For new readers who haven’t read my early posts, you may not know what my thoughts are on debt. So what are they? Am I leveraged up to my eyeballs, making minimum payments every month while I invest everything I can to earn higher returns than I pay in interest?
The truth is that I’m not in any debt, what-so-ever. It’s not because I got everything handed to me, although I’ll be the first to say that I did have it easier than some. Even after getting a lot of things given to me during my high school and college years, I managed to get myself into debt in my twenties. At 24 years old, I was over $25,000 in debt.
Today, I have zero debt. No, it wasn’t forgiven by the government, the strategy many people today are using to handle their debt. “Oh, I’ll just pay on it for X years and then it will be forgiven. No, I didn’t give back the keys to my car and throw my hands in the air. Instead, I rolled up my sleeves and threw every single dollar I had outside of food, lights and shelter at my debt… for years….
It Took Years of Sacrifice to Pay It Off
I sacrificed to an extent many people aren’t willing to do to get myself out of my debt. But, why did I do it? The interest rates were pretty low on my car, at 4.9% and just a bit higher on my student loan. So why would I go through all that effort when I could have gotten by just fine paying the minimum every month? Because debt is horrible. It hurts you and it keeps you down in a place where you have zero options and zero flexibility.
My financial journey started when I was underneath that $25,000 pile of debt while only earning a bit more than that per year. At the time, I lived in a boring little apartment, had hardly any furniture, wore run of the mill clothes and didn’t have any of the “luxury goods” most people came to reply upon as needs. People would ask, “Kraig, you don’t have benefits at work? You are only making that much?” I was a young adult barely getting by.
But deep down, I wanted to accomplish my dreams some day. As a recent college graduate, everyone was asking me, “Kraig, so what are you going to do with your business degree?” And I would respond with, “Well, I’m going to work at X company for a couple years and then I want to start my own business” (By the way, those two years turned into six). My plans were to not to work in the corporate world for long. In fact, I remember the day I decided to drop my Finance major in college. Things were gearing up to send me in a direction towards an internship with a big company, where I’d become an analyst of some sort. I was being trained to be a small cog in very large machine. I remembered back to my dreams of entrepreneurship and doing my own thing, finally deciding “screw this”. “I’m in college to learn about business, not to learn how to do a job”. And I switched to entrepreneurial management, so I could actually start learning something valuable.
Back to my early twenties, I was sitting under a bunch of debt. After looking through bookshelves, flipping through the channels and searching on the internet for somebody, anybody to help guide me in the direction I wanted to go, I found Dave Ramsey. Well, I found others first, and they sucked. Dave was the first person I found who actually motivated and inspired me. Everything changed from there.
Dave Ramsey Motivated Me to Get Out
Dave reminded me how crappy debt is. I had forgotten that in the 7 years following my dad’s death. Before that, my dad was there to lead me by example and smack me upside the head when I thought about borrowing money. Now, I had Dave to tell me to get the heck out of that mess, just like my dad would have done.
So I listened. I got the heck out. It was one of the hardest things I’ve ever done. I killed it for two and a half years, writing massive checks to GMAC (eventually becoming Ally Bank) and to Federal Direct Loans. I became debt-free in December 2010, a MAJOR turning point for my life.
From there, I put myself on a path to make things happen in my life. Yes, I would build myself to a point where I could chase my dreams. No, it wasn’t easy. I had to save and save and save. I still live in the same apartment, still have the same furniture and still live the same lifestyle as I did while getting out of debt.
You know what I don’t have anymore? I don’t have money stress. I don’t need my next paycheck. I don’t need to borrow money anymore. In fact, I don’t think I ever need to borrow money again. Here’s the best thing: I don’t have to do business with all those idiot banks or lenders anymore. Keep your money big banks. I don’t need your services.
Do You Know How Being Debt Free Feels?
Logging into my Mint.com account today, I notice a couple things. First off, my expenses are exceeding my income for the first time in three and a half years, but I’m not worried. Secondly, my credit card and loan totals sit at a ridiculously comfortable zero dollars. Imagine for a second, not owing anybody any money. How would that feel? I’d hope many of you are in the same debt free boat as I am, but for those of you in debt, imagine what it would feel like. Pretty awesome, huh? Let me tell you that however great you imagine it feels, triple that and that’s how it really feels.
Here’s my position on debt. SCREW DEBT. Get out of it at all costs and commit to never going back. If you want to be normal, fine, go ahead and keep your debt around. If you want a future where you owe no one money, where you have complete freedom to live your life how you want to live it, then jump on the debt-free bandwagon. No, it won’t be easy. But if you give it all you got like I did, you’ll get out sooner than you think. I have to warn you though, it will take selling many, many things and giving up on most of your “luxuries”, which you will come to not even miss.
Cable TV? Please, I can find better things to do. Eating out? I can prepare my own meals and don’t feel the need to hire someone to do it for me. Buying a house? As an unmarried person, I see no need for four bedrooms, two living rooms, a formal dining room and a double sink bathroom. The thought of air-conditioning a massive house in the summer and heating it in the winter makes me cringe. I’ll take my debt-free life where I can chase my dreams and live on my own terms over selling my time for a paycheck just to make minimum payments on my debt. It’s simple, I hate debt and you should hate it too.