My Journey Out of Debt in Under 2 Years

Not long ago, I was in a bad spot financially. Really bad, in fact. I was drowning in debt and had an unhealthy relationship with my personal finances. I was $240,000 in the hole to be specific. To be fair, $180,000 of that debt was a mortgage. The catch there was that I really couldn’t afford the house, hence why I’m including it in “bad debt” here.

The rest was split up between:

• high interest credit card debt (multiple cards)
• high interest student loan debt
• car note
• personal loan to cover the down payment on the house (yes, that is a thing…)

Now, mortgages aren’t usually seen as bad. But… they definitely can be when you have to finance the down payment and can’t actually afford the payments plus taxes and insurance… and PMI… upkeep, oh, and electricity and water, then trash pickup… did I miss anything?

This kind of situation is common but definitely not normal by my standards today.

This is how I got out of debt and attained a positive net worth in under 2 years with an ordinary income while paying child support.

What I described above was my reality from the age of 22 to 25. By the time I was 27 I had gotten myself out of this mess thankfully. And before 22 I was always a pretty frugal guy. Actually, no, I take that back, I was the “cheap” guy. Big difference. Thankfully, I’ve come a long way since those days.

Age	Financial Status	Enjoyment Level in Life
18-22	Cheap college kid	Good – hungry for growth and success
22-25	Heavily in debt	Bad – entitled mindset, blamed others for poor decisions
25-27	Super savings mode	Better – good goals, ownership taken, better work ethic
27+	Path to financial independence	Excellent – optimized, balanced approach to money, good flow in life

It didn’t happen overnight and it wasn’t all rainbows & sunshine. In all actuality, it was a few small changes here and there which eventually led me to shedding this huge burden from my shoulders.

If I had to sum up what I did to change all that around, this is what it would look like:

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Action + Consistency = Success

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This is the formula I later came up with that I use to help explain how to achieve success in the most simple of terms.

It’s been many years now that I’ve been debt free. I’m happy to report that my net worth has consistently trended upwards as well since getting out of debt, too. Thanks to a booming market (for my investments) but also consistent investments and savings each pay check. Different circumstances, same formula for success.

The best part about being debt free is the lack of stress that comes along with it. Not only that, but my relationship with money is a lot healthier than it was in 2014. 

During this time I learned quite a few good strategies for how to deal with looming debt or things I can’t afford and I plan to share those with you as well.

The Formula Goes Both Ways

I got out of debt the same way I got into it. Consistent action but in the wrong direction. Little lifestyle changes. Negative lifestyle changes though. Just like how compounding your money in the stock market can help you, compounding debt interest can crush your net worth, too. Usually at a much faster rate. 

Once you begin to spiral it’s easy to let it get way out of hand. This is exactly what happened to me. I had a good paying job out of college but began spending a little too much each paycheck to the point I couldn’t cover the expense on the credit card. I had to have these things right? (No!). 

Unfortunately, too many people go down the same path I did. The path to self ruin. Perhaps some people are OK with that scenario and would work their way through it – not me. It doesn’t seem so bad at first but the stress adds up very quickly.

Finding My “Why” To Getting Debt Free

At one point during all this my car was stolen. Insurance paid me out for it, thankfully. Instead of buying another car we decided to go down to being a 1 car household (plus my motorcycle). Instead I took the money and paid off ALL my consumer debt. That felt really good. Sounds like a smart, frugal decision, right? Downsizing to one car and no longer in consumer debt. Wins! 

Fast forward just a few months and it was already happening again – overspending a little here and there. Oh, by the way, a baby is on the way too! And babies are expensive (in my mind at the time) so we had to buy a TON of things for him and before I knew it the cards were nearly maxed out again!

At that point I realized I had to do better. The giant windfall from insurance didn’t save me. It’s not the money, it’s ME who is the problem here. My habits are causing this misery. My decisions every single day are adding up to negatively impact me in the long-run. I couldn’t “get ahead” ever but it wasn’t someone else’s fault that I was spending too much outside of my bare necessities. I didn’t have a clear goal or vision for my life or money.

It doesn’t even matter what I was buying – it’s the fact that I couldn’t stop the impulse. I had no self control.

Knowing my son was on the way definitely helped me have a paradigm shift in perspective on my habits. Do I want him to grow up and be like how I am now? No, not at all. I want to provide for him and not be stressed about buying things he needs or wants one day. 

If I was going to give him the future I wanted to give him, I knew then something had to change – but what?

Becoming Comfortably Uncomfortable

First, the mortgage I had was way too expensive, the house too big, and the commute way too far – a huge hidden cost. I knew downsizing my living situation would vastly improve my monthly cash flow. Reducing my rent and utilities would free up a lot of cash to put towards debt. It took over 6 months to sell the house but that began to ease the burden a lot once it sold. It also reduced my commute substantially. While that reduced my time for podcasts in the car, it freed up more personal time, which was really nice.

During those 6 months of trying to sell the house, I was living with one of my parents. That was embarrassing to have to ask to do. I wish I could say I saved on rent but since I was going through a split-up, I was still responsible for the mortgage that entire time. In hindsight it would’ve been smarter to stay with my parent until I was further along but their house was an even worse commute to my job and that was pretty miserable. Again, things worked out, but a little slower because of that trade-off.

I knew I needed to pay down consumer debt (credit cards) first and STOP using them all together. I began paying for everything in cash from my paychecks. If I didn’t have enough cash, well, I didn’t have enough money to buy it. There were times I still had to use my credit cards during this period but they were few and far between and I always managed to pay them off before they got charged interest for carrying a balance. This was a huge win to stop the bleeding.

What order is optimal for paying off debt?

While there are multiple schools of thought on what order to pay down your debt, I chose to go with the highest interest rates first. For my situation, I felt this made the most sense.

At the time I had two credit cards. Both were over 22% interest. Once the first was paid off, I took that monthly payment and added it to the other credit card. That really sped up the timeline for my payoff date. Once both of those cards were paid off I had over $500 a month extra in cash flow. 

To free up the cash flow to pay down those cards quickly, I quite literally just stopped spending.

To be specific, I:

• set goals and made a budget
• stopped spending beyond my means
• quit spending on things that weren’t really bringing me value
• prioritized making my own food
• temporarily cut out alcohol
• switched to a cheaper phone plan
• sold old items that were no longer being used
• moved closer to work & biked to work a lot

Each one of these small changes were uncomfortable at first. It took a lot of sheer willpower and eventually discipline to re-learn how to have a semblance of self-control around money. I implemented them slowly, knocking out low-hanging fruit first then going hard on changing my lifestyle. Going in this order ensured my success (consistent correct actions).

Over time I adapted, just as I had adapted to gradually over spending. Each also added up to quite a significant decrease in my monthly spending.

Note that I could’ve stopped my journey here. I was relieved of so much stress from just the consumer debt that life would’ve been pretty smooth sailing if I had stopped there. Instead of spending or saving that extra cash though, I continued to roll it into my student loan payment and eventually my car note. At that point, I was on a streak and I didn’t want to stop.

While it’s uncomfortable to break out of these habits, I knew I had to change. If I kept the same habits I’d keep getting the same results. Becoming a friend of discomfort is key to growth in any area of life, including spending. If you want to increase your income you have to get uncomfortable in that arena too.

Unintended Consequences

During this time I noticed that I worked a little harder at my job too. An unintended consequence of trying to get my life together financially was that I now had a plan for everything. Everything in my life was becoming more organized. One method I employed very early on was utilizing my Bullet Journal to track everything. I even started lifting weights again and studying for a professional certification (which I would never end up getting, but the sentiment of self improvement was strong during this time).

Each of these actions reduced stress little by little and I began to perform a better at my job. That led to getting a small cash bonus. I put that towards my loans, 100%, and that helped speed it up too. 

Optimize Your Net Worth

Your net worth is simply what you have versus how much you owe others. There’s two main ways to boost it. One is to increase your earnings (bonus, promotion, hard work, driving for Uber). The other is to reduce spending day to day, month to month. My journey took me down both paths but I created this business to help others specifically with this second option – spending. 

With that being said, if you’re really serious like I was about getting to a positive net worth and beyond, then you should focus on BOTH to optimize your finances. 

No Debt = Financial Freedom

My company happened to pay out another small cash bonus and that helped me pay off the final $1,000 on my car on May 15, 2017 (yes, I still remember the exact date – this was that significant for me). What a relief that was. A HUGE burden lifted from my shoulders. I was a new man. I finally felt FREE, in control of my life, and like I had potential again.

Not having those loans allowed me to save cash for the first time in years. I quickly got a small emergency fund stashed away then began investing as quickly as I could. It wouldn’t be for another few years until I had invested quite a lot of my income that I began to ease back on my staunch spending rules. Now I employ a frugal but healthy and balanced approach to my finances that works well for my situation.

For many, having loans isn’t a big deal. And that’s fair! If you’re not struggling to make ends meet and you don’t feel the weight of those things, then carry on. For me it was all beginning to be a bit too much and I needed to hit reset on money and on life to be frank. Many are OK with various types of debt but simply want to get their consumer debt under control and I think that’s a smart move.

Financial Independence

Monthly spending – in check. All that money that was going towards debt – diverted to investments and savings. Bought a few things to upgrade here and there – check. What comes next?

Early on in my journey I found out about the “FIRE movement”. FIRE means “Financially Independent, Retired Early”. Essentially people saving up enough money to live on the rest of their lives and then pulling the trigger on retirement before the standard retirement age. 

I calculated my “FI” number and that has been roughly my goal ever since. Getting out of debt was the first phase. Once there I optimized my investments and it was off to the races. This is where I am currently and will probably be for the next few years. 

It took me a while to get out of debt but it’s going to take even longer before I am financially independent. I’m not too worried about retiring early since I like what I do. However, having the option to not work if I don’t have to is very empowering – sort of like being debt free. 

Enjoying The Ride

In the meantime I am enjoying life as much as possible. That’s all I can do, really. That’s all each of us should be focused on. Unfortunately, being in debt and crazy financial obligations can obscure that one simple goal the universe set out for us to seek.

I enjoy spending time with the family, lifting weights, Brazilian jiu-jitsu, studying philosophy and history, reading, writing, and a whole slew of other random hobbies and interests that ebb and flow with the seasons. One day I hope to be financially well off to the point I can afford my dream car and motorcycle (car: 996 GT3, bike: Husqvarna FS 450).

Remember, money is a tool. It can be used for good or bad. It can buy you security, experiences, and material things. But happiness, a good reputation, moral excellence, and a good flow in life are all independent of money. At the end of the day it’s a noble pursuit but it’s not all there is in life, so make sure you’re enjoying life along the way. 

What are you going to do when you’re debt free?

What about when you’re FI? Working backwards from those as your starting point is a powerful way to visualize your life in 5, 10, or 15+ years. While those may be a ways away it’s still empowering and even inspiring to think on. That’s the beauty of financial freedom and why I do what I do at JSS. 

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I look forward to speaking with you and helping guide you down this life changing path.

In health and in wealth,

Seth

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P.S. An earlier version of this was published on the Bullet Journal blog back in 2018. Click here to read that. Enjoy!

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