“How I Got Out of The American Dream and Changed My Life in 3 Years”

american dream

Carrie Smith from the site Careful Cents got out of $150,000 in debt in only 3 years, and today, she’s sharing how she did it!

Getting out of debt sucks — big time! I know, because a couple years ago I was over $150,000 in debt and I wasn’t even 25 years old.

I’ve told parts of my debt story, on my blog and on The Huffington Post, but today I’m going to tell you the whole story. All the dirty details.

“How I Got Out of The American Dream and Changed My Life in 3 Years”…

Being in Debt is “Normal”

What in the world possessed me to go into that much debt at such a young age? The American Dream.

Yep, like you, I grew up believing that being in debt is normal. That taking out a mortgage, car loans, personal loans and financing your life on credit cards, was something everyone does.

So I bought my first home when I was 23 and along with it came a huge mortgage. Then I decided to trade my paid-for car in for a new car with an auto loan. What was I thinking?! I was thinking — and encouraged — that it was normal.

With the pressures of all my financial decisions weighing down on me, I started realizing my life was spiraling out of control. However, I didn’t have a full wake-up call until I was in a major car accident that totaled my new car and nearly killed me.

My marriage was failing. My car was a complete wreck and I had to buy a new one — but I couldn’t afford to, because my mortgage made me asset rich and cash poor. It was time to make a change.

Debt Steals Dreams

Those were the toughest years of my life. At 25 I was divorced, forced to move out of my beautiful home to pay my debts and finally faced the facts. When I say being in debt sucks — I mean it!

Debt Steals Your Dreams

It steals your future. It puts unnecessary strain on relationships, and undo stress on you both physically and emotionally.

I was halfway through my twenties and had to start my life over. Not only in the area of relationships, but with my finances as well. What I had been taught, was obviously not working. What I grew up believing was wrong — and it was time to learn the truth about handling money and being in debt.

Making a Get-Out-of-Debt Plan

The first thing I did was take a good hard look at the debts I had left after getting rid of my mortgage, and how I was spending my money. After selling my home, I still had about $14,000 in consumer debt, from credit cards and my car loan.

I started listening to podcasts and reading blogs, like this one, Man vs Debt, Get Rich Slowly, and many others. I quickly realized that, while there’s a whole slew of people who think being in debt is normal, there’s a whole other crew who believe living debt-free is normal too.

So, I started aggressively paying off my credit cards, and from there I began my small snowball, paying off one debt at a time and rolling that payment over to the next debt.

However, I came to realize that no matter how much I cut back my spending, at only $36,000 a year, I wasn’t making enough money to make a big enough dent in my debt.

The only solution was to create more income coming in, and throw the money directly at my remaining debts. The more money I made, the faster I would be out of debt.

So, I created my blog, and started my freelance business. I did everything from writing about my personal finance journey, to being a virtual assistant, to selling stuff on eBay that I no longer needed.

I Was Determined!

Whatever it took to get out of debt, I was willing to do it. I was tired of debt ruling my life, of banks and loans telling me what to do with my money. I wanted to be free — to have the liberty to travel, volunteer and spend my money how I wanted.

Carrie Smith

Living a Debt-Free Life

On May 29, 2012 I officially sent off the last car payment and became debt-free! And within 3 years, I went from broke and $150,000 in debt, to debt-free with $2,000 in my bank account.

It wasn’t much, but it was mine. And it didn’t belong to the bank or mortgage company.

I was free! For the first time in my since I graduated high school, I was debt-free! I can’t express how great it feels to wake up every day and know that my bills will be paid, that my car is mine and that I’ve created smart financial spending habits that will last me a lifetime.

So What’s Next?

While getting out of debt was journey, living a debt-free lifestyle is also a challenge. All the same temptations are there, and the “normalcy” of going back into debt is something that haunts me every day. But each day, I’ve managed to avoid the pitfalls of debt and I’m now building wealth for my future.

Along with stashing away money into my emergency fund, I’m saving money towards my retirement — something I never thought I’d be able to do. I also raised my income, and am now making the same as the average American. Of course I still have a long way to go, and lots more financial habits to develop, but I’ve come a long way.

So what’s next? Well maybe I’ll continue renting, or maybe I’ll start saving to be a homeowner again — or maybe not. The American Dream isn’t my dream, and neither is being in debt my whole life. Every day I wake up and create my own dream, and follow my own ideas about spending money.

I’ll continue sharing my story, and helping others come to the same understanding that I did — the American Dream doesn’t have to be your dream. You can live a life without debt!

Make a decision today, that this will be the year you make a plan, and finally follow through with being debt-free.

 

Do you fantasize about The American Dream? Do you think it’s wise to follow the goal of home-ownership or is it becoming an antiquated idea? I’d love to hear your thoughts?

 

Carrie Smith is a small business accountant turned financial strategist. Through her blog, Careful Cents, she helps freelancers and entrepreneurs get out of debt and build their dream business. She’s currently launching The Debt Movement, a movement to help go-getters pay off $10 million of debt in 90 days. Find her on Twitter @carefulcents.

It's time to CRUSH that debt!

 

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44 comments


44 thoughts on ““How I Got Out of The American Dream and Changed My Life in 3 Years”

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  1. The Norwegian Girl

    We pretty much have the same idea of the American Dream in Norway as well. Considering education (yes, even University degrees:BA, MA, PHD) are pretty much free, we have all the opportunities in the world to be something great, which should lead to having a big house, a great career, 2 kids, travel the world etc. Even though the average household in Norway today is increasing its debt considerably, we still firmly believe in this way of living. But I`ve decided not to go along with all that. Sure I want my own house one day, but all in due time. I don`t want to be a financial slave until my 70s!

    Reply
  2. riza

    one of the best advice i got from college was to NOT buy a home early in your life. my professor bought a home in his twenties and he ended up having to file for bankruptcy. i don’t understand how being a home owner so young is smart. i kinda like taking long showers/bath without having to stress about how much it’s going to cost me! :D the american dream should be all about living within your means! thanks for sharing your story…truly inspiring.

    Reply
    1. Katy

      While I hate having a mortgage at 25, my mortgage payment for a S92,000 house is less than my monthly rent for a small apartment. Adding in some of those other bills, yes, I’m paying more than rent. But by paying more than the minimum, my husband and I have paid 10,000 off in a year and when we decide to sell in the future, we will have the money we built into this house to buy a better house. I’m so glad I’m not throwing money at a rental where I will get no return. It doesn’t work for every situation, but owning a home works for me!

      Reply
  3. Carrie Smith

    That’s a really great outlook @The Norwegian Girl. I know how tough it is to go against the grain, but in the end you will be happy you did what’s best for you and your future. Cheers to you!

    I’m right there with you @Riza. I don’t know why we’re encouraging young adults to strap themselves with a big mortgage so early on in your life. I’m glad you were able to listen to your professor’s story and learn from it!

    Reply
  4. LT

    This is deceptive. Technically she was only $14K in debt after the home debt. Once she was able to sell her home, it nearly wiped her debt clean in a single swoop. If she truly nickle and dimed $150K in 3 years, then I’d be impressed.

    Reply
    1. Carrie Smith

      I’m sorry that it was so misleading for you. Being in any amount of debt, whatever kind it is, was very difficult for me. I wasn’t able to sell my house in a single swoop, it took over 6 months to go through the entire selling process. And of course I didn’t want to sell it, I just couldn’t live with my life out of control in debt. Like when people choose to sell their car or other possessions to pay off debt, it’s still a big sacrifice and that was the point I tried to make. I hope that helps understand a little more of where I was coming from.

      Reply
  5. ann

    this is super deceptive. very annoyed i read this article, as i legitimately have this much debt, and NO, i’m not lucky enough to have it tied up in a mortgage. Can i sell my student loans? thanks 4 nothing.

    Reply
    1. Carrie Smith

      I take full responsibility for all the type of debt I incurred, and like you, no one forced me to go into debt. All I knew was that I had to make the decision to do it myself. In the end it was still a huge sacrifice for me, emotionally and financially. Thanks for reading my story anyways!

      Reply
  6. poppyannie

    I agree…deceptive. If I owed $200K on a house, and I sold it for $200K, did I get out of $200K debt in an hour spent at the mortgage company? Yep. There are better stories out there, Anna. Or retell your story. Or make some cupcakes and show us a photo. We love you.

    Reply
    1. Carrie Smith

      I apologize that the article didn’t meet your expectations. I lost over $20,000 through the process of selling my home, and it wasn’t something I wanted to get rid of in the first place. But since I needed to change my life, I had to make sacrifices. It was hard to tell my story in front of a new audience, and I appreciate your feedback.

      Reply
  7. Anna Newell Jones

    Hi Everyone,

    I’m sorry some of you feel the story was deceptive; that obviously wasn’t the plan.

    I appreciate Carrie sharing her story and I hope we can look at the similarities in our stories rather than the differences.

    It’s the horrible and crappy feeling that go along with an uncontrollable amount of debt that we can all relate to and we should support each other as we crawl out- no matter the specifics of each situation.

    With that said I think I will change the title of the post just so it’s a bit more clear what the story is about. Please know though, that it doesn’t mean I appreciate Carrie’s story any less.

    Reply
  8. Grayson @ Debt Round

    While I think the story was misleading, she still had to make changes to her financial life. I paid off $50k of credit card debt in about 4 years by making drastic changes. Still a good story about life in the debt trenches.

    Reply
  9. Sandra M.

    In this case, the writer’s story is very personal, and still very poignant. My suggestion would be to change the title, such as those readers who have incurred a great deal of debts in the $*XXX,XXX are not feeling the proverbial slap in the face of a “deceptive” story. Everyone’s story is valid, and everyone’s story is a struggle. Together, we can make a dent in our debt!

    Reply
  10. Joanna

    Carrie, your story is inspirational! Congrats on getting out of debt! Selling your home would be such a tough emotional decision. Thanks for sharing, sorry for the jerks :)

    Reply
  11. Sarah

    I have to agree with others that the original title was very misleading, as trading in an asset (i.e. selling your home) to eliminate a significant source of debt is very different from paying it down. Those with student loans or large credit card debt have nothing to sell, and therefore would find this story useless.

    That said, as a homeowner, I can appreciate the fact that selling your home (and losing $20,000 on it) is a big sacrifice.

    Reply
  12. Jenni Sea

    I definitely agree that not everyone has to buy a house, and being made to feel like we have to buy a house in order to have it all is problematic; however, buying a house is not always a dumb move. I feel like now is a good time to buy, if you’re able to swing it. I had convinced myself that buying a house was very American, and that we were fine with renting — until I realized that our mortgage on the house we were swooning over would cost us $60 less a month than what we were paying in (super cheap) rent on our crummy apartment, and our rate was fixed so it wouldn’t be going up, and our money was going toward something rather than just being thrown at an apartment complex. I think it definitely depends on where you live, and what you can handle.

    Reply
    1. Anna Newell Jones

      I agree with you, where you live makes a HUGE difference on if it’s truly worth it to invest in “The American Dream” or to keep on renting. Lifestyle has a lot to do with it to. Do you want to spend your days dealing with a yard or going to HOA meeting? Depending on how you want to spend your time that could make a big difference too- time or money… time or money.

      Reply
  13. Vicki

    I think that it was super brave of Carrie to share her story and I commend her for her courage! I took the title of the article to mean that we were going to learn about what steps she took to get out of her personal debt situation, which we did. I can totally relate to what was discussed in the article, I fell into a similar trap myself after college when all my firends started getting married and buying homes, I wasted a lot of money on things that didn’t get me where I wanted to be and felt that being in debt was just a part of life that you learned to deal with. Thankfully I’ve changed since then and am in a much better place. We should be celebrating everyone’s triumphs, no matter how big or small, rather than being critical, to me, that’s the main message of this amazing blog great job Carrie!

    Reply
    1. Anna Newell Jones

      Hi Vicki, Thanks for the comment. You are right on about what the hope/message for the blog is too. I want to make sure everyone feels like no matter what the amount of debt they have is that those feelings of guilt and shame and crappiness that are associated with it are universal and that those are feelings we don’t HAVE to accept as a way of life. I’m all about cheering each other on! And always suggest that readers take what they can from each story and if the rest of it doesn’t jive with you or if you can’t relate to it for some reason then that’s fine but it could be helping someone else. xo

      Reply
    2. Carrie Smith

      Thanks Vicki! I’m glad to hear that my story resonated with you and I appreciate the support. I’m also happy to hear that you went through a similar experience but came out on the other side with a new view and perspective about debt. Now you can create a more stable financial future and live your life without debt! Good for you!

      Reply
  14. Maureen

    Carrie- I know how you feel I’m getting divorced and have to sell my house too. I’m pretty sure i will lose a bunch on it (minimum $30K) and its a crappy feeling to put so much elbow grease into a house and then have to sell it for a loss. Thanks for sharing your story and I’m glad things are looking up for you! :)

    Reply
    1. Carrie Smith

      I’m so sorry to hear you’re going through a similar thing Maureen. I definitely feel your pain and sad to hear that you will be losing so much on your house while going through a divorce. It’s like pouring lemon juice on an open wound. But know this, if you keep your spirits high and try to stay positive, you can come out the other side better and smarter than before. Good luck! I’ll be cheering for ya!

      Reply
  15. Lisa

    I think people feel deceived because, I like everyone else, read this story hoping to find new strategies that I could use to pay down my own debt. I don’t have anything that I can sell to unload my $96K in student loan debt.

    Hey, I definitely pat Carrie on the back and give her a virtual high five. But, Anne, we are all constantly looking for ways to cut that we haven’t thought of before.

    Reply
    1. Carrie Smith

      Thanks Lisa! I wish I did have some better or more creative ideas. But like losing weight, you have to eat better and workout to see results and that’s not very “out of the box” but it works. That’s kind of how debt is at times. It’s a slow process and there are some fun and creative things we can do, but unfortunately it takes time and a lot of motivation. Good luck!

      Reply
  16. Arizona Annie

    Getting out of debt is hard work! There is not a quick fix or easy way to do it. It seems as though people respond with bitterness when they don’t get a quick and easy answer from something they read. IT’S HARD!!! If it was easy to get out of debt and build wealth, everyone would be a MILLIONAIRE! Good for you, Carrie; stories like yours are an inspiration for the rest of us who are still working hard to get out of debt! I’m slowly making my way, but each month gets better and better by reading stories like yours and blogs like Anna’s. =)

    Reply
    1. Anna Newell Jones

      Yeah, for everyone’s sake I wish there was a quick fix for getting out of debt! While it is REALLY hard work to get out of debt it is SO worth it though when you’re on the other side- the debt-free side!

      Reply
  17. Carrie Smith

    Oh man I too wish there was a quick fix. I’m so glad my story hit home for you! Little by little you’ll get to your goal, if you stick with it and just keeping moving forward. Feel free to contact me through my blog, to share more of your story, I’d love to keep cheering you on! Good luck!

    Reply
  18. Kath

    Hey Carrie –

    Debt is debt and you had to make some tough choices and learn from your past behaviors to get where you are today. Paying off $14K while only making $36K (for starters) is HARD WORK! Don’t let any of the previous comments get you down.

    Anna – love your blog!

    Carrie AND Anna – keep up the motivation!!

    Reply
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  21. Hunter

    Congrats on getting out of debt. I have turned to the internet to try to find storys like yours of people changing their lives fundamentally to free themselves of debt. My own debt is severe, $150,000 in student loans. I am still trying to figure out how I could have been such a fool, because there is no other way to describe it. I don’t know what is worse, having every day of your life revolve around debt or the personal shame for being such a fool. Outside of the stars aligning and making a lot of money, my personal goal is to start my life again (financially speaking), at 37. I only hope that people that are considering borrowing for anything, school or house, will use better judgement than myself.

    Debt is Debt! If you have to take extreme steps for 3 years like Carrie or a decade plus like myself, do it and begin to live your life the way it should be lived on the other side.

    Sorry I am rambling, last thing, young people do not listen to your parents or school counselors! They are from a different generation and they have no clue what they are talking about. They think they are giving you the best advice for your future but this is based upon their own generation’s experience. Do your homework and speak to young people that currently are where you plan to be after you graduate. ASK THEM..

    Reply
    1. Anna Newell Jones

      Please do yourself a favor and release that shame. You are not a fool. I’m sure you made the decision you did based on what you thought was best for you at the time. I did the same thing as you. I didn’t listen to my parents and I went and got myself a $40,000 associate’s degree at an unaccredited college. Um, d’oh. I felt like an idiot about it for awhile but then I decided to be proactive and that’s when my life and relationship with money changed. Please forgive yourself.

      Reply
  22. Kristin

    I agree that the title was a bit deceptive but understandable at the same time. A mortgage is debt. I can’t really help out with getting out of debt, but my bigger concern is how people get there to begin with. My husband and I had over $115,000 in student loan debt that we paid off in 3 years. The only way we did this, was simply because both of us took on debt for jobs we knew would pay it off. I can’t tell you how many friends I have who get themselves into a lot of debt for a degree that can’t afford the debt. We need to be smarter. I would never have gone out of state if I hadn’t done research that showed me taking on higher tuition would pay off with my job.

    If I could go back in time- I would have been much smarter with money in college to not need as many loans.

    Reply
  23. Amanda

    This is mostly irrelevant (ha), and I wish I could reply to the actual comment instead of way down here, but your statement about what’s involved with owning a home is a gross simplification based on a couple assumptions that wouldn’t apply to many people.

    We pay almost $200 less a month for our home in a nicer, safer area than where we had been renting at, and there are no HOA fees here and we do very little yard work, due in part to the sustainable and appropriate yard we picked based on our climate. Some minor things have needed atteding to since we bought our home years ago, but I think it’s safe to say that I’ve had more personal property ruined in our rental.

    On top of all this, we run a part-time business out of home that wouldn’t be legal to do out of an apartment, AND we rent out our spare room (in addition to our full time jobs).

    Safe to say, our house both saves and makes us money, and in comparison to what we reap from it, has required fairly little from us.

    …and now the market value of it is also $30k more than we bought it. Buying our house in our mid-twenties may have been one of our better decisions, I think!

    Thanks for the personal story!

    Reply
  24. Tina@TreasuredTidbits

    Thank you for sharing your story! We will make our very last van payment in one week and then all we will owe is our mortgage and medical bills that we have not received yet. It takes courage to share your story and once again I say thank you.

    We have made the decision to spend this year building an emergency fund of $5,000-$10,000 while paying cash for some large home repairs, at least 3 mammograms and one biopsy. All on a single income.. To keep me accountable I am sharing the journey on my blog in hopes of inspiring others as you have here.

    Once again thank you for sharing.

    Reply

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