Three years ago this past month, I sat down for coffee with my friend Jeremy at a Starbucks near our house. Almost 25k in credit card debt, behind on all our payments and ready to walk away from the debts, he talked me out of it. He encouraged me to use the last of my money to make the most pressing debt payment. Trust God to provide, and work and hustle like there was no tomorrow to make the next one he said. Three weeks later, the Craigslist business started and it’s been a whirlwind ever since. Having made one last payment a few weeks back, we are now out of debt. (except our house, the next target) You never know what a difference you can make in someone’s life over a cup of coffee and a few words.
What I’m going to share in this post are some of the unconventional methods I used in paying off our debt over the past three years.
1. I never used a budget. This might not work for everyone, but I’m a very competitive and driven person. When I made the decision that I was done living under the black cloud of credit card debt, it was game on. Generally, we strive to spend as little as possible and only on what we need.
2. I passed on investing in Bitcoin… and most other investments. A little over a year ago, we had some friends over and we talked about bitcoins for almost two hours. I was sold. I wanted to invest a good chunk of money in them as they were around $13/bitcoin at the time. But I didn’t. Why? Because I had already decided where all my extra money was going before I earned it. No exceptions. A small portion would go into the slow expansion of the appliance business and the rest would go to paying off high interest credit card debt. My credit card rate was 10.9%, so it was a no brainer to put my money into paying it off.
Looking back, in the past year Bitcoin has gone from $13 to over $1,000 each. That has been slightly painful to watch, but I have no regrets. You can’t have regrets when you are making wise decisions in the moment. Get out of high interest debt and then invest like crazy!
3. I focused on function over form. We have multiple remodel projects that aren’t finished. They haven’t been finished for almost 3 years now. But the thing about each one of them is that what is left on them is mostly cosmetic. I remodeled our bathroom, but I haven’t finished mudding, texturing and painting the walls, for example (or the tile….). I’ve replaced single pane windows all over the house, but I haven’t trimmed them out yet.
The thing about house projects is that you can dump money into them until the end of time. When you are getting out of debt, just focus on the essential projects and save the non-essential ones until you you are debt free.
4. We always use cash. Using cash provides much needed friction during the buying process. It causes you to think just a little bit more before letting the money escape out of your wallet or purse. Many times it will give you the extra nudge you need to walk away from an unneeded purchase.
5. We still took nice vacations. We spent a good chunk of money taking the entire family out to Hawaii two years ago, and then I went out again this last January. We are also planning to go again this February. We could have paid off our debt much sooner had we not taken these vacations, but it wasn’t worth it to us. Paying off our debt was our destination, but I think it’s good to take a few rest stops along the way. Hawaii was one of those rest stops (literally). We have really close friends out in Hawaii that we enjoy visiting. It also provided an opportunity for us (me) to escape the winter seasonal depression that often comes with living in the Pacific Northwest.
6. We would still eat out once a week. Our family has been going to Chipotle every week for the past few years. We spend about $20 each time for the entire family to eat. Rather than buying kid meals, we figured the best way to save money was to have our three young boys split one burrito, and our 3 year old shares food with mama. We all drink water. If Hawaii is our big rest stop, eating out once a week is one of our mini ones. It provides the family a night when a meal doesn’t need to be prepared and it has become a treat to look forward to at the end of each week.
7. We only had one vehicle. My wife stays at home with our four kids (works harder than I do) and I work from home, making it so that we don’t need a second car. This saved a lot of money on insurance, gas and maintenance.
8. I worked hard. I think it’s worth mentioning that it takes a lot of hard work to get out of debt. There were definitely days and weeks where instead of leisurely coasting after reaching my weekly average, I continued to push hard to earn extra money.
9. I had my wife on board. To be able to get out of debt you and your significant other need to be on the same page, heading in the same direction. Getting out debt requires sacrifice and much delayed gratification which can be hard at times. Fortunately for me, it took no convincing my wife towards the mission. Truth be told, she was the one waiting on me all these years to become more responsible with our finances. I have an exceptional wife and I’m incredibly grateful to have her on my team.
10. I sold our one vehicle. With the end of our debt in sight, and the appliance business using the truck all day every day, I decided to just sell it to the business. That was the final death blow to our debt. How do we get by without a car? We are in a unique situation where we still have access to the truck for personal use when needed, but the reality is that we really don’t drive that much. We plan on getting another car sometime in the near future, and when we do we’ll pay for the next one in cash.
I’d love to hear your tips and stories of how you’ve been able to get out of debt, stay out of debt or live a more frugal lifestyle. Also, let me know if you have any questions. I hope this post finds you all well. Let me know if there is anything I can do for you.