Today Iâ€™m going to skip the beginning parts, where I was deep in debt, struggling, anxious about my finances all the time, with horrible financial habits, not wanting to look at my debts â€¦
â€¦ and instead Iâ€™ll talk about what I did to dig myself out of the hole, and what it was like.
It started with a series of conversations with my wife, Eva, about how we needed to change things, and the two of us making a resolve to get out of debt. That meant we had to work together to cut our expenses, we had to talk to the kids and find ways to save money as a family, and we had to help each other get our finances in order and start paying debts.
I read a bunch of articles online, including Get Rich Slowly by J.D. Roth, and things about the debt snowball method, etc. I got out our bills and listed them on a spreadsheet, with the total amounts and how much we were supposed to pay each month. I started making a plan to pay them back, one at a time, starting with the smallest debt. Using this, I could calculate how fast weâ€™d pay off these debts if we were able to find more money for debt payments. This sparked hope and motivated me to spend less!
We worked as a team, Eva and I, and as a family with the kids. Instead of going to the movies or the mall (which were two things we used to do as a family), we stayed home and played games and did things outdoors. We went on picnics instead of eating out, or went to the beach after packing some PB&J sandwiches. We met every Sunday as a family and planned out cheap or free things to do together.
We sacrificed together. And we learned that it can actually be fun to simplify, to declutter, to find free things to do, and that â€œsacrificingâ€ is just a state of mind. We were poor, but it didnâ€™t feel like we were suffering at all.
Slowly, we paid off the small debts, and started working on the medium ones. The progress was slow, but it was amazing, to see debts paid off and see ourselves making so much progress. I started freelancing to make more money, and the progress sped up. I was super motivated to work a lot, because every extra paycheck I got was an extra debt payment.
We got by with just one car, which meant a lot of logistical challenges with so many kids, but we made it work. We got buy without buying anything new, and just used what we had as long as we could, or borrowed or shared or used the library or went without. It takes a little creativity to not buy new things, but itâ€™s not as hard as you might think.
Some debts we had to put off paying, and I negotiated with my creditors to get them off my back and to buy us some time. Mostly they were just happy to have someone who was finally going to pay them, so they were flexible.
I started making a little money off my blog, a couple years into our debt elimination journey, and by this time we were close to finally being debt free. I sold my first ebook on Zen Habits, in November 2007, and this extra money was the miracle that finally ended our debt. We celebrated! It was truly an amazing feeling, to be out of debt.
From that point on, we never went into debt again. We saved and bought our next car on cash. We didnâ€™t get credit cards for more than 5 years, because we didnâ€™t trust them. We didnâ€™t get a house loan (and still havenâ€™t), and just rented. We saved, and saved, and then invested. When we finally got a credit card (for travel miles), we were obsessive about paying it in full every week (now every month), so that we would never pay interest like our former sucker selves.
We have remained debt-free, and now are firmly on stable financial ground, thanks to the habits we created when we were poor and struggling and creatively living on the cheap. It was an incredible experience that taught us so much.