The real secret to getting out of debt

After years of searching, I have finally discovered the real secret to getting out of debt.

It certainly hasn’t come easily, and it’s been a long, long road. It feels like forever since I started educating myself about personal finance, and then attempting to apply sound principles to my life.

I have read much on the subject. Aside from Dave Ramsey’s The Total Money Makeover, books I have read about money include:

That doesn’t even include numerous articles from blog posts, websites, and other resources. It has been quite a journey.

These are all great reads. I’ve learned quite a bit. Some have good advice. Some have terrible advice. But I always kept reading, learning more. I desired to understand about the current we are all forced to deal with eventually. It is like electricity, flowing, weaving, and I wanted to understand it because I was so bad with it for so long.

Debt comes along for the ride in a discussion about money, and in turn I learned the lesson about how to get out of debt.

The secret to getting out of debt is that you must use everything in your power to remove it.

And by everything, I mean everything in your power. You must use your income, your will, your cuts, your pain, your discomfort, your angst. You must throw everything at it; you must go all in.

I tried for years to “wander” out of debt. I thought if I just made more money, things would get better. Or perhaps if I cut enough, that would work. Maybe if I saved a few bucks on my phone bill, that would help. If my cell phone bill was lower, then I could get ahead.

It was all of that, and none of it.

And now, the only thing that has led to success is the day I got to a point where I finally hated debt. To that point, I only disliked it. I kept looking for some magical event that would happen to tip the scales in my favor. No amount of reading worked. No paycheck was big enough. It was only when I got a deep-in-the-gut of my soul anger that we started making real progress.

Getting out of debt is not fun. Every paycheck, I kiss more money away to the next of the faceless banks that have held our loans. Every paycheck, I click a few buttons, watch the money leave the account, and then wait for the money to clear on the other side. And then we wait until more money comes in again and we repeat the process.

I hate it. Our debt is my white whale. But unlike Captain Ahab, this will not destroy me. We are relentlessly moving forward. Our hate is our fuel.

This is how we will win.

Having a big ‘why’

When it comes to big goals, I think it is important to have a really big “why.”

Why are we doing this? What drives us? Why persist? What is keeping us motivated?

For me, that answer wrapped up a lot in my three children.

I am playing a long game here. It’s my job as a parent to raise three children that can go out into the world and develop into the human beings they are supposed to become. To do that, I want them to learn some things from me while they are in the care of me and my wife.

For starters, I want them to not be afraid of big, hairy goals, If you want to take a stab at something, don’t listen to the naysayers; listen to your heart. Give it a shot. You will truly never find out what you’re made of until you push outside of your comfort zone.

The Edge … there is no honest way to explain it because the only people who really know where it is are the ones who have gone over. – Hunter S. Thompson

I want them to have wisdom. It’s one thing to be smart, but it’s another to be wise. I want them to have a plan for their money through ever step of their life. I want my children to not make the same mistakes my wife and I have made.

There’s a concept I want my children to know, and that there can be a lot of turmoil when your finances are in disarray, and when you have your house in order, you can have peace.

It’s my great hope that my children can learn how great a tool money can be. They are already earning money through work (no allowances at our house), and learning how to spend their paycheck. Naturally, spending comes pretty easily for them. I also want to teach them how important it is to save, but also to give. Giving makes me joyful. I have a thing that I do every year in December where I find an individual in need and we give a something to ease a burden. The joy that I get from that is enthralling. My wish for my children is that they learn to give, with humility, to others who are less fortunate. We all win when that happens.

Lastly, I want to teach them how to enjoy their money with experiences. Recently I heard of this idea that I think I’m going to steal. It goes like this: every year on your debt-free anniversary, you go do something that you normally wouldn’t have done because your past self was in debt and unable to do something. I like this idea a lot. I think we will. We just need to get to the finish line, but get there we will.

For my valentines: Remi, Ember, and Rogan. They are a big part of my ‘why.’

The waiting is the hardest part

Mail dropbox
It’s easy to get into debt at the speed of digital, but getting out can be a much slower pace.

The waiting is the hardest part. – Tom Petty

There’s a secret I want to tell you about getting out of debt with intensity: it’s boring.

For me, that can be a stressful. My day is usually filled with lots of chaos, but in a good way. My job is fast-paced, and my mind is constantly stimulated with exciting projects, deadlines, and challenges.

But no matter how quickly the day goes, the paychecks still only come in at regular intervals. The cycle goes like this: work, get paid, then pay on the debt with every paycheck. After the money has been processed with the bank holding the student loan, the process is complete. Repeat.

Since I’m paid twice a month, it can make the whole thing just feel slow.

I want to get this over with. I am angry. I want to be done now. But that’s not how this works. We have to be diligent, and we also have to be patient (a little).

This week I’ve had anxiety about the process. I started thinking about retirement, saving for college, getting a house someday, replacing the cars, and family vacations, and … Ugh!

Getting out of debt is a lot like trying to lose weight. It is so easy to put on weight (at least, for me). All I have to do is mindlessly eat and give myself no restrictions, then magically one day my clothes don’t fit anymore.

Debt isn’t any different. All I have to do is mindless spend without restrictions, and just like that I can wander into debt — or at the very least — spending everything I have on things that are frivolous and detrimental to my overall financial health.

I have to constantly remind myself to slow down, take a mental break, and breathe. This is happening. We are working a plan. The plan is going to succeed, and it’s going to succeed this year. Calm down, Eric.

That’s not to say I’m not trying other things to get the ball rolling a little faster. I am working on a freelancing gig, but the money won’t be rolling in for awhile. We will likely get something with our tax returns, and we have an appointment with our tax preparer for Feb. 19 to do our taxes. I am constantly looking for ways to save a dollar here, or gain a dollar there.

Move forward, wait. Move forward some more, wait.

Generally speaking, I’m a calm person. I tend to think that whatever happens in life, most often everything is going to work out fine. That all goes out the window when I’m dead set on a goal. It consumes me, and when progress doesn’t happen as fast as I want it, I start to break down.

I wish there was some magical way to get this last leg of our debt snowball done. But there’s no white knight coming. We have to do the work, we have to be mindful in our spending, we have to patient.

We are going to win the war. But these battles are going to be hard fought until then.

What does life after debt look like?

Grubers at Disney World
The wife (Amy) and I on our honeymoon, July 2003 at Disney World.

A friend of mine recently challenged to think toward the future. He asked, “What do you envision for your life or your finances after paying off debt?”

That was an excellent question. It’s like asking, “What do your dreams look like?”

After debt, what likely comes first is a trip to Disney World. We are putting the family through a lot to hit this goal in one year, and the efforts should be rewarded with something fun.

Next we’ll make a nice, robust emergency fund. In Baby Step 1, the goal is to have $1,000 emergency fund for emergencies that come up while you’re paying off debt (or $500 if you make less than $20,000 per year). For some, that seems like a small amount. However, we have found that it covers most emergencies that come up, and the goal isn’t to stay there forever. In fact, the amount is small by design. It’s small so you get motivated (scared) to get out of debt, fast, and then build up a robust savings.

After debt is Baby Step 3, where we’ll save three to six months of expenses. I’m not sure where we’ll land — be it the three months or six months amount — but either is a far cry from where we’ve ever been. It will feel great to know we have a good amount of money waiting for when emergencies come.

Another thing we’ll be thinking about is replacing our kid hauler. My daily driver, although not at all attractive, is working fine for now. However, our 18-year-old van will need to be replaced. We’re having issues cramming all our stuff into the van when we travel, and more room is needed the bigger these kids get. Eventually, we will replace my car as well. However, we’re going to do this with a twist: we don’t want to have a car payment ever again. So, we’re going to take a different approach to getting newer vehicles. More on that later.

Beyond that, as my Magic 8-Ball says, “Cannot predict now.”

I really don’t know what our life might look like when we’re not shelling out tons of money toward debt every month. Will we get a new kitchen table to replace the old one we have? Probably not, because what we have works fine and the kids are still young enough to do plenty of damage. Will we purchase a bigger TV? Our is big enough and working fine, so I don’t think we will.

The funny thing about “stuff” is that you can get to a point where stuff isn’t a big deal anymore. My interest in minimalism has really subsided my thirst for more to the point there’s not many material things that make me happy. For my family, I value experiences over things, and safety over large impulse purchases. I think having a better safety net and the ability to do something fun on a whim for a weekend will be quite a lot to satisfy me.

For the moment, all the above is just a dream. But dreaming is an excellent place to start.

‘The Year Of No’ monthly report: January

We are making good progress.

It makes sense to me that if I’m going to continue to record the emotional progress of our debt snowball, that I should also record some numbers as well.

I don’t have real solid data from long ago, but as evidenced in the audio recording from 2005 in my last post, we had around $68,200 in 2005.

Then we did a few things right and a million things wrong. We had some kids, bought a house, yada, yada, yada. And finally, after more than a decade of screwing around, decided to get really serious about paying off the debt going all in.

I officially count the start of our debt snowball at July 25, 2016, the day our former house sale was finalized. At that time, we owed $34,076 in consumer and student loan debt combined, plus an additional amount that I borrowed from my parents to help us move. The parent loan was paid back immediately after we received money from the sale of our house, leaving us with our other debt.

We started Financial Peace University on Sept. 11, 2016, with $34,076 in debt. We used whatever was left from the sale of the house, and threw a bunch more at the debt to reach around $29,000 by the end of 2016. That was pretty good progress, but the bulk of that were proceeds from the sale of the house.

My goal for 2017 was to try and pay down an additional $10,000. It was a lofty goal, but one we didn’t hit. We slacked off a bit in the summer, but still did OK for the year. At the end of 2017, we were down to around $20,000 left in student loan debt.

Which brings us to the present.

January 2018

There was a lot of hustle happening in January. To really get things moving, we did some radical things:

  • Said “no” to the kids over and over and over about buying “stuff”
  • Said “no” to ourselves a lot on buying “stuff” as well and stuck to the budget very strictly
  • Stopped going out to eat once a paycheck (I am paid twice per month)
  • Stopped the monthly “kids night out” at our local YMCA and date night with it
  • Changed cell phone plans to a cheaper rate
  • I found my name on the website and found a small amount of money the Kansas State Treasurer’s Office was holding for me
  • Sold one of my guitars
  • Stayed home a lot, but mostly because it was a cold month
  • Received some additional money because of changes to the 2018 income tax withholding tabes
  • Took steps to increase income from freelance work, which should begin to solidify in February

Because of all of that, we were able to pay down a whopping $2,170.53, bringing our remaining debt down to $18,666.54 to start February.

We started a Debt Chain for our kids, with each link representing $1,000 and a final one that says “Debt Free!” It’s a $20,000 chain made out of construction paper, but today the kids got to cut two rings off the chain.

That feels pretty awesome. Now let’s see what we can do in February.