Achieving The Debt Free Life

In the next few months, I will be completely debt free. It took me about 10 years to climb out of over half a million dollars of debt. This included my mortgage, two car loans, credit cards and other personal loans. I remember that feeling of being in debt, I felt heavy, oppressed and scared. According to the bank, I would finish paying back what I owed a few months before my 68th birthday. Since I was in my early forties, this felt so daunting. So, this is what I did about it.

1.??????I added it to my prayer list and tithed on my income. It was one of the top five things that I prayed for at the start of every year. The first two years, I just kept up with the planned payments, never stopped tithing and nothing happened. In fact, I ended up taking out another personal loan increasing my debt. But I knew I needed a miracle, so I kept praying and tithing.

2.??????In the third year, I gave up on running my own business and took a job. In my business I was working day and night, seven days a week. Doing consultancy and then waking up early in the morning and cleaning the office toilets, mowing the lawn and then at night doing the accounts, developing sales pitches and on weekends designing new tools. I love the work that I was doing, but as a single person, the delays in payments from clients meant that I was always in danger of missing payment dates and incurring more interest on my debt. Most months my staff walked away with their pay cheque smiling and by the time I paid NIS, taxes and vat, I would have to short pay myself. This was critical because that same year, my mum was diagnosed with Alzheimers and began to require day care.

3.??????Having a fixed income, meant that I could finally create a budget which I could stick to. I set aside 10% for tithes, 10% for savings, and then I ensured that I paid all my bills minimum payment and my mum’s care. The balance was divided into 10% for debt recovery and the rest for food, gas and entertainment. Now I know some people struggle with tithing. But here's the thing, that 10% couldn't make the difference, so I decided to bet on God and trust him to keep his promise and bless me.

4.??????I organised for all debts, tithes and savings to leave my bank account within two days of getting paid. This prevented me from overspending or second guessing my budget. If I had to physically write cheques, I would have created so many opportunities each month when I would have to decide should I pay this or save that or spend it on something else. Having it automated took away all of those decisions and possible points of failure.

5.??????I paid off the smallest debt first. I had read so may articles of debt recovery and they all said pay the smallest first to give yourself a win. It will increase your motivation and the money that you save can then be added to one of the other debts. It took almost a year to get the first loan which was about$7,500 paid. But I was on my way. After that I tackled my credit card because it had the highest interest. ?By year five, I had paid back all personal loans and my credit card and my truck, leaving one car and my mortgage.

6.??????In the Caribbean, moving your mortgage isn’t really an option, since you have to pay all the legal fees that you paid when you first took out a mortgage for a second time. However, there was fierce competition between banks who were offering 4% instead of the 6.9% I was paying on my mortgage. That gave me to courage to ask for a rate reduction with my bank. Since I was still on the hook for over 400K, they agreed to oblige me, and they reduced my rate to 4.9%. I didn’t really want to go through the hassle of moving the mortgage, so I accepted it but kept my payments the same. This meant that with each payment, I was paying off my mortgage at a faster rate. Also, my mortgage had no penalty for early repayment, if I moved to a different bank, that would not be the case.

7.??????One of the things that impacted my ability to save was that I am generous. I see someone in difficulty, and I always want to help. I had gotten myself into a position where I was always tucking money into a friend or family member’s purse, even though I couldn’t afford it. What was awful was that I would make the sacrifice to give them, and they wouldn’t pay the bill I was trying to help with. They would get their nails, or their hair done. It drove me crazy. But I didn't confront them, I took it God. Through prayer I recognised that once I give it, its theirs to do as they like with. Just like tithes, God can choose to give it to the pastor, the needy or build a church. That's between the Pastor and God. I needed to stop giving out of my core – the money I needed to survive. I then set aside a fixed amount from which I would be generous each month. It was about $300. I could decide if I wanted to buy someone lunch, pay a bill, donate to a charity and sometimes even treat myself. Also, if I wanted to pay a bill, I got the account information and paid it directly to the company. The biggest thing was that I had to address my wrong belief that I had a duty to help family, friends and pretty much everyone that I met who was in need.

8.??????Throughout the 10 years, there were times when I had to use my credit card and it was more than I could pay back in a month. I ran my credit card to its limit probably 4 or five times. But each time, I would focus all of my debt relief budget to paying it off as quickly as possible. I learnt not to beat myself up even when it felt like I was going backwards.

9.??????As I paid of my debts, I increased the payments to my cars and then saved lump sums which I added to my mortgage every six months. I also increased the percentage to my savings. I’m getting older and I need to make sure that I have investments which will mature when I’m older and won’t be able to rely on a job. So, I throughout the years I bought some investments. The first was fixed term deposit that matures in five years which was my parents’ burial fund. So far, I have been able to renew it every five years and even when my mum passed last year, I had enough savings to cover her funeral without have to cash in the deposit. Since then, I have added shares and a 20-year endowment policy.

10.??My last step in becoming debt free was a big one. I had to make some big sacrifices. I couldn’t do the frequent trips and lavish holidays that my colleagues were doing.?I went clothes shopping once a year and kept my spending on Amazon to essentials. I took care of my stuff, made it last and repaired shoe heels when I could. I tried to buy one or two good pieces and gave up trying to keep up with fashion. But I allowed myself treats each year. Sometimes it was the latest phone, or a Fitbit watch, or an expensive handbag or pair of shoes. The final sacrifice was when I sold my best car. Yep, that’s right, not the worse one, the best one. The money from that truck allowed me to pay off almost a third of my mortgage. I still look at pictures of my truck and sigh, but then I look at my mortgage payments and smile.

11.??In a few weeks I leave my job and I have already decided that I am taking my pay-out and putting it all on my mortgage. That and a hefty scoop of savings will be enough to pay that mortgage in full. When I’m done, I will be skint. I have already warned my sister that my reward will be an airmiles trip to Canada where I will be living off her for a few weeks and watching Netflix to recover from the shock to my bank account. I've saved enough so that I can live frugally for about six months until I find a new job. Its scary, but exhilarating.

So, if you have a dream of being debt-free, I want to encourage you not to give up. Even when it looks like everything is going in the wrong direction, unexpected cost come up and you make mistakes. Keep going and keep believing and no matter how little you have, share it with someone less fortunate, you will reap blessings because of your kindness. Not only will I soon be debt free, but I have also rid myself of the need to keep up with the Jones. I no longer see having the latest hair style, or clothes or most expensive car and trips as all that important. I realise that things never brought me more than a few seconds happiness and yes, I had plenty of things that I never wore, never used and never took out the box. As I stopped the senseless buying, I had more money to pay my debts, less unnecessary debt and I felt great when I saw how happy people were when they wore the clothes and shoes and bags that were just filling my wardrobe. I felt lighter as I got rid of stuff. In fact, I looked and felt so much better, that it inspired one of my team members to start giving away her clothes and stuff and keeping only what she actually uses. I warn you, its catching.

Have you made a similar journey; I would love to hear about it? If not, I hope this might inspire you to get on the road to becoming debt free and don't give up. You can do it.