How I got from Red to Black

(mailing a cheque to OSAP circa Feb 08)

#20 on my 101 in 1001 is, or was: Pay off my debt RBCV, VMC, MC2, TDLoC, OSAP-Can/Ont, OSAP-Cdn -DONE

This took 2 years and 2 months, and I went from roughly $12,000.00 in debt to $0.00.

This is a huge accomplishment for me. Not only to be done with the debt, but because of what the debt represented to me. A lot of the debt was tied to wedding expenses (I'm since divorced), student loans for which I ended up dropping out of school due to not being able to handle going, and a line of credit I borrowed against when I was underemployed or unemployed. All of those were my choices. Many of them I could have fought to get someone else to pay it or have some kind of relief on it but I didn't. My choices, good or bad, are mine to live with.

So, the big question is - how did I do it? I'll tell you!

After making many budgets, pouring over bills & bank statements, reading many books and even a tv show, (see list below) there really are only two things to consider when you are working with your money.

1) How much do you make
2) How much do you spend

The magic formula is to make more than you spend. If you aren't doing this already, there are two ways to change that:

1) Earn more money
2) Reduce your spending


It's so simple it's scary. It's so simple that you really do have the power to make it happen. The trick is, just because it's simple doesn't mean it's easy. For me, it took time and energy reading and learning on the subject of money, thinking about what money meant to me and overall what was important to me.

Things that helped me along the way:

I got a job that paid really well.
This kinda came outta nowhere, and boy do I thank my lucky stars. I got a temp gig where they ended up needed someone on a more permanent basis. There were just months between being in overdraft to my last five bucks, not being able to afford an apartment and getting calls from creditors to earning the most I had made in my life.

I moved somewhere less expensive.
Yes, moving costs money but over time this really paid off, and I like my new place a lot!

I made an active effort to pay off my debt.
Sounds like another no brainer eh? Well sometimes it was and sometimes it wasn't. Sometimes it felt yucky to say no to invitations to do fun things and go home and give that money to a credit card company.

I tracked my spending habits.
Sometimes we over estimate and sometimes we underestimate. It's worth it to check in and see is the phone bill always that much? Or do I use long distance more than I think? Do I never order a film on PPV? Do I really stick to my weekly food and spending budget? No? If not, why not? Am I allocating too little to these items, or did something special come up?

I faced the music.
I have some expenses that are pretty high and non negotiable. I don't like them but I have them. Better to just be real and budget for them than pretend otherwise.

I saved money as well.
I don't why this helped but it did. It seems illogical when being charged interest every month to save, but I am happy I did. It made it much more enjoyable to get through the holidays, helped me achieve many important goals over the past few years (like going to TIFF) and I couldn't have done that without saving.

I did spend money on things important to me.
If you are in this for the long haul, you can't scrimp all the time. I decided what would make the difference in my day to day life and added that to the mix. For me it was going out with my sister, going to the movies, and then some extra each week. I had to schedule things carefully and made sure I didn't have too much going on in one week so that I could stick to my budget. I actually still keep getting miffed a little about my new hobby of knitting because it's not in my budget to buy yarn! But I still find to get it here and there.

I added a 'Miscellaneous' amount to my monthly budget.
Sometimes unexpected (or expected) things come up. I added this so that I would have money for things like gifts and events, as well as the occasional tech-toy. If I didn't have anything to allocate it to in any given month, I added it to my savings.

I revised my budget and priorities.
Things change over time, so it's worth it to revisit the budget as a whole every once and a while.

Once you pay off one thing, add that monthly payment to the next debt.
Don't go thinking "woohoo, and extra $50 a month!". Nope... just roll it into the next thing.

Support from those around me.
I suck at taking help. But I did, so I want to acknowledge it because they deserve it! To both my sisters: Jamie & Suzie, my Mom and Jamie's husband Justin who have all been really supporting along the way from chatting to commenting to Jamie and her honey actually taking me in to their home, twice when I needed it. Thank you!

Info that rocks:
Suze Orman: The 9 Steps to Financial Freedom, The Money Book for the Young, Fabulous and Broke
The Wealthy Barber by David Chilton
Gail Vaz-Oxlade: Til Debt Do s Part

Books that didn't work for me, but made me think nonetheless:
The Money Book
The Four Hour Work Week



Loes said…
Congratulations! You must be so proud of yourself!
themarina said…
Ummmm how did I miss your personal blog?

Either way, CONGRATS!!! That's fantastic news!
Sacred Suzie said…
What a FANTASTIC post! I just loved it Shannon, such an interesting read and I am also so proud of you and sending you a big long distance hug. You have inspired me so much when it comes to dealing with finances and I am thoroughly impressed you are out of debt. You absolutely rock.

Thanks to you I managed to save enough money for a downpayment that I ended up not using so I could put towards a car after our accident. Had I not had these funds, I would be totally screwed up financially. I'm still saving every month and am now out of credit card debt! Lots to go on the line of credit now because of the car but that's better than a car loan. Hugs to you Shannon! You're amazing.
Jamie said…
What a fabulous post, Shannon! Congratulations on a great accomplishment! That took smarts and discipline and determination. Yay to being debt-free!

And not only is that totally awesome but this is a great post about how you got there. I absolutely love and will remember your simple bottom-line statements about working with money.

All that you've shared is so helpful and inspiring!
Shannon said…
Thank you everyone for your comments, support and congrats, it makes so much difference to hear that.

Marina, welcome to my personal blog :)

Suzie - that rocks that you had enough for a downpayment and are free of credit card debt - woohoo!!!
Danette said…
WOW, Congratulations Shannon! I too am impressed and inspired by your financial footsteps. Thank you so much for being brave enough to post this,money is such a taboo subject for so many.

You are delightful and refreshing, on so many levels. :)

Woo-WHooO! Way to go!
Anastasia said…
Hey Shannon, I've been lurking for a little while, so hello!

That is a really great post - very inspiring! Thanks!
gkgirl said…
yay you!
and this is fantastic advice...
such an interesting
thought provoking post!!

Shannon said…
Thanks ladies! I hope the info is useful and I'm thrilled to hear it's inspiring.

Hello to Anastasia! Thanks for commenting out of the lurk :)
Jana B said…
OMW!!!! GO SHANNON!!!!!!!!!

I'm so inspired by this!!!!

We're finally caught up on our major bills (house payment, car, etc.) but still need to pay off medical bills and things like that, plus make renovations to the house... so you've given me HOPE that this can be done!!! Thanks!
cadiz12 said…
that is awesome! i'm trying to do the same thing right now (mostly moving out of an expensive condo) but the housing market isn't really helping.

Melba said…
I am so proud of you!!! because I know first hand how difficult it is to pay off debt. This is an amazing, excellent post. You are so smart and savy! I wish for you abundance in all ways!
Shannon said…
Thanks everyone, I really really appreciate it!
You're an inspiration but, I'm happy to say, told me nothing new to help on my journey to being debt free.

As for the wool - have you checked out your local op (thrift) shops? That's where I get pretty much all of mine except for the occassional "splurge" when KMart have crazy prices (50 cents for a 10g ball of pure wool, anyone?)Oh - and I'm lucky enough to be able to shop friends' stashes sometimes...
Shannon said…
The Shopping Sherpa, good luck on your journey to being debt free!

I do check out the thrift shops for yarn, I actually have tons of odd ball here and there stuff and then a bunch of matching stuff too. I should be good for a while until I get another specific project in mind. Thanks for the tip!
Anonymous said…
OK, I am here via "Sacred Suzie", and I think you may have changed my life.
Thank you for this post! Student loans really can be paid off! omg!
I'm printing it out and sticking it on my fridge.
You are an inspiration to me!
My phone is ringing right now, and no doubt it's creditors.
You rule!
Anonymous said…
And oh, btw, I know EXACTLY where you are in that pic. Corner of Yonge & Charles (Ha!) hood whenever I'm in Toronto visiting my brother.
Shannon said…
Welcome Bohemian Mom, I'm glad the post was inspiring for you!!

That pic is just south of Yonge & Bloor - good eye!
Marilyn said…
Shannon, I've been out of the blogging loop for a lot of the Spring. Now on summer break and trying to get caught up. Still follow you at Twitter, but just caught up on your posts. This is an AMAZING accomplishment...because you did it in such a short period of time...and that's not a small amount of debt to pay off! CONGRATULATIONS!!! You should be VERY PROUD!

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