Two rules of wealth building: our debt story

wealth building

Good day, Enemy of Debt readers.

Travis already mentioned that I’ve joined the EOD Team so I’m writing this in a way of introduction. After all, before anyone pays any heed to anyone on the Internet these days, they wish to know what their credentials are.

What makes my relationship with Enemy of Debt passionate (yep, I hope the site loves me as much as I love the site) is that I am a big, gigantic enemy of debt. I am a debt destroyer: I destroyed sh*tload of our debt and I support others to do the same!

I started as a debt hater.

As far back as I remember debt was the option of last resort: my parents only borrowed to buy a house and paid the mortgage off as soon as they could. My Dad and the communist state (but mainly my Dad) paid for my university education and supported me to do a PhD. All through my years at university I worked.

By 1990 – a threshold year in my life when I left Bulgaria and moved to the UK – my net worth was zero and my self-worth in the millions. I was highly educated, capable and a natural born hustler; most importantly I had no debt.

Fast forward couple of decades and we get to a fine evening in the autumn of 2009. After a long working day and a nice glass of wine, my husband told me that we’ve accumulated some debt.

‘Some’ is an interesting number. For me it would have been upsetting enough if we had $20,000 debt.

Our ‘some’ turned out to be about $160,000 worth of consumer debt.

This is when ‘Maria, the Debt Destroyer’ was born.

To cut a long story short, I became such a powerful enemy that we destroyed our debt in three years. Yep, you heard right: we paid off $160,000 worth of debt in three years; and with the interest on top.

If you are interested in the whole story don’t be shy: go and read it on The Money Principle.

People ask how we did it.

They expect a story of epic sacrifice, suffering and deprivation.

This is not how it was! We did it by following the two rules of wealth building.

Regardless of whether you are paying off debt or building savings and investments the rules for winning the Game of Wealth are the same and they are only two:

Rule 1: Optimise your spending; and

Rule 2: Increase your income

Some will tell you that the first rule is king. My experience is that the king needs his queen and only in agreement they rule for the happiness and satisfaction of all.

Rule 1: Optimise your spending

To do this you need to know the following about your spending:

  • How much do you spend per month?
  • What is the ratio between different categories of spending?
  • What do you spend on?
  • Do you spend more or less than you earn?

To be able to answer you need to track your spending; it doesn’t matter how you do it but the data has to be good (no forgotten trips costing thousands, not missed regular payments).

Once you’ve done the ‘number game’ (and there are some really hot resources on the web to help you do this, including the budgeting tools on Enemy of Debt) you’ll have to use, what I call the ERR budgeting strategy: eliminate, replace and reduce.

  1. Eliminate: Look carefully at your data and decide which spending you can cut out completely. This will be a combination between payments you’ve forgotten you make, things you pay for and don’t use and things you use but can live without because these have stopped being important.
  2. Replace: This is about learning to do things differently so that you get ‘a good bang for your buck’. Replacement strategies can be applied to entertaining, going out, holidays, travel, energy deals and many other lines of expenditure.
  3. Reduce: This is about tackling and controlling consumption. Consumerism pervades our lives and many of us are stuck in cycles of mindless consumption. Can you live in a smaller house/apartment? Could you buy less food? Is it really justified to keep the heating on day and night? May be you should have less wine/liquor?

Using the ERR budgeting strategy can help you optimise your spending and feel great about it; the alternative is to go for extreme frugality and feel deprived. Your choice!

Rule 2: Increase your income

Increasing your income is the second rule of wealth building; and you remember that when you are paying off debt you are building your wealth, right?

This can take a bit of time although it doesn’t have to. I bet that you can come up with fifteen different ways to earn enough to fill in your fridge for a month within fifteen minutes. Try doing it! If you need inspiration have a look here.

How did it go?

Now try to come up with fifteen ideas to earn enough to pay your bills for a month. Think and think hard.

I bet it didn’t take long. And if there are ‘dummy’ ideas like ‘mug people at ATM machines’ don’t worry – eight out of every ten ideas you generate are likely to be complete rubbish.

The thing to remember is that you are not interested in the ideas that are rubbish; you are interested in the ones that can work.

After you’ve identified the ideas that could work, start thinking about what do you need (have to do) to make these come off. If you find that you need a new skill, learn; if you find that you need a new qualification get back to school; and if you need capital start figuring out how to get it.

One thing that you’ll need to do is act and try things out.

I had never hustled before $160,000 worth of consumer debt joined my family. Couple of months later, I was on my way to becoming an extraordinary hustler. And not only as a university professor, researchers and consultant either.

I learned to blog, I learned to barter and I learned about business.

Most of all, I learned that making money is not that hard if you have a bit of imagination and a lot of application.


We paid off all our consumer debt – all $160,000 of it – in three years by applying these two rules. Within couple of months of applying the ERR budgeting strategy, we’d managed to reduce our monthly spending by over $3,500. This allowed us to start paying off our debts and to over pay.

Within five-six months we’d started increasing our income. At first, this was ad hoc, by us doing the occasional consultancy. By the end of the second year of debt repayment, we’d managed to increase our regular income by about 15%; when we finished paying off the debt our regular income was about 25% higher than when we started. Now, slightly a year after we became debt free our regular monthly income is about 40% higher than when we started.

We still follow these rules although we allow ourselves to spend a bit more on holidays, fun and flowers: delayed gratification is young people’s game.

Our next aim is to have enough cash and investments by October 2018 so that I don’t have to be employed any longer. I am so looking forward to writing novels and being a public intellectual.

This is our story and these are my credentials to write on Enemy of Debt from time to time.

What do you think, do I qualify?

8 Responses to “Two rules of wealth building: our debt story”

Read below or add a comment...

  1. Kim says:

    Absolutely! I think the big difference between people who pay off large amounts of debt and those who never seem to be able is all in the attitude. You said what else can I do to earn more money instead of finding an excuse for why you can’t pay off debt. If people spent as much time researching ways to save and make more instead of whining and complaining, there would be far less debt in the world.

    • Maria Nedeva says:

      @Kim: Thanks, Kim. Yes, I believe that people pay off their debt when they decide that they are fend up with it. And it is to a large degree a matter of ‘I can do’ attitude – needs a lot of work and changing the way in which one thinks and sees the world.

  2. Wow, what a crazy story! It must have been difficult to think you were in no debt and then find out you were in an astonishing amount of debt. That is really impressive you paid it off in 3 years! Great work, and I look forward to seeing your writing here. 🙂

    • Maria Nedeva says:

      @Melanie: It was soul destroying. What I found very difficult to deal with was that we are not 20 years old any longer and I couldn’t face being 50 and having all this consumer debt. Paid it all off three months after my 50th birthday: how sweet is that?

  3. Finding ways to eliminate spending was key for me. Although it was hard to really admit some of the daily comforts I was purchasing were unnecessary, once I made myself recognize what was most important, it got a lot easier. I was able to make much more progress on my debt as a result.

    • Maria Nedeva says:

      @TheWalletDoctor: Well done! I kept many of the comforts (I claim to come from a hedonistic culture but the truth is I don’t believe in a life with no joy). Thing is, I developed a way to control my wants and may be I’ll tell EOD readers about this one some day :).

  4. Samantha says:

    I am very interested in the details of this revelation!!! Did you have any idea you were in any debt at all? How did you not know – was he managing all the finances? What was the debt – credit cards? How did you decide to work it out with your husband after such huge financial lies? That would be VERY hard for me. My husband and I were very bad with money, but we turned it around and will be debt-free this year. But if he were to say “Oh, I have all this secret debt over here” I would be super angry/betrayed, and almost feel like he cheated on me!

    • Maria Nedeva says:

      @Samantha: I had a very bad feeling about it but I didn’t know; I refused to know. My attitude was very much: ‘I’ll earn as much as I can and you look after the money; and you just make your consultancy work.’ I waan’t ready to listen and later I was really angry with my husband for not telling me. All debt was on credit cards; all of them in my husband’s name but the money was spent on keeping the household going – it is just that his consultancy wasn’t making anything and we were overspending by a lot.

      I was very angry though it wasn’t a lie as such; he was trying to protect me in the wrong way. And as many people who work for themselves (have their business) he kept hoping that the one contact that will get us out of the mess will come any second now – it didn’t. I raved and raged at him for several months but things started moving forward when I looked at my behaviour, accepted some of the responsibility and committed to work together. We came out of this much stronger than we were!

Leave a Comment...


This site uses Akismet to reduce spam. Learn how your comment data is processed.