Updated on 11.10.06

The Road to Financial Armageddon #9: The Road to Recovery

Trent Hamm

Yesterday, I described my financial meltdown, when I reached a point where there was more money going out each month than coming in with no real hope for redemption without a change from within. Then, thanks to some inspiration, I made that change.

The first thing I did was I laid out every single expense I had each month and asked myself what I could do to reduce them. I piled all of my credit card bills together in one place, my student loan bills together in one place, and so on. I then called each of the credit card numbers and simply told them that I am going to transfer all of my balances to one card and would they like my business? The first couple pulled my credit report and didn’t comply, but the third one did. I then proceeded to consolidate my student loans into one loan, and set up an automatic payment plan. With these two moves, I eliminated about 75% of the interest I was paying each month.

The next thing I did was I set up a loose monthly budget that I re-evaluated and tightened at the end of each month. I had so little idea of where my money was actually going that I didn’t actually save anything for the first two months – I just made large debt payments with my money. Once I realized where all that money was going, I was prepared to make even bigger changes in my financial life.

Once I understood my budget both in and out, I put strong caps on all of my frivolous spending. I allowed myself to spend a bit on entertainment, but I strongly budgeted it. I also began to cut down on frivolous spending even on things like groceries, where I taught myself how to shop in a much more frivolous fashion using tools like coupons and shopping lists.

The biggest step was making clear short term goals for myself. I clearly stated that I wanted my credit card debt gone and I wanted a two month emergency fund and I developed a week-by-week plan for getting that done. As I met the goal for each week, I began to develop a sense of pride as I watched my debt disappear much quicker than I would have ever thought possible.

The icing on the cake was I began to build up some savings so that disasters wouldn’t derail me. I opened up a high-interest savings account and set up an automatic deduction plan so that the money would simply move automatically into savings; all I had to do was mark it in my budget and savings would just happen. Soon, I was seeing the joy of compound interest and the peace of having an emergency fund.

Each of these financial moves helped to get me on track to righting the numbers, but how did I right my soul? Tomorrow, I’ll conclude this series by discussing the real lessons the road to financial armageddon taught me.

Want to jump quickly to the other Road to Financial Armageddon posts? Here’s an index to help you out.

#1: The Earliest Mistakes
#2: Early Profits … Lost
#3: Cash & College
#4: The First Taste of Real Money
#5: Love & Marriage
#6: The Yuppie Years
#7: Here Comes Baby
#8: Meltdown
#9: The Road to Recovery
#10: What I Learned

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  1. BigBuddha says:

    Many people will debate the usefulness of having an “emergency fund”, as opposed to a large “working” capital account.

    To me it’s simply a case of if you don’t have an “emergency fund” inevitably there will be some large bill that comes round that will knock your budge out of the park which means you’ll be scrambling around to find funds which eventually leads to use of credit debt again … and so the deadly debt circle begins again …

    an “emergency” fund is essential not only for peace of mind but to smooth out those cashflow “bumps” in the road which invariably will come around and help you avoid dipping into credit debt again and keep you out of the “deadly debt circle”

  2. Sam says:

    Terrific story! As happens to many people who dig themselves into a financial hole, I’m happy that you didn’t lose your job or face illness.

  3. John S says:

    What I find most interesting about your otherwise-excellent narrative is that your problems and solutions all seem to be unilateral. Where is your wife’s presence throughout all this? Why is she not brought into the discussion? Do you keep separate accounts? Or are you in carte blanche control of the family’s money (including her spending?)

    In my own experience, the hardest “unexpected expenses” to deal with are ones you didn’t make, but your wife did. Your entire story downplays her as essentially a non-factor in this whole process, which I find unrealistic.

  4. Andrea says:


    I grew up in Germany, where having a savings account is pretty much the first thing you learned (it has changed now, too). My first car was a 17 year old cab, holding together only because of the vast amount of stickers over rust holes. It cost me the equivalent of $500, which I saved up for months. Anyway, where I am going is that I am very glad I learned how to save. While my family and I are far from well off, I know how to live off chicken and potatoes for a few months, when the budget is tight. I wish parents would teach their kids how to save, rather than spending it on cheap, totally unnecessary plastic stuff they don’t need. I wish more parents would teach their kids to play with items they find in the yard. This country is in this mess, because nowbody has taught the kids the value of money. Keep up your great blog!

  5. JoAnn says:

    Loved your blog Trent!
    I am a penny pincher too and have learned the same lessons you have. I think it’s great what you’ve done and keep up the good work! These are lessons you’ll pass down to your family and I think it’s great!

  6. Megan says:

    John S.: my thoughts exactly. Wasn’t she freaking out with all these changes you were making?

  7. KIM says:

    in this portion of the story you speak as if you are the only equation in the story. what about your wife? how did she cope with the changes? you said “I” and awful lot! where’s the “we”? just wondering how she delt with it all?

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