often make parallels between your financial well-being and your diet and this is a great example. When you see articles about the world’s heaviest people – I doubt the word impressed comes to mind. When those stories transition to how they lost hundreds of pounds through hard work and dedication – now you have something to be inspired about. I am not insinuating that your sense of self-worth should be driven by how others see you. I am saying that being impressed with your own achievements is a wonderful feeling and that needs to be your goal. Be your own role model, your own inspiration, your own muse.

Another powerful tool in helping you with this very difficult process is to have an end goal. For me, I had found the woman of my dreams and wanted very much to live the rest of my life with her. She had her own struggles with money but didn’t carry the burden of debt. She did not provide me with an ultimatum on paying off the debt – but it was very important to me that I rid myself of this liability so she would not inherit it from me. She was very proud to have kept debt-free through her hard work and you don’t take that away from someone you love. My restriction was self-imposed; I would not start the most rewarding phase of my life without solving my problem. I hope you find a goal as important as this to achieve as it will make your journey easier to stick to – but if you aren’t so lucky, just make sure you have something you are working towards to keep you on track.

If you need help with developing your own tools to rid yourself of debt and free yourself financially, don’t feel like you have to do it alone. Subscribe to our newsletter for a free guide to communicating about money and download our free budget template. These are great tools that we are confident will help you in bettering your life. If you’d like a more personalized approach to reversing the trend from debt to savings – we offer an exciting coaching program which serves as an investment in your financial well-being. Further details can be found here.

“Disciplining yourself to do what you know is right and important, although difficult, is the highroad to pride, self-esteem, and personal satisfaction” – Margaret Thatcher

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