Every journey has a starting point. My starting point for getting out of debt was the bottom of a very deep and very dark hole that my life circumstances had been digging for a decade.
There were basically two options open to me when I found myself in a hole of my own making.
1. I could can pretend I’m not in a hole and continue digging.
2. I could open my eyes, tell myself the truth about the hole I’m in, and make a plan to get out.
Like a lot of other people, I took option 1 for many, many years and it cost me dearly. Life is too short to spend hours every month working to pay the minimums on credit card balances that never really seem to get any smaller.
Then the crash of 2008 happened I had to take a pay cut as my government contractor employer lost business. The cost of my health insurance started climbing with no end in sight. Suddenly I missed one credit card payment and then another. I scrambled to make them up but with fees stacked on top of a skyrocketing interest rate it was a losing game.
Once I decided to get the truth about the hole I was in, my first step was to get my credit report (you can read more about the free service I used here) and make a realistic assessment of my debt-to-income ratio. It wasn’t pretty.
For starters, there were over $5000 in debts that I didn’t actually owe. A broken lease had led to a landlord claiming that I owed six months in rent when in reality I only owed just under $300. That was an easy win through filing a dispute that was resolved in a few weeks. The rest…were not so easy.
After doing what the banks are hoping you won’t do (some simple math), I realized that unless I won the lottery or found a big bag of money in a parking lot, there was simply no way to pay back the full value of what I owed short of making myself the indentured servant of the banks for the next 20 years.
The usual “financial guru” advice of clipping coupons, brewing my own coffee, or brown bagging my lunch to work wasn’t going to be enough. Neither was working an extra job or three. Something far more drastic was going to be called for.
I took a long, hard look at the hole I was standing in. Then I made a choice.