HOW I GOT OUT OF DEBT
I worked for it, and it was not easy, nor was it fun.
I was $60,000 in debt and I put every free penny I had of my net income towards my debt.
This was probably 50% – 90% of my income at times while earning about $65,000 grosss per year (which is around $50,000 after taxes and fees).
Note: I was a consultant living out of a suitcase, so by the nature of my job, I was able to channel a lot of my net income each paycheque towards my $60,000 in debt.
I watched every penny, and followed a budget exactly like the one I created for myself below.
And that’s it. The big secret.
Of course, there are a lot more details to the 18 months it took to clear my $60,000 debt, but that’s the gist of it.
WHERE AM I AT NOW?
I went from November 2006 being $60,000 in debt to the start of January 2011 being $180,000 in the black.
I don’t have my old posts because I wasn’t organized AND I lost all my old monthly budget roundups when I moved from Blogger to WordPress 🙁
In about 4 full years, I increased my net worth by almost a quarter of a million or $240,000.
I hit $200,000 net worth in March 2011 but then had to pay my taxes, so I’ve dropped down to about $180,000 again in April.
For all of 2011 I decided to not work at my full-time job as a consultant, and take the year off to travel to Asia and spend the summer in Europe before traveling around the U.S. for the remainder of the year.
I am expecting to be at about a $160,000 net worth after my little yearlong adventure, and I ended up being at $155,000 net worth at the end of 2011.
SO HOW DO YOU GET OUT OF DEBT?
You can start by reading these posts:
- Stay motivated to get out of debt
- How I got out of debt
- Are you suffering from frugal or debt fatigue?
- Cut everywhere, not just where YOU want to save
FB Favorite Budgeting Tool
Being super motivated to pay off your debt is the #1 step. But once you are super hyped about your new resolution, you need a plan. There are all kinds of plans in life; you can make plans to have a new boyfriend, a plan to get a promotion or a plan for a new design for your bedroom. But when you talk about personal finance, there is only one plan that works. This plan is called Budgeting!
There are tons of budget spreadsheets across the web. I know it’s hard to find the right one! This is why I’m giving you my suggestion. The best part is you can get a free copy to test out and then, you can use The Super Deluxe Budget for only $15.
What I like about The Super Basic Budget (the Free one) is that… it’s super basic and easy to use! You even get on screen explanations to make sure you enter the right number in the right cell.
Why Go for the Super Deluxe Version?
Yeah… good question! Why should you spend $15 after making the decision to pay down your debts? Doesn’t this sound like an expense? This is where you are wrong; The Super Deluxe Version is an Investment in Your Future. The Super Basic Version is great and offers the following features:
- Track One Income Source
- Track Regular Income only
- Track up to 10 Expense Categories
- 12-month Timeframe
But if you want a “taylormade” version that will require no adjustments, the Deluxe Version comes with the following:
- Select your Currency
- Track up to 5 Income Sources
- Track Regular Income and Irregular Income
- Track up to 20 Expense Categories
- Track up to 20 Subcategories within each Expense Category
- Set Recurring Expenses
- Adjust your budgets by month
- 12-month Timeframe
- Includes 6 months worth of FREE updates
This is the perfect tool to track your expenses and modify your spending habits along the way and watch your improvements! Once you will have run 12 months with your budget, you will feel so darn proud of yourself because you will have paid down your debts!
Here’s a video explaining how to use the Deluxe Version:
And Now That You Are Ready to Save Money Aside…
Once you have control of your budget. The very first thing is to start saving money. You need an account that doesn’t eat your money with fees and gives your interest to protect from inflation. The ING Orange Account covers both feature perfectly: