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From -40K to debt free

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#1 juicy


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Posted 23 February 2010 - 03:29 PM

I've ummed and ahhed about posting this and decided to just do it! I wanted to document the end of an era for me...

Debt is a pretty personal thing. Something you don’t discuss over dinner or at a party. It’s something people lie to their friends and family about having (I certainly did), something you pretend doesn’t exist (did that too) and something you’re embarrassed about (most definitely).

Despite this, I thought I would share my story with the lovely i-do community. Who know’s, maybe it will inspire someone here to take back their own life.

When I was 18… ahh young and stupid… I had a job. A real, grown up job with 40 hours a week and a miniscule monthly pay check. I worked hard for my little pay check and I thought I ‘deserved’ to be rewarded… so I bought a new car. A shiny, red, brand new, $20,000 car. I’d been working for all of five minutes and thought I was entitled to it. First mistake. rolleyes.gif In the beginning, I could make the repayments, I was living at home with my parents and all of my income was disposable. I’d go out every Friday/Saturday night… shout my friends who couldn’t afford to go out, buy new clothes etc. I started to spend more than I was earning… no problem, that’s what a credit card is for! My first card was $7500. No idea how I managed to get it, but alas, I did. So there I was, around 18 to 20 years old with $27,500 in debt. It pains me to think about it but I was in more debt than I was earning annually as a uni student/entry level in my field.

This started the cycle of the next 5 years of my life. I met a guy who had as little financial stability as myself. He was in just as much debt as me (actually quite a lot more) and encouraged the lifestyle I was leading. Because of his debt, I took on more.. even to cover basic things like rent and groceries. We ‘accepted’ we would probably never be able to buy a house.. and I accepted I’d never have my dream wedding or bring my kids up the way I had always hoped to (with food on the table/a roof over their heads/ financial security). I had no willpower or self control. I would max out the card, pay a little off and max it out again. ‘But I need new clothes for XYZ’s party’, ‘But we need a weekend away, we’ve been so busy’ ‘But I need a treadmill’. A treadmill…. yes, really.

Eventually, that one card became two… then three.. then four… then I thought I’d do the responsible thing and consolidate everything into one loan and pay it all back. But I didn’t. I didn’t close the cards either and before I knew it… I had credit cards racked up to the same amount my consolidation loan was. I wouldn’t answer my phone if it was a private number, I left mail unopened because I knew it was bills, I would only pay the minimum repayment on whichever financial institution was on my case the most… usually the one that had sent a nasty letter my way. I had absolutely no idea of the actual state of my financial affairs. You’d think the warning bells would have gone off by now, but they didn’t. I kept this up for years... at one stage, I even got another car loan BEFORE the original car loan (now a consolidation loan) was paid off. I had no idea of the value of money, or the idea of actually saving for something I wanted. If I wanted it, I bought it. Even though I had NO money.

By now you’re probably thinking “this girl is an idiot..” and you’re right, but I didn’t see it like that at all, I had no idea how much trouble I was in or what sort of mess I was creating... I had a full time job that paid an average wage, an education, a ‘normal’ relationship, friends, family etc etc. There wasn’t anything about me that excused the way I put my head in the sand and ignored something so important.

Eventually the strain of being in so much debt amongst other things broke down the relationship. I moved in with a friend (paying less rent) but overall my habits didn’t change.

Fast forward to meeting my OH. He’s a numbers person. He has a background in finance and was (still is) financially secure. I didn’t tell him straight away about my money problems, in fact, as we entered a long distance relationship.. it contributed to the problem! I was rapidly racking up flight and accommodation costs to see him. I’d occasionally mention being broke or being ‘in a bit of debt’ but we never spoke details. Around the 6 month mark, and I remember this afternoon like it was yesterday, we were lazing around after spending a lovely weekend together..and he said ‘you know.. I could see myself spending the rest of my life with you’… and I knew I had to come clean. It wasn’t fair on him to get seriously involved with me without knowing the full extent of what I’d gotten myself into. He said he had seen a few clues that had led him to think I had a bit of debt.. but nowhere near what I had. Honestly, I had no idea. Me, the person whose life this was, my very own being and yet I had no idea. I thought it would be around 20k.. maybe 25k… the remainder of the consolidation loan and a bit of credit card debt… not $40,000. I cried, he cried, I cried some more. I had never felt so low as I did in that moment. To know that I, individually, would prevent us from achieving all of the goals and dreams we’d set for us as couple was gutting. But OH didn’t let me dwell.. it was done now, it’s out in the open, no more secrets.. time to fix it.

He created a budget for me… made me find out what interest rates I was paying on all 5 credit cards and 2 personal loans (because I had NO idea) and worked out how much I could physically repay each month. My budget consisted of rent, food, petrol and repayments. Nothing else.. no hair dressers, no facials, no movies, no dinners, nada. Amazing how little you can live off when you have to. One by one I chipped away…. and away… and away….. and away.

This morning, nearly 3 years later, I made my last repayment. I have no debt. Not a cent. I don’t owe anyone anything! And to top it all off, I did it on my own. Without OH’s financial help or being bailed out by my parents.

It hasn’t been easy. There have been times where I’ve sulked/cried/screamed/ blamed my OH for ‘restricting’ my lifestyle. I’ve had to say ‘no’ to social gatherings/ holidays/ new clothes for ‘special occasions’ etc. I can’t remember the last time I bought a book (my weakness) or a magazine. I can’t remember the last time I spent more than $20 without feeling guilty.. but it’s been so worth it. Of course there have been exceptions, I’ve splurged on a nice night out for our anniversary and late last year I was lucky enough to go overseas… it put me 3 months behind my repayment schedule, but I did it without borrowing money, with my own hard earned cash.

I cannot explain what ‘clicked’ in my head for me to change my entire mindset regarding money. I think it’s a combination of the overwhelming love for my OH and wanting the best for him/us as well as, and probably more so, education. Knowing what I had to do to fix the problem. I just kept getting myself in deeper… the problem was never going to go away but because I had no idea how to fix it or where to start, I just ignored it.

Paying off my debt has changed my life. Being with someone who has the same dreams and aspirations for a joint future has changed my life. If I had stayed on the track I was on, I would never have owned a house, gone overseas, been able to provide for my future children what my parents did for me. The weight off my shoulders and the freedom I have now far outweighs any superficial happiness a new outfit for a party would have.

I don’t post much on i-do so a massive post is a rarity and if you’ve got this far, well done! You don’t have to have 40k in debt before you sort your finances out and I wanted to share my story as a reminder to everyone that sticking your head in the sand isn’t the answer!

#2 Becca13


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Posted 23 February 2010 - 03:37 PM

Well done!

#3 Rain...



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Posted 23 February 2010 - 03:56 PM

Wow! Thats insane!

You've done an amazing job! and have einspired me to get rid of some of my debt.. im going to go do a spread sheet now.
My debt isnt out of control like your sounded... but stilll... i would prefer to have less.

I really cant beleive you did it all in 3yrs!!

AWESOME... you should really feel super proud of yourself, andthanks for sharing your story.


#4 Leapstar


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Posted 23 February 2010 - 03:57 PM

I think you aught to be admired biggrin.gif

Talk about turning your life around, you should feel immensely proud of yourself.

Now the next hard lesson you will need to learn is how to be able to treat yourself to the nice things in life again without going back to the old habits. Just make sure you have the money saved before you buy the item/treat.

I will bet with your newfound tenacity that when you do buy a house you will pay it off in no time at all!

Congratulations biggrin.gif

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#5 **Bee**


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Posted 23 February 2010 - 04:02 PM

Wow! That's amazing. Nice work biggrin.gif I bet you feel fantastic right now. I know I would.

We have a bit of a debt here too but not as much. We also spent up big when younger and are now paying for it. We have two little girls which makes it hard but we are getting there. I will tell you what we have learnt our lesson that's for sure. laugh.gif

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#6 *manda*



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Posted 23 February 2010 - 04:02 PM

Well done juicy! Massive congrats, that is such a HUGE achievement!

We have done similar..no credit cards, but personal loan and stupid finance debt. We cleared a massive tax bill before xmas, and that was a huge relief for us, so now we are moving onto out finance debt, its not easy, but that bit of relief we felt at xmas paying off our tax was an awesome feeling, so I cant wait to keep doing it!

Enjoy your newfound debt free happiness!!

(hope you have been well hun, havent chatted for quite a while smile.gif )
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#7 Busterella


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Posted 23 February 2010 - 04:04 PM

All I can say is WELL DONE. You must be so proud. Now, get on with saving now and you won't know yourself to have savings.

good for you.


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#8 Mark$Girl


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Posted 23 February 2010 - 04:12 PM

Firstly, CONGRTS!!!! biggrin.gif Having been in debt myself, i know how it feels to finally be out of debt and able to say that EVERY cent is now yours!!!

My story is similar to yours, but i was only in about $22K debt at the time of meeting my current OH. This debt had been the cause of taking out a loan for a "wedding that was supposed to happen with my ex", which i ended up spending on other things once he left me!!! sad.gif

I met my OH while i was living at my parents (also going out every weekend and spending all my pay, only paying minimum off my loan/credit card), until one day my OH and i got talking and i thought, this isn't fair for him to get into a relationship with me being in this much debt. I explained the situation to him and he said he would help me (not with his money, but his advice)and guide me to pay it off!!

I then found out that he already had $60k saved in his own bank account and owned his commodore ute and a cruiser and a boat, all at 23 years of age...i was dumb founded!!! BUT this made me realise that i HAD to pay this debt out to help OUR relationship and about 1 and a half years later, i finished paying off that debt!!! biggrin.gif biggrin.gif BEST FEELING EVER!!! biggrin.gif biggrin.gif

Since then, we have bought our own home, sold 2 of our cars and bought another in their place(which we don't owe any money on) and we both have savings of about $10K each!! Not to mention our joint account which also has about $20K in it!!! I feel that we are very fortunate and for that i can sympathise with your story biggrin.gif I too would never have been able to do it without my OH, and i laugh about it these days and say "Geez, i'm becoming as tight as you now...LOL, think you've worn off on me" and he just laughs at me!!! laugh.gif laugh.gif

WELL DONE HUN, you deserve the praise!!!! tongue.gif biggrin.gif
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#9 Jane Doe

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Posted 23 February 2010 - 04:24 PM

Congratulations on such a big achievement!
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#10 Calzo


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Posted 23 February 2010 - 04:42 PM

Congratulations!!! What a heart felt story smile.gif
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#11 beachgurl


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Posted 23 February 2010 - 04:48 PM

Wow, that is a very inspiring story! Thanks so much for sharing. I bet your partner is incredibly proud of you too. It could've been so easy for you to continue in the same vain for the rest of your life but to make a change and pay off your debts so quickly is life changing.

#12 loni



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Posted 23 February 2010 - 04:59 PM

Congratulations on your huge achievement and thank you for sharing your story. I hope it inspires anyone else who might be in debt to work their way towards paying it off!
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#13 karry327


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Posted 23 February 2010 - 05:02 PM

What an amazing effort, well done!!

#14 Lollies


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Posted 23 February 2010 - 05:05 PM

Wow Congratulations!!!

Thanks for sharing, we have a few short term debts at the moment (BAS & school fees plus credit card) that seem a little out of our reach, but you have really inspired & encouraged me with your story.
Married 7th April 2006 ~ Happily Ever After

#15 Reserge


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Posted 23 February 2010 - 05:05 PM

Wow what an inspiring story. Thank you for sharing.

You must feel AMAZING rigt now biggrin.gif .
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