pf blogroll

Broke and Beautiful

blog categories

May

2

Debt-Free Fridays!: Geting Out of Debt is So Much More Than The Money

Moneys! I’ve received a few comments lately asking me to detail HOW to get out of debt. There are loads of great resources out there, so the topic has already been covered extensively. But since I’ve been asked, I’d like to give you my take on the process. For me, getting out of debt was far more a shift in attitude and mindset than it was about the money.

I’ll remind you all that I’m not actually out of debt yet. I still have $750 on my last credit card - but it’s all just numbers. I’ve earned the money to pay that off, it just needs to come in and then I’ll be officially out. I expect that this will happen in the next week or so, once checks are received and deposited and I can transfer the balance online.

Passion

The first thing you must do to get out of debt is get serious. And I don’t mean just making a budget, or saying that you want out. The difference between the phrases, “How do I get rid of this debt?” and “How can I pay off this debt?” is not small. You must, first and foremost, acknowledge that you are in debt and nothing but paying it off will get you out. There is no magical solution - sending money to the debts is the only cut and dry way to make the totals shrink.

You must decide that there is nothing more important to you than getting out of debt - not social life, not television, sleep, or your car. You must decide that this debt is the only thing you care to focus on. There is immense power in laser intensity and focus.

When I decided to get out of debt, I canceled the cable and Netflix. I turned down the thermostat. I stopped hanging out at bars and clubs every weekend. I didn’t renew magazine subscriptions when they came due. I switched to a (painfully) limited plan for my cell phone. I stopped getting manicures and haircuts. I quit buying makeup, snacks that weren’t necessary, eating out, and I quit buying books every week.

The sacrifices didn’t end there. The biggest sacrifice I gave was my time and space. I allowed my best friend to move into my apartment with me and take up all of the space - just to split the rent. And I started working extra wherever I could find it. My typical day in 2007 was working 8-5 at my day job and making websites from 6 to midnight. That was my life. I had no free time, but the money started to come in.

Compassion

You have to forgive yourself for getting into debt. There is something to be said for having a positive attitude (which I know I have heaps of), and being down all the time because of the debt only makes the war against it more exhausting. In the third installment of my series on my debt story, I wrote:

By making a plan of action to get out of debt, and honestly sticking to the plan, I allowed myself to be okay. I forgave myself for getting into debt. Every morning in the mirror I would say to myself, “It’s okay that we’re in debt. Now we’re getting out of it, and everything is going to be fabulous.” Honest to God, I said these words every morning. By letting myself off the hook for being so stupid before, I was allowed to embrace change and the possibility that things were getting better. And I stopped beating myself up over a past filled with bad decisions that I could not change.

You must forgive yourself, and encourage yourself, and love yourself. This is a long process of righting what you did wrong. If you give yourself a little love, you’ll find it that much easier to continue working hard and paying off the debt.

Hard Work

There is no magical solution. One in a million of you might win the lottery, or get an inheritance, but don’t bet on it. The only way to pay off your debts faster is to make more money and spend less money.

To spend less, you will have to work hard on yourself - learning to give up luxuries that you once thought were staples. And you will have to find ways to entertain and please yourself that are free or very inexpensive. You need to be creative and clever - find ways to spend less on everything, find ways to conserve what you have and reuse what can be reused. The default to buy new all the time has got us stuck in an endless loop of consumption that must end! If you figure out a way to heat your apartment less, or to spend less on groceries, or to have free fun - you’ve just won a little battle in the war of debt repayment.

To earn more, you will have to work hard at jobs. If you get a promotion at work, great! But it’s not likely to happen every month. To earn more money NOW you need to think outside of the box. You will have to find ways to use every last minute of your time making money. Start snowflake businesses and be serious about promoting them. When you get a job, do 200% of what’s expected and you can guarantee you’ll get repeat customers. I said above that you have to sacrifice - and your time is something really worth sacrificing here. Make more money in any way you can think of. Taking on a part-time job at Subway is an idea.

Participate

I know many of you out there are doing this already (you’re reading this blog!). Communities that have your best interests in mind will keep you encouraged and excited. I found bliss in reading debt-reduction and frugal blogs over the last year. Get involved by commenting and reading. Participate in forums. Read books on personal finance, listen to Dave Ramsey, talk to people in chat rooms. Talking and reading about money and debt-reduction will keep you fired up and eager to participate in the collective bettering of all of the participants.

I read The Total Money Makeover in January, four months before when I had planned to be debt-free. There was no reason for me to read the book - as an avid Dave Ramsey listener I was already well aware of the Baby Steps and all the info he preaches. But reading the book was my way to yet again fire myself up to KEEP GOING! Having someone tell you that YOU CAN DO IT over and over again is a sure-fire way to keep motivated
This is all just my perspective, but I’ve been through it, and I did it! I honestly think that getting out of debt has far more to do with how you treat and talk to yourself, and how you manage your life, than it has to do with money. And although money helps, earning more money alone will not ensure that you get out of debt. When I got a raise before, I just spent more! Only with a good attitude, determination, and discipline will you actually get out of debt.

If you’re looking for more reading about my journey with debt, I wrote a three part series on my entire debt story when I started this blog. The first part - Stumbling Into Slavery - will take you to the second, and from there to the third. I’m proud of these posts, not only because they were some of my first, but also because I think they genuinely reflect what I went through over these last few years while paying off debt.

Good luck!

Filed Under Debt-Free Fridays!, Inbox Clips - Reader Q&A, Self-Help and Personal Progress, money and finance

Comments

3 Responses to “Debt-Free Fridays!: Geting Out of Debt is So Much More Than The Money”

zach @ Pennywise on May 2nd, 2008 5:59 pm

erm. . . what do you do if you were never in debt in the first place, but you don’t have the skills to invest wisely? One good thing about being in debt is it allows you to be much more creative with your money and time and assets.

Myself, I’ve never been able to amass any *real* wealth. I wish I could do that.
Andy on May 2nd, 2008 11:36 pm

If you working hard, finally you get used to it. And after you get out of debt it’s sometimes difficult to stop saving every cent and start living free without debt.

On the other hand if you pay off your debt, it’s time to think about savings. And your paying off debt skills will be very helpful. But along with them you need also to develop investing skills.

Moreover I think it’s important to keep a balance between saving and living in the way you want and like to live. After all you paid your debt not to live debt free till the last days of the life, but to have more freedom and to live more happier.
My Daily Dollars on May 3rd, 2008 4:59 am

Great post! Congratulations on wiping out your debt. How are you going to celebrate when it’s finally official?