In June 2007, exactly seven months ago, I was in debt to the tune of $15,000. That may not sound like much, but consider that my annual after tax income as a recent broadcasting school graduate, working in retail while looking for a “real” job, was a meagre $13,000. That means that my total debt load was 115% my annual salary. Even if I was able to dedicate half of my income to debt repayment, it would have taken me twenty-seven months of pay it off, more than two years! And that’s not accounting for interest. Now consider that most entry-level broadcasting jobs don’t pay much better than retail, and the situation seems more than overwhelming.
I am not the type of person who can ignore problems and go about life with a smile on my face. And when it come to debt, I think our society has become altogether too comfortable with it. I’m not one of them. I would look at what I owed and think of all the things I couldn’t do until I fixed it. I couldn’t go travelling. I couldn’t buy a new camera. I couldn’t start a new job in the broadcasting industry with the proverbial monkey on my back. So I made the decision to eliminate my limitations.
I took a job with a construction company. Most people who know me found this more than a bit surprising. I don’t fit the construction worker stereotype by any stretch of the imagination. And to this day I don’t quite fit in with the group. So in many ways it was a sacrifice, but the immediate benefits more than made up for it. By taking that job my income immediately tripled. I was able to pour every spare penny into paying off my debt.
I started with my credit card debt. Only about $1000, mostly for eating out when I was a student, and for a trip I took with my ex-girlfriend. I paid this off in the first month.
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I then tackled my car loan. I owed about $4,000 on an original loan of $7500. I had already been paying on it for two years. $1500 of the original amount was for borrowing fees. The other $6,000 is what the bank actually gave me to buy an overpriced used car. In the two years I had been paying I had paid about $500 in interest. So already my $6,000 dollar car had cost me $8,000, I was not willing to let that go up any further. In two months I had paid off this loan completely.
My final obstacle was the student loans, which amounted to about $10,000. Once again I put every spare penny I had into them. When I had paid about half of the balance I had a bit of good luck, though it didn’t seem that way at first. I parked my car at work one morning, alongside the road by the job-site as usual. I had left me car and walked around the hedge into the driveway where I met a co-worker who I began chatting with. At that moment I heard a loud crunch followed by the sound of a tire popping and grass breaking. I knew it was my car. I rushed back to the street to find the driver’s side of my car smashed to bits. As it turns out a flat deck truck and driven by with a crane extending into the shoulder of the road, it hadn’t been secured properly. My car was a write off and I received a settlement. Rather than spend it on another car I used it to pay off the rest of my loans. I was now totally debt free. I started getting to work through a combination of cycling, begging rides, and carpooling. Eventually I bought a beater car for $300.
Fast forward to today and I have no debt, and a positive net worth of several thousand dollars. It not much, yet, but it tastes like freedom, and freedom is delicious.