In 2017, I was $40,000 in debt, unemployed and without savings. To make matters worse, I was also homeless. Yep. I couldn’t afford to pay rent after I got fired from the business that I started, so I got evicted. Not having anyone to turn to, I packed my stuff into my car, parked it next to a building and lived in it.
At the time, that was the worst period in my life. I barely had any money to buy food, and my stuff occupied the backseat, so the only space I could enjoy was the passenger seat. The low temperatures of winter made the experience more gruesome.
I recalled looking up from inside the car at a light in one of the apartments, feeling envy towards the person inside. He or she felt warmth, had food and space to enjoy.
After living in my car for a few weeks, I got in touch with a friend of mine whom I worked with at a restaurant. I asked him for advice about selling my stuff online, and he invited me over for lunch. I gladly accepted. It was then that he discovered my homelessness.
He offered me a place to stay, which I gladly accepted.
After several months of searching the job market, I got hired to be a restaurant manager. My salary was less than half of what I earned as an accountant.
I managed to save money because I compiled a budget that permitted only a minimalist lifestyle. I also made arrangements with my creditors to pay them as much as I could afford. But they knew my intention was to pay them back.
Rule No.1 of Getting Out of Debt
The same way Fight Club had a rule, the Debt-Free Club also has a rule—NEVER TAKE OUT DEBT AGAIN. You don’t get out of a hole by digging it deeper.
My financial struggles made me realise that debt alleviated pain in the short term but compounded problems in the long run. I understood that I had to pay everything with cash. And if I didn’t have cash for a purchase, then I couldn’t afford it.
After paying off the first debt, I felt like I had won the first leg of a race. The other legs would be more challenging, but I was one step closer to the finish line.
After paying off the vehicle finance, a credit card, an overdraft and several other loans, I had to pay a personal loan, which carried the bulk of the outstanding debt. I made minimal payments on that loan and saved as much money so that I could pay it off in a lump sum.
In 2022, I paid off the last loan and became debt-free.
My Life After Debt
The barrage of daily phone calls from lawyers, threatening to black list me so that I could never get credit again, garnish my wages and sue me, stopped. My sleep that night was calm because my subconscious mind was peaceful.
I felt the proverbial chains come off my neck, and my shoulders felt lighter. The tension in my head had vanished. The pain that had compounded throughout the years of being in debt was behind me. I was free to focus on my future, and I never had to worry about those struggles again as long as I avoided debt.
Freedom
Being debt-free showed me that debt is the No. 1 enemy of financial freedom. It’s impossible to be financially free as long as you owe money to an institution or an individual. You work to receive an income and then pay a portion of it to creditors. Statistics reveal that some people pay eighty percent of their salary to creditors. That’s a lot of money that could stay in your bank account.
My savings ballooned exponentially when I became debt-free. The more money you have, the more freedom you enjoy.
I maintained the minimalist lifestyle, and increasing my income helped to increase my savings as opposed to spenders who increase their spending when their income increases.
Since I no longer needed to go to work to pay creditors, I re-evaluated my job. I wasn’t happy with the company that I worked for, so I quit. The savings I had accumulated helped me to open a business.
When you’re debt-free, you’re no longer chained to your desk, and you’re free to explore other ventures. I’m convinced that some companies want their employees to remain in debt because it increases their staff retention ratio. Many people feel pressure to keep returning to the job they dislike because they have to pay their debt.
I Grew My Money Through Investments
It’s almost impossible to invest your money when you’re in debt. After paying creditors and expenses, most people are lucky to break even. Their ongoing struggle to avoid drowning financially encourages them to take out debt to solve their problems in the short term. But that only leads to more problems. The better alternative is to trim expenses to the bare minimum and eliminate the ones that aren’t necessary for survival.
After you pay off your first debt, you’ll feel relieved, and your motivation to persist will be boosted. Having one less monthly payment will enable you to dedicate more money to other debts, enabling you to pay off the second debt faster.
Once you’re debt-free, you’ll have disposable cash to dedicate to various investments. If you make the right investments, your money will work for you, instead of you working for it. That’s a great feeling, and it’s something that you’ll experience but only after you pay off your debt.
Word of Encouragement
It took me about six years to pay off the $40k debt. But remember, I started literally off the street. Your debt may be even bigger, but you’re several financial steps ahead of me when I started.
I didn’t start with the smallest debt, but you can because that will give you motivation to tackle the second debt. The debt-free journey is challenging. At times, you’ll want to quit because you may feel that you haven’t made a dent in the debt after months or years of paying it. Keep going. You’re a lot closer to the finish line than you think.
It’s extremely important to remain disciplined, and that means sticking to the minimalist budget. You cannot deviate, even once.
Keep track of the balance that you repaid. That will show you how far you’ve come, and you’ll be surprised at the result.
Work to increase your income and to decrease your expenses as much as possible. Sacrifices will be necessary, but they will be worth it. The debt-free journey will condition you to become a saver, and that’s the long-lasting solution to getting and staying out of debt.
CHECK OUT MY NEW BOOK — From Homeless to Debtless with Savings
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