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A few months ago, I launched my debt payoff series: inspiring stories from people who have paid off or are in the middle of paying off debt. I figured you’ve been hearing enough about my debt payoff journey, and you might want some inspiration from others!
In this post, Jon from Compounding Pennies discusses his debt payoff journey, what he did to pay off debt, his struggles and his recommendations to others in the midst of paying off debt.
Jon’s story on paying off debt is one of the best debt payoff stories I’ve read all year – it’s really an inspiring and heartwarming story. Check it out below! You can visit Jon at Compounding Pennies here.
Do you want to be featured in Sunburnt Saver’s Debt Payoff series? Contact me here!
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Debt Payoff Series with Jon from Compounding Pennies
How much debt did you have and how did you get into it?
In total I had $10,000 worth of credit card debt that I paid off. I got into debt right after graduating from college. I was excited to start my career and have everything in life fall into place.
I thought I was going to land a good paying job that I loved and would allow me to move up the corporate ladder. Then I would buy a house, find a woman to marry and the rest would be history.
But I graduated in 2001 just before the recession hit. As a finance graduate, it was hard to find a job. As I continued applying for positions and not getting the job or callbacks for interviews, I slowly became depressed.
Staying in the house all day didn’t help, so I started to go to the mall, just to get out. I would window shop, going into stores and seeing things I liked and imagining having the clothing, electronics, and other things I saw.
Then I started buying them. This made me feel good and allowed me to pretend in my mind that everything was OK.
But the joy I got from buying things began to wear off faster and faster, which led me to buy more things at a quicker pace.
The next thing I knew, I was in thousands of dollars of credit card debt.
At what point did you realize you needed to deal with your debt?
I was out at the mall trying on a jacket. For some reason the light bulb went off. I asked myself why I was buying the jacket when I had a handful at home, many of which I had yet to wear.
I put the jacket back and drove home. During this drive I admitted to myself that I wasn’t happy with life and was depressed.
That was rock bottom and I stayed there for a few days thinking about my life and how what I envisioned was not playing out.
I knew I needed to get help for overcoming my depression so I sought out a therapist. This was the first step I needed to break the debt cycle.
From there I accepted a part time job, as having any job was better for me than sitting at home all day or walking through the mall.
Tell us about your debt pay off plan.
I tried a few times early on to pay off my debt. This began with me opening a second credit card. Being the smart finance major, I wanted to take advantage of a zero percent balance transfer offer and save money on interest.
After getting approved for the card, I made the transfer and was happy. But I found myself spending on my first credit card again. After a few months of this, I finally decided enough was enough.
I opened up another credit card that offered a zero percent offer. But after just a few short weeks, I started spending on my original credit card all over again!
Once I admitted I was depressed and got to the root issue, I was able to pay off my debt.
I used the money I was making from my part time job to make the minimum payments. I then found a full time job. I kept the part time job and used all of that money to pay down my debt.
I also took a good portion of my income from my full time job and put that towards my debt as well.
But it wasn’t smooth sailing. I still encountered an issue. When I first developed my plan, I wanted to be out of debt as fast as possible. So I set up a budget that had as much money going towards my debt as possible.
At first this was OK, as a I was excited to pay off my debt. But after a month of not going out with friends or having any fun money to spend, I began to resent my debt.
So I ended up revising my budget to allow for some fun. I came to accept that I didn’t get into debt overnight and I wasn’t going to get out of debt overnight either.
What was the hardest thing about your debt pay off process?
It was admitting to myself that I was depressed. I didn’t think I would ever be someone who was depressed, but it can happen to anyone. Trying to manage through your day with no motivation or interest in things that you enjoy is hard.
But once you are in it, the listlessness feels “normal” to you, even though it really isn’t. It is hard to explain and hard for people who have never been depressed to fully understand it.
Another hard part was admitting to friends and family that I was in debt. This was because I was (and still am) the go-to finance person. Whenever they have questions about their money they ask me.
When I was in debt, I felt like a fraud offering smart finance tips when I couldn’t even keep my finances in order.
What was something you learned while you paid off your debt?
One thing I learned is that I don’t need a lot of the stuff I think I do. I realized how good advertisers are at making you think you need things.
With a little help from advertisers you can easily rationalize in your mind why you need a new shirt or a new car, even though the ones you have are in good condition and do the job well.
I also learned some of the sales tricks used to get you to spend more money. For example, the “buy one, get one 50% off” sale is great marketing. I fell for this many times.
We tend to only focus on the 50% off part and think this is a deal we can’t pass up. But when you step back, you realize it is only a deal if you needed 2 of the same item to start with.
If you only needed one, then buying another one, regardless of the price, is spending more money than you planned.
In the end, I’ve learned to question my spending a lot more and this has allowed me to save more of my money each month.
If you had to do it all over again, what’s one thing you would have done differently?
I would have avoided opening up the third credit card for the balance transfer. There was a voice in my head telling me not to do it as I was probably going to keep spending, but I didn’t listen to it.
Had I not opened that third card and started spending on my original card, I would have lessened my debt burden by close to $1,000 which would have allowed me to be debt free in less time.
What advice do you have for someone who’s in debt right now and is struggling to pay it off?
Many times we think we have a spending problem and if we can get our spending under control, then we can start to pay off our debt and eventually be debt free.
But all too often the real issue isn’t a spending problem. The issue is something deep inside like not being happy with your career, your relationship, etc. We end up buying things because it makes us feel better about ourselves and our life.
Then when we decide to pay off our debt, it never works long term because we never addressed the real issue.
So my advice for others is to take the time to look within to find out why you really are in debt. Chances are you will find it isn’t a spending problem at all.
Looking within isn’t fun but it is what has to be done if you want to break the debt cycle and truly be debt free one day.
When I take a minute and think back on my journey, I will admit that coming to terms with my depression and getting professional help was a lot of work, but it was worth every minute.
Living debt free now is a huge weight off my shoulders and allows me to strive for financial independence.
Author Bio: Jon helps people improve their finances one day at a time at his blog Compounding Pennies. By making small changes every day, you will see massive change over time.
Thank You to Jon from Compounding Pennies
Especially at this time of year, it’s easy to get swept into advertiser’s claims that spending money on gifts = love. It’s easy to take out that card and swipe it, or type it into yet another browser. But most things in life aren’t about money – they’re about showing people you care, taking care of yourself, and being present.
Thank you so much to Jon from Compounding Pennies for sharing his debt payoff story! I hope you’ve found it just as inspirational as I have. You can read more from Jon here.