Updated on 05.03.07

The Day After: My Immediate Actions When I Reached Financial Armageddon

Trent Hamm

Recently, a reader who found himself in a situation much like my own financial meltdown. He read about the real pain of the meltdown and the general plan I began to follow afterwards, but there’s a little gap in the middle that wasn’t really explained. How did I get out of that immediate jam? What did I do to get out of that situation where I had a pile of late bills and not a dime to my name?

Well, here are the five things I did immediately to fix the situation.

I called every credit card company and asked what I could do. I just flipped over my credit card, dialed the number, eventually got to a real person, and basically said that I wanted an interest rate reduction. Almost every time, I got a rate reduction of some sort. Right there, I trimmed off a few hundred a month in payments.

I liquidated everything I could get my hands on. In two days, I sold several hundred DVDs, four game consoles, approximately 50 video games, an extensive vintage baseball card collection, a Magic: the Gathering card collection, most of my hardback books and trade paperbacks, and several other odds and ends. Basically, I went through my belongings and asked myself honestly, “Compared to my son, do I really need this?” The answer was usually no. This cash was enough to pay off my immediate bills, plus pay off a portion of the largest credit card debt.

I started a second job. That’s not entirely accurate; I actually just did a big push for my computer consulting company, which I had let become somewhat dormant for a while. I called every person that I had done business with, plus I put up new posters about the business. This resulted in a big wad of extra income right when I needed it.

I started questioning everything that involved money. If I spent money for any reason, I spent some time thinking about why I was spending it, and most of the time I talked myself out of spending it. If money left my possession for any reason, I asked why and if I didn’t get a strong answer, I didn’t spend, period. Prior to that, I would just spend and not really think about it at all.

I started reading. I went to the library and checked out a big pile of personal finance books that very evening. I read them all in about three days, then went back for another pile, then another. I just washed myself in information, trying to understand what exactly I needed to do to get a grip on my situation. After about a week of it, I started to get a grip on what I needed to be doing.

This is what the first few days after my financial armageddon looked like, and from there I moved on to a financially stable lifestyle which is more wonderful than I ever thought possible.

Loading Disqus Comments ...
Loading Facebook Comments ...
  1. Dan says:

    Armageddon is a really appropriate term. It’s Greek roots mean something like “the unveiling.” Most importantly, it’s not the end. It’s the understanding. I’m sorry things ever had to come to such dire straits, but I’m glad you’re sharing your story.

  2. NCN says:

    Seriously, this may be THE SINGLE best personal finance article you’ve written (or I’ve read) in the past 2 years. Great, great, great job of giving real-life, easy-to-do, deeply motivating information. I’m going to link to it from my site an highlight it. Awesome, simply awesome,

  3. BK says:

    RE: I went through my belongings and asked myself honestly, “Compared to my son, do I really need this?” The answer was usually no.

    I am curious which belongings you needed more than your son!

  4. Robert says:

    There are 3 things you mentioned there that are of the utmost importance – liquidate, second job, and question everything.

    Many people ‘want’ to get out of debt, or have some other fleeting financial goal. But rarely do people get serious about it. Those 3 things you did are what made it work.

    Getting totally out of debt is much like playing professional sports. There isn’t a single professional athlete who didn’t sacrifice a little to get where they are. It took discipline and desire. Getting out of debt takes discipline and desire.

    It takes discipline to skip dessert when the dessert looks so good. It is a sacrifice to decline an invite out to a restaurant with some friends. It also is a sacrifice to give up a few nights a week to work a second job.

    I commend you for your sacrifice and discipline. Your future family will be much better off because of it. I did some of the same a few years ago, and in a few years, it will pay off when my wife is able to quit work to stay at home with our future children.

    Financial sacrifice now yields great results later.

  5. Andamom says:

    I think the first step is to assess the entire situation and inventory your spending/saving/earning life. Things may not be as dire as you first believe –but until you examine the full picture, it is hard to know. Gather your bank statements/data, receipts, bills, income payments, and other financial information together. Then, plug this information into a program or just tabulate it. How much are you spending on various items? If things expenses > income, you’ll need to make some adjustments. If there are non-performing assets as well, what can be done to make those productive or can they be liquidated and use that money for other purposes?

    I don’t agree with immediately liquidating things — or agreeing to various terms with organizations until you know for sure what is truly transpiring.

    Just my $0.02 …

  6. InaDaze says:

    Very inspiring, fortunately I haven’t come to this situation yet, but very practical steps for everyone to keep in mind if one does walk into the hornets net of debt collectors. Had to give up the baseball card collection huh?

  7. Bonita Kale says:

    Two things occur to me:
    1. Save this blog for your son when he grows up. You can tell him he did you a favor, and he can see how much he’s loved.

    2. The reading is very important. If you read one book in a field, it’s hard to be sure how important the advice in it may be. If you read a bunch, you’ll get an invaluable “feel” for what the experts agree on and what they don’t.

  8. Lydia says:

    Another great and inspiring story — many thanks! I’ve recently realized that we have lots of hard assets that we could readily do without, but what is the best way to liquidate, for example, household goods, books, gardening items, electronics and the like?

  9. junger says:

    Great read — it’s too bad that it requires hitting rock bottom before important (but non-drastic) measures are taken.

  10. db says:


    Speaking for myself, I’ve liquidated a lot of my possessions by taking clothes to consignment stores, having a couple of yard sales (one netted me $1000), and my best success has been with selling books, CDs and DVDs on amazon.com.

    Another idea that I keep threatening to try is ebay, though I’ve really dragged my feet on it.

    I totally agree that liquidating STUFF is a great way to kick off debt repayment, especially if you allow it to teach you not to value stuff so much. Just don’t go buy more stuff!


  11. Single Midwest Mom says:

    I am suddenly in a serious financial crisis, due to the unexpected cessation of child support as my ex may be heading to jail for a crime he apparently committed…very difficult times for my children having to cope with this, and scary for me as I figure out how to survive. Thanks for sharing your survival story.

  12. mjh says:

    This is similar to my own awakening. Though I was nowhere near Armageddon, I was heading in the write direction. Then I met my fiancee, who is of a different nationality to me. I soon realized that my amazing collection of books, records and CDs, and my student loan for half a degree, would not allow me to relocate to the US, find a job and make my contribution toward building a life for us both, let alone any children.

    So I sold all of my CDs and records, saving them as mp3s, and drastically culled my bookshelves (incidentally, this improved the overall quality of my collection as I weeded out the filler).

    Then I educated myself, care of the local library, the finance pages and blogs such as this one (especially this one). I embraced home cooking, thrift shopping and outright non-consuming.

    Now I’m on track. Still in the starting blocks, but at least I know I’m facing the right direction.

    Well done, on this post, your blog, and the changes you’ve made to your life.

  13. Beth says:

    As it’s been said, it’s fortunate that I, too, have never been in that situation. The steps to getting out of debt are the same as need to be taken by people to stay out of debt. Recently, it’s become my goal to amass savings, and these are the steps I need to take, too.

  14. Thomas says:

    This isa very good post. Wishing you well for the future.

    With your permission I will have this post translated into german and post it with credits to you on a few sites. “Hitting rock bottom” with personal financial situations are big discussions here too, but most people are that sensible in resolving their situation as you put it. So, i like to use your post as an example.
    Thanks Thomas

  15. Rob in Madrid says:

    What surprised me isn’t that you hit the financial wall but that once you pulled back from the brink that you didn’t start to slip. Often what happens is you get religion for a while than the siren call of easy debt starts up again. It starts off very easy, after several weeks or months of frugality you get a bit of money and decide to reward yourself with a dinner out or a new CD. Then old habits start to re assert themselves. In Canada it is really popular for people to convert their mortgages to lines of Credit which they can access for day to day spending. While it’s been hugely profitable for the banks it’s caused alot of pain for people involved because it’s very easy to run it up to the max. I’ve known several people who’ve been forced to sell/downsized because they couldn’t afford the debt payments.

    The other problem so common in marriage spouses often are at odds on money and spending.

    btw I’m Canadian but live in Spain now.

  16. KMull says:

    Wow. Thanks for being so honest with us Trent.

Leave a Reply

Your email address will not be published. Required fields are marked *