Debt Free News From A Debt Free Reader #2

Hello everyone! There has been a change of plan. Originally, I wanted to share with you how my wife and I were earning extra dollars and saving money, but that post is incomplete. I need a little more time to add everything we’ve done. I also got bogged down with site design the last few days.

So today, I wanted to share with you an inspiring story of debt freedom! This story comes to you via one of my followers on Twitter. He recently became debt free, and I jumped on the opportunity to get him to share his journey with you. You can leave comments of celebration for @Nickfro here in the comments section, or you can send him a tweet to congratulate him.

One thing that is not allowed here is negativity! If you do not agree with the method he used (The Total Money Makeover) fine, but save your comments for another day. Today it is time to congratulate someone who has broken free from the grips of slavery, to continue his journey towards financial peace. An awesome accomplishment that more people should applaud!

Congratulations Nick from Enemy of Debt! Job WELL DONE!

I am planning on creating a form so everyone can submit their own debt free questionnaire, to be part of this growing series. Stay tuned…

The Enemy of Debt Questionnaire – by Nick

How does becoming debt free actually feel? Does it feel better than you imagined it would?

It’s an interesting feeling, to be sure…but I’m viewing it merely as a milestone on my road to “Financial Peace” (albeit an important one). It’s a nice feeling to get into my car and know that it is 100% mine (a feeling I haven’t had in more than 10 years…yikes!) and to know that more of my paycheck is mine, as opposed to belonging to my creditors. On the other hand, I’m not stuck on this moment and it’s just that — a moment. I bought myself a new shiny electronic toy (a Motorola DROID, if anyone is interested) to celebrate and am now on to the next…

What were some of the struggles that you had to deal with along the way? Was there ever a time where you almost gave up?

There was definitely a lot of internal fighting at the start of the process for me. “Do I *have* to put every last cent towards the debt snowball?” “Can’t I just keep a *little* more money this month for ‘fun things’?” It was a real switch going from blowing all of my disposable income on random crap to putting all of that disposable income towards my debt. And there were the little things that life throws your way…a sick dog, a roof torn up by a bad storm, etc., that gave me pause…but because I had a small emergency fund, those things were easier to brush off.

What would you consider to be the most important key to becoming debt free? What helped you the most?

I think there were two things that were critical for me. First was stopping the use of credit cards and even my debit card for most purchases. Paying in cash made each purchase ‘hurt’, and that was a good thing. The second thing was developing and sticking with an ‘envelope driven’ budget. Before the start of each month I knew where every dollar was going. With my utility bills and mortgage on automatic bank draft, that meant my funds for things like groceries, pet expenses, household items, and, yes, entertainment were transformed into cash on the first of the month and placed into envelopes broken down by category and by week. When the envelope was empty, that was it. It didn’t matter that I *wanted* some shiny new electronic toy; if the envelope was empty, I couldn’t have it. In the early months of budgeting, I’ll admit that I didn’t do a great job and there were a few months where I cut things a little close, but by sticking with it, I made it work. And I can’t imagine not having a detailed budget now.

It seems a lot of people have bought into the idea that debt is essential in order to prosper, what do you have to say to those people?

How about: WAKE UP! BANKS DO NOT WANT TO GIVE YOU DEBT TO MAKE YOU RICH. THEY WANT TO GIVE YOU DEBT TO MAKE THEM RICH. Sorry, that was probably a little loud. But it’s true. I never realized how many ads we are exposed to every day for credit cards, car loans and leases, and (the worst sharks of all) pay day lenders — not to mention various “free credit report” services that are not actually free, but which serve to allow us to worship at the altar of the almighty FICO. For folks who think those ads are harmless, the fact that there is just about one ad for “credit counseling” or “get out of debt fast” services ought to tell them something. Cut up the cards, switch to a cash only lifestyle, and, to paraphrase a popular movie quote, “You are not your khakis.” If you think you need to look prosperous before you can be prosperous, you need to rethink things…big time.

What was the biggest sacrifice you would say you made in order to become debt free? What about you changed the most?

Oh that’s easy…my NHL season tickets. Two rows behind the home team’s bench. Yeah, that hurt. A lot. But the tickets were bought two jobs ago when I had considerably more disposable income (that I wasted), and they were not compatible with my goal to get out of debt. In the end, it was a blessing in disguise as my schedule wouldn’t have allowed me to make as many games as I would want to anyway. As to myself…I realized that I used to do things (read that as ‘buy things’) to keep up the appearance of being prosperous. Dumb. Dumb. Dumb. Now if I have something nice, it’s because I can afford it, not just because I think I need to have it. Take my car for example. The last thing I paid off was my 2007 Toyota Prius. Now, I love this car. I really do. It’s reliable, inexpensive to operate, and spacious. Funny thing though…when I bought it in May 2007, I was underwater on a 2005 BMW 325i, that had nothing wrong with it. And when I bought the 325i two years earlier I was slightly underwater on a… and so on and so on. I bought a car every two years because I thought I was SUPPOSED to do that. Fail. I’ll have the Prius for a few more years and then I will replace it with a nice, pre-owned vehicle. Period. No more Stupid Tax on cars for me.

Did your friends and family give you a hard time about your new mission to eliminate the debt from your life? If so how did you deal with it? Did you have skeptical friends? Do you think you inspired others by your journey?

I’m fairly certain at least some of my family members and co-workers thought I’d joined some kind of cult, but I guess Dave Ramsey is a polarizing figure. A few folks gave me a hard time, with the usual arguments: you’re young; why sacrifice now?; but you work hard and deserve new things. Blah, blah, blah. A few of my friends and co-workers decided to come along for the ride, though, and that’s been great. I don’t know that I inspired anyone, but I know that I’m happy to have pointed a few more people at Dave Ramsey and his teachings.

What is next for you? What financial goals do you plan to accomplish?

That’s easy…I just finished Dave’s “Baby Step 2″. I’m now building up a four month emergency fund (that seems to be the sweet spot for me where there will be enough to cover a real emergency but not so much that I’m tempted to dip into it for non-emergencies), and that should be in place by the end of May 2010. Once that’s done, my retirement contributions will skyrocket and I’ll start paying off the house early. I will also allow myself a bit more of a monthly allowance…and probably look at refinancing the house into a 15 year fixed mortgage from the current 30 year one. After that…we’ll see what comes my way on the road to Financial Peace.

photo credit

Debt Free News From A Debt Free Reader Series

Debt Free News: The Kick Off – Yours Truly @enemyofdebt
Debt Free News From A Debt Free Reader #1 – Kelsalynn @KelsaLynnFitLog
Debt Free News From A Debt Free Reader #2 – Nick @Nickfro
Debt Free News From A Debt Free Reader #3 – Paul @fiscalgeek
More to come…