You Can Do This

About two years ago, I had almost $17,000 in credit card debt. That added up to about a third of my salary at the time, and the minimum payments were more than my rent. Most months, my paycheck was gone before I would even see it, swallowed up by credit card payments, a rent payment, utilities, insurance, a bundle of student loans, and two outstanding car loans.

My wife and my infant son and I lived in a little apartment together and we had every luxury item we could afford. We liked buying neat stuff – I owned two iPods and had multiple computer systems, we had an enormous DVD collection that practically filled our living room (with a lot of them still in the shrink-wrap, bought but never opened), and my wife had a taste for books. Lots of books.

When we first found out we were going to have a child, we decided that he would have the best of everything. We spent several hundred dollars on an amazing crib for him and bought almost everything one could possibly think of that a baby would want. We turned the tiny second bedroom in our apartment into a nursery and just poured out the money. We bought a top-of-the-line breast pumping machine, dozens of educational toys, and a mountain of clothes for the boy.

We just kept sinking and sinking and sinking into debt, but I just couldn’t bring myself to really think about it. It was so much easier to not think about it, to just keep doing the same things I was always doing. I’d go buy DVDs and books and such after work, eat out for lunch at expensive places, and just keep sinking slowly further and further into debt. I assumed that “future me” would just take care of it.

One day, I woke up and there was no money. I had less than a hundred dollars to my name, a mountain of unpaid bills in front of me, and no forthcoming paychecks. I knew in the back of my mind that such a day would come, but I didn’t know when it came that it would punch me in the gut quite so hard.

I was scared. I held my son for a long time. I cried. I talked to my wife about everything and we went carefully through the bills. I went to the library – not the bookstore, for once – and checked out a pile of books on money management, trying to figure out how I could get myself out of this mess this time. Two of them really stuck with me – Your Money or Your Life and The Total Money Makeover.

The one thing I realized above everything else? Fixing it wasn’t that hard. Sure, the problem can’t be solved in a day, but the solution is really, really easy. Want some tips to get started?

Enjoy the stuff you have instead of buying new stuff. If you’re tempted to buy something, look around the stuff you already have and try out one of those instead. If you’re going to go buy a new DVD, watch one on your shelf instead. Lusting for a flat panel? Go for that upgrade – but wait until the TV you already have doesn’t work. Want to buy clothes? How about doing a big closet cleaning and seeing if there’s anything you’ve forgotten about in there? Look at what you’ve got before you spend some more.

Lock up all of your credit cards. Don’t carry them with you for a while, but continue to live your normal life. You’ll find your habits being subtly changed by this – and better yet, you won’t be building up a balance on those cards. Try it for just a couple of weeks and see what happens.

Pick your debt that has the lowest principal left and make extra payments on it. If you do the two things above, you’ll notice some extra breathing room in your monthly spending. Take some of that and make extra payments on the debt you have with the lowest balance. Hopefully, you can pay it off fairly quickly – and you can feel the rush of a debt burden being lifted from your shoulders. If you like that feeling, move on to the next debt.

Eat at home more. Even if you just go home and prepare a prepackaged meal, it’s substantially cheaper than constantly eating out. Try to incorporate making some of your own food as well – see if you can come up with a used crock pot and then start using it by just dumping in some ingredients in the morning, turning it to simmer all day, and coming home to a delicious and frugal meal. I make roasts in mine all the time – just put in a roast, a seasoning packet, and some vegetables and my wife and I have three or four delicious meals waiting for us.

It’s not rocket science, just a bunch of small steps you can take. The hardest part is just having the courage to take that first step.

Why I Wrote This Post

A reader named “Jon” sent me an email earlier today that’s worth quoting:

I’ve also passed the Simple Dollar along to some co-workers who are struggling financially. What I find, however, is most who are struggling don’t want to look in the mirror, because they don’t want to see the changes that need to be made and then make them.

This email hit a real nerve with me. The people that Jon talks about in this email are the very people I want to reach the most. They’re sitting in the very situation I was in three years ago – slowly sinking, getting myself more and more in debt, and, most of all, not wanting to face it at all. It’s much easier to not face it, after all.

If this sounds like someone you know, please send them this post. Thank you.

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.