Debt Free Interview #14 - David & John - the Debt Free Guys

Hello today's debt interview is with David and John - two guys from Colorado who used to have salary level debt. They lived through their debt and were able to tell the story. Here is their story:

1. How did you get into debt?

The story of how we got into debt is a little different for each of us since we both acquired most of our debt before we got together.

David’s Story: I got my ball and chain of debt when I was 19. My mother took me to the bank to co-sign on a credit card for a trip to Ireland. The trip was paid for, but the card was for emergencies. I did have spending money saved. Lesson learned; never let a teenager loose with a credit card. By the time I returned I had maxed out the balance. True, it was only $500, but that’s like $1,000 today. I had a part time job and from that point on I was sucked into the minimum monthly payment scam for years.

I was not a high roller when it came to my credit card. I was the nickel-and-dimer. I spent $5 here and $15 there, which lulled me into thinking that I wasn't really spending much money. Seeing my credit card statement each month never made it sink in, especially when it seemed like I was getting a regular credit limit increase. I remember my first credit limit increase. It was like I received a 100 percent raise. A 100 percent negative raise, I suppose. Now I spent even more and just made larger minimum monthly payments.

John’s Story: My struggle with debt started in 1999 when I was 25 years old and moved to Denver, CO with a friend from college. We moved to Denver to go skiing and snowboarding. I didn't want for anything while I grew up, so I guess I never really understood the value of a dollar. Now that I was finally on my own, I thought I needed things to make me an adult. I was the big-ticket-spender, contrary to David. I bought top-of-the-line snowboard equipment, furnished and decorated my new apartment with things I couldn't really afford and bought a new car with $3,000 down from my credit card. We were new to Denver and wanted to make friends, so we went out to bars and restaurants regularly to meet people. All this added up quickly and I went from a $5,000 surplus to negative $30,000+ in a couple of years.

By 2003, when David and I started to date, we were two 30-something men who both worked in financial services, lived in a basement apartment and had a combined credit card balance over $51,000.

2. How deeply in debt were you at the worst point? What did it feel like?

At our highest, we had over $51,000 in combined credit card debt. It was split about 1/3 David and 2/3 John. It may not be lot of debt to some, but in 2003 that was 1/3 the cost of an average house and could have bought us both nice cars. With the rapid run up in home prices, we probably lost out on hundreds of thousands of dollars in appreciation so that we could have a bagel and coffee in the morning or a new pair of Diesel tennis shoes.

We were angry, frustrated, stressed and embarrassed that we put ourselves into this situation. We were angry that we were that stupid with our own money, as our jobs were to help people with their money. It was all our fault, none of our debt was due to emergencies or family problems. As someone once said, we "[spent] money we don't have to impress people we don't like."

That is when we quit. We quit having a nice lifestyle for a couple of years.  

3. When did you decide to get out of debt and why?

A few months after we moved into our basement apartment, we were stressed because of our bills. It was nighttime and we sat in the backyard and had heart-to-heart. We were two 30-something men with a combined tenure of 13 years in financial services. We had decent income, especially combined, and yet we were always stressed about money. One of our cars was in pretty bad condition and we lived in a basement. It was from that conversation that we made the decision to change because we knew we were capable of a better life and were determined to achieve it. Over the course of several weeks, we analyzed our personal finances, cut back certain expenses and eliminated others. We had several discussions about what we both really wanted in life. We ultimately came up with our personal financial plan.

4. How long did it take you to get completely debt free?

This is a great question that should have a two word answer. It took us a little over two and a half years to pay off our original debt of just over $51,000. To do this, we cut up credit cards, eliminated all personal travel, really pulled in the reigns on dining out and grocery shopping and adjusted our social life considerably.

We've gone into debt twice since then. Neither time was more for than $5,000, but it was easier for us to see where we were headed. Our first relapse was driven by our desire to reward ourselves for paying off our $51,000 of debt. We celebrated by doing almost everything that originally put us into debt in the first place. The second relapse happened a few years later after we put ourselves into a much better financial situation with bigger salaries and increased retirement and emergency savings, but we became lax with our money management.

We liken each time to maintaining our goal weight. Especially during certain times or the year, we make allowances for ourselves with what we eat and how often we workout. Other times of the year, we notice we unconsciously increased our caloric intake or decreased our caloric expenditure. Personal health, like personal finance, requires ongoing management for most of us.

5. What advice would you give to someone trying to become debt free?

Of course, there is a ton of advice to give. What helped us most was to learn what we truly want in life. That knowledge is our motivation for the long-term and through the hard times. When we did our soul searching in the basement we realized we both want to travel and save for retirement. We don't want a huge house. We don't want fancy cars. Going out to clubs to see and be seen isn't what we really want. We stopped behaviors that didn't fulfill us and adopted behaviors that do.

As of today, we have traveled extensively, plan to travel more and are on a good path to a comfortable retirement. We each have over three times the national average saved for retirement and plan to increase that with each pay check.

Finally, don’t continue to do the same thing and expect different results. Change is difficult at first, but worth it to become debt free. We made it and so can you!

  
Thanks so much David and John for sharing!

 

Debt free interview #12 - Emma of "From Aldi to Harrod's" Blog

This week's interview comes from a Brit - Emma the blogger responsible for the blog "From Aldi to Harrods" blog. She shares her story of getting out of debt here today: 

1.       How did you get into debt?

It started when I turned 18 and I was about to head off to university. My bank gave me a student credit card with a fairly low limit of just £200 ($339.231). I bought a house whilst I was at university so I had a lot more living expenses that the usual rent, food and phone bills - I had to kit out an entire house. Then when I took a part time job with Marks and Spencer Money, I was given another credit card, this time with a £1,500($2,544.11) ( limit. It just spiraled from there. I'd love to say that I at least spent it on having an extravagant lifestyle, but that's not the case. I used credit cards for living costs whilst at university, and then I graduated in to the recession and couldn't find a job, but still had a mortgage to pay.

2.       How deeply in debt were you at the worst point? What did it feel like?

I was very much a "head in the sand" person, and I don't know the true extent of my debt at its worst. At the end of 2013 it was close to £5,000 ($8,480.17)  still outstanding. Although I managed my debt well (it was on 0% interest and I never missed a payment) it still felt like a chain around my neck. How could I be going and enjoying meals out when I still had debts to pay off? 

3.       When did you decide to get out of debt and why?

When my fiancé proposed to me in November 2013, I knew our wedding would be an added expense. I was determined to make sure that I was walking down the aisle debt free. I managed to clear my debt with a year to go until we say our vows.

4.       How long did it take you to get completely debt free?

 I've been trying since I was 18 (over 8 years), but I made a conscious effort to pay off the last £5k ($8,480.17) in 6 months.

 5.       What advice would you give to someone trying to become debt free?

Don't underestimate how much a little change can help. You might think that cancelling your paid TV subscription will only save you a small amount per month, but it does all add up.

Debt- free interview #11 - Luke from Consumerism Commentary

This week I'm thrilled to have a response from Luke Landes of Consumerism Commentary. Landes has been blogging about his debt and finances for well over a decade. Here are his responses.

1.       How did you get into debt?
Like many recently-former students, I had student loan debt. On top of
that, when I finally got my career started, I was working in a
non-profit organization and my salary wasn't covering my basic living
expenses. I was going further into debt each month, and I wasn't even
spending extravagantly. I didn't have a runaway shopping habit, but in
order to live within I means I would have had to make sacrifices I
didn't want to make -- like living in a run-down apartment in a
run-down neighborhood.

2.       How deeply in debt were you at the worst point? What did it feel like?

I was probably in about $30,000 of debt at the worst of it, maybe
more. I know that's not as much as some people's rock bottoms, but it
was enough for me to eventually realize I needed to make some changes.
It felt... well I felt nothing. I was able survive on credit cards.
With access to credit, I was able to ignore my declining situation for
a long time. And ignoring the problem was a defense mechanism that
prevented me from feeling bad about the situation. But eventually,
when I lost my job, my apartment, my car, and my girlfriend, I knew it
was time to make some changes.

3.       When did you decide to get out of debt and why?

I found myself in a situation that was far beyond what I ever expected
for myself. I had to move in with my father. That's fine for someone
just out of college, looking for their first job, but it wasn't how I
wanted to living at that time. So I made a conscious effort to make
changes to my life, my attitude, and my philosophy to get myself out
of that situation.

4.       How long did it take you to get completely debt free?

 Because I tracked this on Consumerism Commentary, and was one of the
first people to track his finances online, publicly, this information
is pretty easy for me to find. My first happy milestone was having a
positive net worth, which seems to have occurred in December 2002.
That's almost a year after starting a new job, and after a few months
of greatly reduced living expenses within that time. But I finally
paid off the last of my student loan debt in December 2008. That was
the last of my debt. I have never owned a house and have never had a
mortgage.

5.       What advice would you give to someone trying to become debt free?

Besides reading my story throughout the years on Consumerism
Commentary, I always start people off by advising them to start paying
attention to their finances. But if they're trying to get debt free,
they may already be paying attention. But not everyone who tries is
really, actively, trying. And that attitude is the key. It's one thing
to want to get out of debt, it's another thing to take actions to get
out of debt, but the only thing that works is to let the idea of
becoming debt free become part of the overarching philosophy of your
life. It's a priority, and you can't afford lapses. The right mindset
is so essential to getting out -- and staying out -- of debt that
without it, any positive steps you take could easily be negated in one
unfortunate circumstance. Every financial decision is a choice.

Debt free interview #8 - Kacie from Sense to Save

This week's interview is with Kacie the author of the PF blog Sense to Save. She shares some quick notes on her debt-free journey.

1.       How did you get into debt?

 "In the past, we had a car loan and credit card debt. The car loan was something we could have avoided, or perhaps a smaller balance if we went for a different vehicle. The credit card debt was largely just being dumb and not knowing any better!"

2.       How deeply in debt were you at the worst point? What did it feel like?

The car loan was $11,500 and the credit card debt was somewhere around $8-10k at worst.

3.       When did you decide to get out of debt and why?

It was around 2008 when we got serious about our finances and buckled down to pay off everything.

4.       How long did it take you to get completely debt free?

Took a few months to take care of the credit cards and a little bit longer to get rid of the car loan.

 

5.       What advice would you give to someone trying to become debt free?

Advice would be to make a plan. Add it all up from all sources and know what you're working with. If it's huge, don't be overwhelmed -- break it into chunks. Like a student loan could be viewed as total divided by 8 semesters. Or the number of classes you took, even. Just focus on each segment rather than thinking about the whole balance if it's stressful.

And do it as fast as possible -- move on to better things than paying debts! :)

Debt Free Interview #3: Mike Polinsky - debt free

This week's debt free interview features Mike Polinsky - Mike is a debt expert and does online writing for various sites.

1. How did you get into debt?
The biggest reason why I got into debt was because of a job loss I experienced a few years back.
2. How deeply in debt were you at the worst point? What did it feel like?
At the worst point, I was about $15,000 in debt. It felt awful – it nagged at me almost every day.
3. When did you decide to get out of debt and why?
When that nagging feeling and the associated stress got to be too much, I finally decided to do something about it. I had finally had enough.
4. How long did it take you to get completely debt free?
It took me about two years to become debt-free.
5. What advice would you give to someone trying to become debt free?
My first piece of advice for someone trying to become debt-free is that you have to commit to doing something about it. If you approach it half-heartedly, you'll never succeed. If you're out of work, take any job you can find to start bringing in some money. Then, get yourself on a budget. Look at each and every monthly bill and use the Internet to find ways to save. Start using coupons to save on groceries. Stop all personal purchases (or as many as you can) and devote all your extra cash to your debts. Once you're debt-free, you'll have plenty of extra money to resume your old spending habits. Although if that was the cause of your debt, you might want to continue to monitor your spending.

Thanks Mike for your help!