Updated on 02.05.08

You Can Do This

Trent Hamm

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.

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  1. Mark B. says:

    Great post Trent, I have been that person you described here more than once. I will have a moment of “clarity” and start to turn things around, but then I slowly start to slip back to my old ways.

    Every year about this time I find myself with thousands in credit card debt, and I make a real push to turn things around. Then I usually get my tax refund, pay off most of the debt, and start the cycle all over again. What if I didn’t get a tax refund?

    I want to change my habits, but how do I keep myself from slipping back to my old self?

  2. My Two Cents says:

    Very good post, Trent, and I hope it helps some people out. I’m on the road headed in the right direction thanks to the lessons my parents learned from similar mistakes – instead of charging up a ton of things like you did, though, they built their own house and couldn’t afford to finance it. A few years after the house was done, and I was born, we moved into a very small town house for the four of us. It was definitely a HUGE step down for my parents, but it helped them financially in the long run.

    I think that your comment on leaving your credit cards at home, or locked up, is a great tactic. I’ve done it a few times when I take trips out to Best Buy or some place with my friends, because I don’t even want to have to deal with the temptation of buying a Playstation 3 or something else that I really don’t need.

  3. elizabeth says:

    My husband and I really worked hard and in the last 2 years paid off all of my credit card debt and my student loans on a very limited income (most of you would laugh to know how little we make together). Anyway, I get stuck on the next step. Now that I don’t have the payments, it is harder to save. We want a house, but it is more difficult to pay it forward than it is to pay it back in my opinion.

  4. Credit says:

    I realized that I haven’t made a single positive reply yet. I like the enthusiastic message of hope combined with the realistic tactics for accomplishing goals you provide on The Simple Dollar. The advice is helpful even for those people who are not deeply in debt, but would like to optimize the benefit of money we do have. It is this broad appeal that makes this the most enjoyable personal finance blog i’ve ever read. Thanks Trent.

  5. 1WineDude says:

    Good stuff – I will definitely be passing this along to a few people.

  6. AaronO says:

    “Lusting for a flat panel? Go for that upgrade – but wait until the TV you already have doesn’t work.” — Do you know me?

    I think the people that read this blog are the people you are trying to reach out to…we’ve just realized our financial position sooner.

    Some people need to hit rock bottom before the bounce back up while others are scared to death to actually hit the ground. I am glad I took the time to see where I could have been headed and I am turning things around.

    I don’t comment a lot but I read your posts everyday. I think it is pretty easy to connect with others financially – no matter how much you make. Debt and finances are a part of everyone’s life.

    I use iGoogle and I added your blog to my homepage. I can easily see whenever you make a new post. Thanks for your efforts and keep up the great work.

  7. Susan says:

    I’ve got a little over $18,000.00 in credit card debt and still owe $6,000.00 on a hospital bill. I am attacking these with the same vengeance as that of a mother defending her young. I use that analogy because when I really think about it, I am attempting to repair and protect what little assets I do have and hopefully come out of this hole. I’m paying $1,200.00 per month on credit card debt, a little less than half of my monthly net income. I don’t touch the cards, I view this debt repayment as a challenge and I know that if I can keep my health and continue with my progress, that I will achieve my goal. Oh yes, I don’t own a vehicle any longer (sold it) and I ride the bus to work and everywhere else or I walk. Life is actually easier and simpler–and I feel like I am living more authentically by paying down my debt and living with less. My children are grown and at first they thought I had gone completely mad, but I think they appreciate my austerity when I am able to give them a considerable cash gift at Christmas and on their birthdays (I do it because it’s fun and they appreciate it.) Anyway, I’m glad I’m teaching myself to live with less and not file bankruptcy. I got myself into this situation and the only way towards solvency is to struggle a bit. Power to eveyone else doing the same.

  8. Kristina says:

    Hi Trent.

    Your post really hit home for me–not so much about the financials, but the ‘head-in-the-sand’ avoidance we practice when we know there’s something wrong but we think it’s going to be hard to fix.

    I am currently avoiding the problem of weight loss. :) I have the books, I know what it’s going to take to fix the problem, but I’m avoiding taking the first step in actually doing anything.

    Time to get off my butt.


  9. Amanda B. says:

    @ elizabeth:
    Automate. I send $25 to an E fund, $10 to a hubby gift fund and $10 to a me gift fund weekly. The cool part, I don’t feel like we have to money to spare, but when it never hits the bank we just make it work. When we figure out how to make it with that money, I’ll bump up the amount. I am essentially stealing from myself. But it works!

  10. Heather says:

    I’ve been reading your blog for around 9 months now and this is one of my new favorite posts. It is hard to own up to mistakes and to admit that changes in attitude and lifestyle are necessary to begin addressing those mistakes. It’s a hard long road. Thanks for continually inspiring me to stay on it. :)

  11. imelda says:

    Trent, this article from the NY Times might interest you: http://www.nytimes.com/2008/02/05/business/05spend.html?_r=1&hp&oref=slogin

    As the economy worsens, it’s about more families turning to thrift as a way to get by, returning to the spending habits of the older generations.

  12. Cheapest Man says:

    Great post man. I love to hear people’s stories of debt and how they overcame it. I had a similar situation and just finished paying off my last credit card. That was a great feeling, and one I hope the rest of my family can experience someday (FYI – my family is full of debt).

    I just found this blog today and love what you are doing here. I’ll be checking out this site quite often, thanks for putting this together.

  13. tubaman-z says:

    Great post. While my wife and I never accumulated large consumer debt as DINKs, we also didn’t have much to show for what we did earn – money in equaled money out, mostly for food and entertainment, not for savings. That got fixed when she quit working to be a SAHM. We’ve actually saved (and given away to church and charity) far more aggressively since then.

    “If you’re going to go buy a new DVD, watch one on your shelf instead.” I find that very few of the DVDs that we own get watched more than once (The Lord of the Rings extended DVD set and Star Wars excluded :-). This makes for a strong case for using either the library or Netflix for DVDs. The library is cheaper, but has less selection. Since I try to avoid accumulating subscription fees, it’s generally the library for me.

  14. KC says:

    Every parent wants to give their child the best of everything. But all your child really wants is good, loving parents. I grew up in the 70s and 80s, my parents were middle-class. But looking back on it we may have been slighly less than middle-class. But I honestly don’t remember “wanting” for anything (except that Atari I never got). I had loving parents who made me a well adjusted child. I had few materials needs except good clothes and shoes – thanks to my grandparents.

    My point is you don’t have to buy your kids all these material items. Sure, they’ll need some, but what they need more than anything is love and emotional support – if you give that to them both you and they will be happy and well-adjusted.

  15. Toxic Money says:

    Already sent it to my sister-in-law. I am sure that I’ll hear that she doesn’t need it, but oh well… I’ve done my part ;)

  16. Anne says:

    For me, the hardest part wasn’t “the first step”, the hardest part was believing the tiny little steps I was making were going to add up to a better future. In my worst debt period, I quit a job I loved and went to a data-entry position simply because it paid more. I lived with a crazy roommate. I took lentil stew and rice to work so often my coworkers believed I was a vegitarian. When I got tired of the books I owned and the books at the library, I started writing book reviews for a small magazine.

    And you know, it worked. I paid of $15,000 worth of credit card debt and bought a small condo. The little steps have turned into habits, so that now — when I’m unemployed — I am not at rock bottom. The mortgage is getting covered and I have money for food. I’ve figured out how to go to a class I want to do in exchange for work, and how to take fitness classes, also in trade.

    For me, the turn-around books were “Get out of Debt, Stay out of Debt, and Live Prosperously”, “How to Live Within Your Means and Still Finance Your Dreams”, “Living Cheaply With Style”, a Betty Crocker cookbook, and “Money is my Friend”.

  17. Cindy in NY says:

    Our moment of clarity came several years ago when we were trying to buy our first home. Our debt to income ratio was so bad we had a hard time getting a loan for $60,000. We had never paid attention to how much debt we had so we put everything down on a spreadsheet and then picked ourselves up off the floor! We had about $30,000 in credit card debt and $20,000 in student loans! To get rid of our debt, we did one thing differently from you – we paid off the highest interest card first. We continued snowballing our payments until all that debt was paid. We also stopped spending on “nonsense”.

    We sold that home and bought another. This time we were pre-approved for $250,000! (We didn’t spend anywhere near that.) My husband said “That’s what happens when you wear $15 shoes!”

    Now, we have no credit card debt, we have no student loan debt, we own 2 cars (11 years and 8 years old), and our home will be paid off early in nine years. We also have money invested in my husband’s retirement account at work, we have an emergency fund with 3 month’s salary plus we have funds for household emergencies, a car fund, home repair expenses, and a vacation fund. It all started with looking at our finances with open eyes!!

  18. What a great message! Very inspirational :)

  19. fran says:

    It’s been said before and is worth saying again…write it down! It’s so easy to go into the headspace of mindlessness. Writing down what you spend, eat (I lost 80 lbs with journaling as one of my tools)or invest time in will foster awareness and help you make changes.

  20. Inca says:

    Great post.

    I used to be very frugal and organized with my savings/investments. Then I married. To put it mildly my husband is the exact opposite. For a while I tried coaxing him towards my way, but I was getting very frustrated and depressed. It is much easier to fall into bad habits than to convince someone else to develop good habits. And you can imagine my story some 30 years later…Great kids, Teriffic grandkids, and little else but worry and fear.

    I am submitting this comment in particular as a suggesstion for a post…not about worry and fear but about regret that paralyzes.

    Can you write a post for those of us who are up there in years and spend most of our time regretting the past and feeling the future is hopeless and thus are totally stymied. It seems that the small efforts offered to the young and those more towards the beginning of their journey will not help us at all…and to do “big” things all at once seems overwhelming, if not impossible.

    Is there such a thing as “too late”?

  21. Diane says:

    This may sound crazy but my first step out of substantial debt began with a simple exercise. I heard a financial person say that your money (paper bills) should all be facing the same direction and ordered largest denomination to smallest. It taught me respect for money which I didn’t have prior. I am now completely free of $32,000 in credit card debt. Love your message, Trent!

  22. Matt says:

    The timing of this post couldn’t have been better for me.

    I was offered a GREAT job opportunity back in the beginning of January the problem is that it doesn’t start until mid-March hopefully and I wasn’t working at the time. I couldn’t pass this opportunity up so I promised myself that I would make it happen. Well, my emergency fund is just about gone now and I’ve been doing whatever I can for money. I’ve doing some sporadic temp work, focus groups, selling things on ebay but I don’t think I can make enough money for the next month and a half.

    I’m looking at probably $1500 of debt max that I’ve already secured at 0% interest for a year. I can pay this off within that time but I’ve worked so hard not to acquire credit card debt and work hard and paying down my student loans. I feel like I’m going backwards, that’s $1500 I could put towards my student loans.

    Then I read stories where people were in much worse financial shape and managed to pull themselves out. Your story helps me know that I can and will make the best of this. After all I managed to get the job I’ve been working towards since I was a teenager.

  23. jtimberman says:

    An important distinction here, and one of the biggest lessons out of this post, is in this statement:

    “…and we had every luxury item we could afford.”

    Here’s the thing that everyone needs to realize. You CANT afford “it”. Thats why you went into debt to buy it! If you had the money, cash in your pocket, then you could afford it! Just because you make enough to pay the minimum payments does not mean you have the right to buy something, nor that you can afford it.

    Again, affording monthly payments is different than affording “stuff”. This isn’t the American Dream, this is the American Justification For Bad Money Behaviour!

    I’m glad I learned how to control my spending and learn what affording something really means. I just bought a new TV and a new computer, paid out of pocket, and it feels awesome. I don’t have to worry that in 90 days or 18 months or whatever that I have to scrape together the cash to finish paying off some rip off finance plan with backdated interest and fees for late payments.

  24. You are so right – the easiest way to get out of debt is cut out many of life’s luxuries until you can pay off necessary expenses and get back on your feet.

    The simplest way to do that is to stop going out so often, stay in to eat, and start enjoying things you already own rather than replacing them with newer versions.

    Debt reduction requires Major sacrifice of one’s short term desires for a greater long term good!

  25. AaronO says:


    I agree completely. That’s why I haven’t made the plunge for that new flat panel.

    I’ve realized that going into debt over something I don’t really need is pointless. The 32″ CRT I bought at Walmart 3 years ago for $250 is doing the job…it’s just not as “cool” as a flat panel. As much as I want one, I don’t need the debt or the flat panel. When my current TV dies, I will look at a fancy flat panel.

  26. ClickerTrainer says:

    I must admit, I am ashamed of my generation. We have succeeded in raising an entire generation that (1) gets credit cards far too young,(2) don’t know how to set a budget, and (3) have expectations that are simply beyond. Shame on all me and my fellow baby boomers.

    I didn’t get my first credit card until I was 28. It was a Macy’s card with a $100 limit! I used it sparingly to build up a credit history. I didn’t need it, but I wanted a house. Didn’t need a house really either, except I really really wanted a dog. :)

  27. The road to recovery begins by looking in a mirror and having the courage to make the needed changes.

  28. Lurker Carl says:

    Most of the stuff we consider necessities didn’t exist 100 years ago. I wonder how the human race survived prior to the 20th century.

  29. Craig says:

    Great website. My favorite along with GetRichSlowly.com.

    I talked with my brother, who is emerging from a divorce. Talk about financial makeovers. Half of everything he HAD went to his ex. He had to remake himself.

    After talking with him, I signed up with Geico for automobile insurance (same coverage), and canceled the provider I had for more than 20 years. I will be saving more than $300 a year.

    He also canceled his telephone landline and got VOIP. He is saving around $40 every month. We shall be doing much the same thing.

    With just the car insurance and the VOIP, we should be saving around $70 a month. That’s going into our brand new ING Direct account.

    I opened an ING account because of the great things I read about ING here and at GetRichSlowly. My brother has an account and highly recommends it. Our certified financial planner also highly recommends ING. No buts about it. It’s ING, baby.

    Yep, we also signed up with and paid for a money guy. I hate thinking about money TOO much, so I pay this guy to do it. He already has great ideas we putting into action.

    I still have plenty to do, and debts to kill off, but they are being dealt with one by one, snowflake style, with malice aforethought.

    Keep up the great work.

  30. KH says:

    My first instinct is to say something negative about your post, because then I know you’ll read it! ;)

    However, you wrote this at the exact time that I needed to hear it. I’ve been reading your posts for about 2 weeks, and catching up on reading your previous ones too. I have found it so valuable – more so than any of the credit-bought-crap that sits around me.

    I made a conscious decision in January to REALLY look at my finances, not just check my card limit to see how much is available for me to spend this month…. I’m now taking steps to turn this mess around. And I know that I can do it.

    I am one of the people I think you wanted to reach, and you did (and just in time).


  31. Bill says:

    If my current TV died I’d look to craigslist for a conventional CRT replacement.

    Flat-panel TVs aren’t cheap, and the technology is still evolving rapidly

    e.g. 120Hz refresh, more reliable LED (instead of fluorescent) backlight

  32. Debbie says:

    Good post Trent! So many times I have tried to guide people away from the crazed money spending before it gets bad. Very rarely has this worked. Suppose it is a lot like a addict. Sometimes you really do have to hit rock bottom before you are willing to do whatever it takes to get out of it.

    Me? I try to learn my lesson at least by the 3rd time! and hopefully from other’s mistakes.

  33. Allison says:


    does your library system have an inter-library loan process that you can use? My library might not have the DVD I’m looking for, but if I look it up in the entire county’s library system, there will usually be a copy floating around somewhere. I put in a request for it, and usually within a week I get a call saying that the DVD is waiting for me at my local libray. Sure, you lose out on the instant-gratification of finding it right away at the movie store, but for me it’s worth waiting a week to see a movie if I can get it for free.

  34. Frugal Dad says:

    Our lives sound very much alike! After our first child my wife became a stay-home mom, but we continued to spend like a double-income family. We simply financed the difference on credit cards, until it finally caught up with us.

  35. Sandy says:

    Wow…a new TV…we’re still nursing the same one we bought in 1991! It’s died on us twice…it sat in our living room on the floor for a week or so, then my husband decided to try and play around with it, and got it going both times, for an extra year each time. Needless to say, parting with cash is hard for us, and somehow, we’re really not tempted to buy new everytime something new comes on the market. Now…paying off the mortgage…that’s something we get excited about!

  36. tubaman-z says:


    Yes, my library system does inter-library loan. This is a “good thing” as my local library, town population 5,000, is somewhat…..sparse. I rarely actually pickup a DVD from the library that it came from. It’s pretty much always a week or two from request to receipt – which is fine. I haven’t rented from a movie store in years.

  37. The Immigrant says:

    As an immigrant to US I find it extremely amazing how young(er) generations in US has never been taught or shown financial responsibility by their parents. I believe this is the reason that some if not most of them are not financially responsible themselves and have to learn and force themselves into becoming financially responsible at an age where it should’ve been already natural.

    Here is the real solution to your problems with spending:
    Do NOT spend. For a year at least.

    On ANYTHING that does not provide nourishing food on your table (at home), a modest roof upon your head, car that is drivable and economical to support, basic clothes for you and your family to keep you warm, paying your bare necessity bills (electricity, landline phone+DSL only if required for your business, water and sewer, debt / loans payoff).

    DVDs? Books? – Check them out from the website of your local library. Maybe they will not have the latest flicks, but you are still in for thousands and thousands of hours of free (paid-for-by-your-taxes) entertainment and some education along the way.

    Dining at restaurants? – Ask yourselves if you really need to spend the extra $20 for a greasy, heavy meal, with contents of unknown origin, which you force yourself to eat so it doesn’t go to waste.

    Junk food? – see above.
    You can also make someone else buy groceries for you. Do the same for them and follow their list strictly (minus the junk you know they do not need).

    Cable / Satellite TV? – Do you really REQUIRE seeing all the ads and dumb shows the media is trying to wipe your brains out with? As I said – check your library instead.

    It’s really easy when you know what goal is.

  38. Roman says:

    A very down to the point post.
    I specially like what you are saying about credit cards – that one should always pay back the card with the smallest amount of debt first.
    Usually “financial gurus” give you the recommendation that you should start by paying off the card with the highest interest rate. This is a good idea on paper but I find that it actually makes a lot more sense to start paying back the debt with the smaller principal left. That way when you finish paying back your first credit card it gives you a sense of accomplishment and a will to go on!

  39. Jen says:

    A little over two years ago, my husband and I were looking at approximately 35K in non-mortgage debt.

    At the end of this month, when our tax returns come in we will be paying off the final one.

    We did it through hard work (increased income), frugality (decreased spending), commitment and compromise (marital communication and teamwork), and a boatload of prayer and discipline.

    It sometimes was not easy. We blew it on occasion and extended our journey as a result. BUT WE DID IT. And I am a firm believer that if the two of us can, anyone can. (Hopeless financial ignorants, that was us before!)

    Thanks Trent, for encouraging me along the way and for sharing your passion with us all.

  40. Amit says:

    Thanks for this article.

    I have been reading your blog for past 3 months, and you have inspired me very much :))

    Unfortunately, i could not get the book “The total money makeover” here in my city in India.

    I have already stopped using my credit cards, and have analyzed my situation and feeling good about it, I think i will be able to clear my credit card debt by this year end.

    Your articles are the best i have read. I think they are very close to reality..so they hit me hard :))))

    Thanks for writing and sharing your thoughts.

  41. Amy says:

    To Immigrant — That’s fantastic! I do almost everything you mention (except I admit to buying some junk food at the supermarket now & then). No buying DVDs or books; no cell phone; no tv service; almost no dining out; very little traveling; no entertainment (like going out to the movies). And we’re doing fine with the basics –food, water, clothes, house, & autos.

    No credit card debt. Owe a little on the mortgage, 1 vehicle & $600 left on a college loan. And am in the process of buying a $7000 heatpump for the house (will pay for it in cash).

    And to whoever said to automate savings — absolutely! Have money automatically put into your savings and retirement accounts & only spend what’s in your checking account. Just do a little at first & increase the amount you save slowly.

    You can’t change overnight — start tracking your spending & wean yourself from things slowly (I don’t even miss satellite tv any more, although it was an adjustment).

    Change your thinking from “what I deserve” to “what I can afford” — we probably all deserve weekly massages & pedicures, but we can’t all afford them.

    Sound boring? Well, I love my life! I love vacationing at home, playing in the garden, reading books & using the free internet at the library, joining friends for walks at local parks.

    Need some motivation? Think about what you’d do without a job. My husband is presently out of work, and its possible my job will be outsourced within the next year or two. If the worse happens, I’ll be happy that I have a healthy savings account…

  42. NiJaal says:

    I know someone who really, really, really needs a huge wakeup call but i doubt they would listen or be willing to change. Not sure what to do in that situation. Thanks for the post though. I will pass it along.

  43. Ranelle says:

    Thanks, Trent, for this blog — I read it faithfully every day! Although we have a very, very long way to go to reducing our debt, we are taking some of the baby steps you’ve recommended. I just opened up our first ING account — too bad you can’t get referral money for all the folks you’ve steered their way!

    Keep it up — you’re awesome!

  44. Bruce says:


    I’ve been in a bad debt situation twice in my life. The first time ($30,000), I was just young and irresponsible. The second time($50,000), I failed at an entrepreneurial venture, and my wife came into our marriage with a lot of debt.

    One of the key elements to my success both times was making my debt reduction plan easy to execute, and making it visible. You need to know where you are, where you are going, and you want to be able to see and celebrate the small successes along the way.

  45. Peter says:

    One point not really mentioned, is that you don’t necessarily need to go “cold turkey” and stop everything (though that can certianly help). What you need to do is open your eyes and see where your money is going? Once you become aware of what you are actually spending, then you can make better decisions to decide where you want to spend it.

    Sometimes it can be as simple as deciding you’ll only eat out twice a week instead of five times. Maybe you need cable because of piss poor reception, so you go with the basic package instead of all premium channels. Maybe you’ve just never realized that you’re spending two hundred dollars every week when you go out shopping with your friends or each time you golf and hang out with your buddy’s afterwards. Just being aware of what you’re spending and why can allow you to cut back on some of these things without eliminating them. That difference can add up over time.

    On the savings side, while starting big helps, start with something so you have something. I started each child’s college fund with $20 a paycheck when they were born and have raised it $5 a year and usually added $5 if I got a raise or promotion. My oldest is going to have $25,000 in her account when she starts in a year or two. Will it pay for all of her college? Probably not, but will it ease the burden? Hell yeah! If I’d have been intimidated by the 120K tags of projected college costs, I would have never started or continued to save, but the goal was to save what I felt I could, and I have. So if you get a raise, put a full percent or two towards savings or debt so you don’t really start to count on it to “live”. After a dozen years you’ll be surprised how much you’re saving, even if it isn’t the 15-20% figure everyone recommends, even if it doesn’t mean you fit some curve allowing you to retire with 80% of your savings. If you never start, you’ll never have anything.

    Finally, don’t be discouraged when you hit bumps. My networth has gone up an down like a yo-yo over the years based on the decisions my wife and I have made, some good, some bad. But because of the focus on getting ahead, the general trend has been up.

  46. CarolineMolina says:

    Thank you for your frank advice. It gives me courage to be frugal just knowing others are also being like that, AND your encouragement. I do just that…leave the credit cards at home unless I have a plan to use them. I have 5 with big big lines of credit but I have limited use to only one and I have only a home equity Line of Credit. Those are my only monthly bills, then the room mate pays for utilities. So that helps alot. I use only cash when possible. And fight the urge to go out to eat. I am 56,divorced and in the real estate business..Yikes! for right now anyway. If it wasn’t for my room mate It may be a different senario…

    Just Thanks again….I do appreciate your articles ofcourse some more than others. Keep up the Good Work.

  47. Kari says:


    In addition to making minor changes to your lifestyle and habits, make a minor change to how you physically spend your money with a reloadable prepaid debit card, like the UPside Visa card. Unlike a debit card from your bank (which many allow overdrafts, getting you into even more debt), you are only able to spend what you put on the card. You are able to fund the card periodically or automatically with allowance schedules, from family, friends and employers. And with multiple plans to choose from, you can find a card that fits you and/or your family’s lifestyle, as you can get the card for yourself or one for family members that are either already in need of debt-help or you would like to teach healthy financial living to, like your kids (as young as 13 years of age).


  48. KellyKelly says:

    Thanks for saying it doesn’t have to be “cold turkey.”

    I bought clothes last night. I cannot remember the last time I bought clothes. I needed turtlenecks and they are on deep discount now.

    I spent $25 for four high-quality articles of clothing. It still felt “wasteful” and “unfrugal” and wrong.

    I am sick of walking around in beat-up clothing. I am sick of living in a house that needs repairs and I’m afraid to spend any money.

    Trent I am really not trying to take one iota of credit away from you — you did a great thing and a difficult thing when you decided to turn things around.

    But it DOES help when you already HAVE the clothes and the toys. I do the thrift store thing, trust me. Where I live it is usually better to wait until the malls do the sales at the end of season. I could pay $12 for a used turtleneck at a thrift store, or $10 for a brand new one at the end of season.

    Anyway, just needed to vent a bit. I feel like I cannot get ahead.

  49. Sally says:

    @KellyKelly: Wow, if a turtleneck costs $12 at your local thrift stores, then I’d say you’re making a good choice. Dang, that’s expensive for a used shirt! o_O

  50. KellyKelly says:

    I know. Isn’t that insane? Sometimes I get VERY lucky at a thrift store, but usually not.

    My problem is I think spending ANY money is “bad.” So I catch my reflection in the mirror and notice that my business suit is all frayed in the elbows, or that my blouse has a stain I didn’t notice under normal lighting.

    My debt was from surviving in between jobs, NOT from buying DVDs or toys. I am still wearing clothes I bought 10 years ago. But I have been throwing thing away as they become truly too bad for even me to wear them, and not replacing them.

    This is hard.

  51. A in NC says:

    Wow, great comments. Almost as informative as the blog itself.
    One thing that has become obvious to my husband and myself through our difficult financial journey was that we had to work as a team.
    As a result, we are doing it, one “snowflake at a time” AND our marriage is better than ever.
    People comment to us how well we are handling a really difficult finacial situation. They don’t see the occasional melt downs we experience but they do see two committed people who are a team. A great gift as a result of a hard lesson.

  52. Kathryn says:

    I sympathize with KellyKelly…after being so careful, it’s hard to even spend money that should be spent. My clothes are getting holes, but I put off replacing them. I can’t even enjoy restaurant food because I feel guilty for spending the money. I’m letting things in the house fall apart rather than spend “too much” for the needed repairs.

    An interesting topic for discussion would be how to bring some balance to the process for those who get so “into it” that they are forgetting that there are sometimes reasons to spend money.

  53. KellyKelly says:


    There was a post about that very topic a week or two ago. Look through the archives.

  54. BradM says:

    I love this site. I have found that my biggest vice is eating out. My wife and I have a problem with getting lazy after work and going to eat out. Tonight for example we did “Date night” and spent $50 on food. We have chicken and potatoes at home, I could have eaten for free.

    It’s hard to break those habits. I have been eating out for years and blown TENS OF THOUSANDS eating at restaurants but I can’t seem to stop.

  55. kentuckyliz says:

    Excellent post and comments.

    One thing that helped me rein in my spending: using a cash envelope wallet system for the spending categories I do “out and about.” I figured out the right amount of money per pay period that I needed to fill my envelopes: food, gas, entertainment, and blow, and that’s it. It makes me pay attention to my spending and once an envelope is empty, that’s it, game over until next payday.

    Everyone will have different amounts that will work for them, but for me it’s $100 food, $100 gas, $80 entertainment, and $80 blow. Usually I’ll have a little money left at the end of the period, and sometimes a lot. This last period I ended up with $230 left over out of the $360! So I put that in an envelope in a safe place at home, as a back-up emergency cash stash, or to put into the savings account, or to set aside for some upcoming business/recreational travels. I usually drive a lot more in the summer, to the lake to go rowing, so it could be the booster gas money envelope. It’s nice to have “cushion.”

    I just have $6400 of student loans left, and I have $7500 in savings while I weather some uncertainties in life–finishing cancer treatment, making sure the medical bills get paid, seeing if there’s going to be layoffs in a pinched-budget time in our state. A paid off debt can’t pay the bills if I need some survival money to tide me through to the next job. This savings is sleep-well-at-night money. Nothing is as comforting as a steaming hot pile of cash.

    When I feel my situation is secure again, I’ll pull the trigger on that student loan, because twenty years of debt slavery is quite enough, thankyouverymuch!!!

    Best of luck to everyone as they continue the journey to FREEDOM!!!

  56. Chris says:

    Commenter Matt above has the thought that to get out of debt one must steal from others, ergo he infringed on our copyright through launching his knockoff site, which he is promoting by commenting here.

    This is not a good way to get out of debt. US Copyright Law provides for a reward of up to $25,000 per instance of infraction, that would add to debt. I hope Matt reads this.

  57. Ana says:

    I’m so glad to read that post that said the reason they were in debt was due to survival needs, not spending on luxuries. That’s my situation, too.

    My problem is a tiny income, period. Almost all of my credit card debt is due to paying for necessities my paycheck just doesn’t cover. I was working abroad where I made good money and twice paid off large credit card bills that way. Now I’m back here making peanuts.

    Time to go back to Asia! I’ll have to use my cards again for the initial expenses, increasing the debt temporarily. But by this time next year ALL of my debt will be once again paid off, just like before, and I’ll finish the second year with savings in five figures. How about that?

    Sometimes you have to look outside the box (border) for answers.

  58. Ana says:

    … And, in paying off everything when I’m back in Asia, I will NOT need to deny myself to quite the extent I’m reading here.

    I’ve never owned a new car in my life, in the last decade I’ve bought few really nice new clothes, I own no jewelry, I’ve never owned a house … I just don’t think after a lifetime of hard work and frugality I should have to deny myself those things I do love. Life is too short.

    So I find my own ways to get those zero balances.

  59. Trent, I say this without any hyperbole: this article is one of the most inspiring pieces I’ve ever read – – online or off.

    Much thanks for your works.

  60. steve says:

    A 2 percent payment, the standard sized minimum payment, on 17000 is 340 dollars per month. If that was more than your rent two years ago and, as you say, you were pulling in 3×17000 or 51,000 gross per year ($4250 per month before taxes) (plus benefits I’m guessing) then you were extremely well positioned incomewise to do a lightning speed turnaround. I’m guessing you could easily retire 2700-3000 dollars worth of debt per month.

    Maybe I’m missing something, but something about these figures doesn’t make sense, particularly when contrastedw ith your epiphany that you had when you came home and all the bills added up to more cash than you were going to have for two weeks and you went up and sat with your infant son and decided to make a change. Or perhaps I am confusing two different time periods in your life that you have written about separately.

    I guess it’s immaterial as the message remains the same–if you have resources available to you, you can focus your efforts and achieve financial goals if you take it step by step and work at it consistently.

  61. steve says:

    Immigrant (#37) hit it on the head.

    Amazingly enough, many third and fourth generation americans (I am fourth generation; my great grandparents came from Ireland and Italy and Germany in the late 1800s) did not have their values of thrift passed onto them by their parents and have had to learn it ourselves, all the while fighting against the influence of one of the greatest consumption-inducing cultures of the world–the mass media advertising and consumption culture.

    “Immigrant’s” suggestion to only buy absolute necessities for one year is a fantastic prescription that will effectively kill any tendency to spend money on unnecessary stuff that you cannot afford (and if you aren’t on track to provide for your long term financial requirements including retirement, you really can’t afford to spend that money. But someone will always be happy to sell you something to take some of that cash for themselves.)

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