Indebted over 147 thousand dollars to debt freedom in 4 years

Document created by kevind on Nov 10, 2015Last modified by amara.mastronardi@socialedgeconsulting.com on Dec 5, 2016
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I firmly believe in the power of education to unlock opportunities in life. I graduated from my bachelors program with honors, and then completed a masters program. I am currently finishing my final pre-req for an associates degree in nursing. Because of poor financial habits however, my total debts amounted to over $147,000 (give or take a few dollars and cents).  My debt mountain amounted to approximately $70k of my own student loans, $35k my wife's student loans, $8k wifes car, and the rest was various credit card debt (multiple visa cards, best buy, etc). We made good money between the two of us, but so much of our monthly wages were going to debt we were in a sinking ship laden with holes.  We were sinking, but just didn't know it until we stopped to examine the damage we had caused.

 

That just goes to show you that you can be book smart and money dumb, as I was. I did not learn sound money skills from my parents (my parents made over $400,000 last year and are paying off a $100,000 + IRS tax bill). That was my financial education unfortunately, and I compounded it with years of impulsive and reckless spending. That was before I got serious.

 

We immediately began a tight budget and ordered our debts from smallest to largest and began paying off the smallest debts first, one at a time. We set aside a small emergency fund, which helped cover car repairs on our 10 yr old plus vehicles. I began to work as many over time shifts as possible, to the extent of working every weekend for a several month period. When we received bonuses from work, we applied them to the debt. When we received a tax refund, we went out to eat and applied the rest to the debt. We carved out a small monthly slush funds amount for my wife and I, to keep us from going crazy, but it was a paltry sum compared to what we were throwing at the debt. Christmas and birthday spending were axed to a mere pittance. Talks were held with family members about how the next several years would go for gifts, vacations and the like. Some family understood, and some looked at us as though we had two heads.

 

We retired the first several credit card debts quickly which felt great. As months wore on, the debts we focused on became larger, from under a thousand dollars, to multi-thousand dollar debts, to debts in the tens of thousands of dollars. This was by far the hardest stage to remain motivated in, because by that point we had gone from over ten different debt accounts, to two, each of our student loan debts. It would have been very easy to relax our debt plan at this point in time with the rationalization that we owed it to ourselves. To counter this we made a treasure map for the final debt out of poster board, which was my student loan debt of around $70k, and named it Big Bertha. It took over a year to pay off, and was very difficult. By breaking the $70k into 5k and 10k increments, it further broke up this financial leviathan into more manageable, observable chunks. We celebrated at the halfway point of this last debt by going to a nice steakhouse and making a night of it.

 

Co-workers of mine have been amazed when they hear our story of debt freedom.  They looked at me sometimes as though they never know how they could do a similar feat. Even when I lay out the steps we took one by one, they struggle to accept that they could implement similar steps in their own lives. It is vital that you disallow yourself from being indebted the rest of your life. It must become more important to you that you gain control of your finances, so that they can work for you instead of you for them.

 

I have a video clip of our celebration day, just ask and I can submit it

 

YOU CAN DO THIS !!

 

Kevin Davidson

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