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.
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.