Debt Free – Our Journey in and out of Debt

I remember being debt free a few times before.


It was 1990.  I was 18 and driving through Nebraska on my way to St Olaf College in a red 1984 Chevy pickup that my dad had purchased from a local public utilities auction.

It was 1994.  I had just sold my 1980-something Ford Ranger pickup to pay off the last of my credit cards, before jumping on a plane to Panama for the Peace Corps.

It was 1997.  Having just returned from Panama and 4 months of travel through Central America, I had not yet gotten back into the swing of ‘charging it.’

It is May 21, 2013.  After moving halfway across the world to the 5th most expensive city in the world, we have paid off the last $6,628.95 that we owe!

Marina Bay Sands - Debt Free and Living in Singapore?

How did we get into the pickle of having around $40k in consumer & car debt in 2011, and more importantly, how were we able to pay it off in less than 2 years?

The story of how we got into debt is likely a story that everyone reading this has experienced.  In 1990, after parking my paid for truck in the school parking lot, I went to my new campus post office box and removed offers from multiple credit card companies that praised me for my ‘good credit’ and offering to give me free money.

The only downside to this “free money” was that they actually expected me to pay it back, and amazingly they had the gall to charge me for the pleasure of spending money I didn’t actually have!  Needless to say, I quickly found very useful purposes for the $1,000 ‘windfall’ that had come my way, and thus began my relationship with credit card companies.

Over the years, I made decisions that can be best summed up by Dave Ramsey as ‘stupid taxes.’  When I married Sharo, a woman who had only ever known cash spending/savings due to very limited credit facilities in Panama as she was growing up, I taught her the ‘American Way’ of spending more than you make and paying for it with future wish-come.  Soon, we had a new car, a time share, and were starting to slowly build an out-go that was larger than our income.

By 2011, due to several bad decisions, and frankly a conscious decision to go into debt in the short term (rather than actually have a budget) if need be to allow Sharo to be a stay at home mom, we found ourselves in about $40k of debt.  Yes, this debt did include our minivan, but I later realized that it is stupid to buy a new car, especially one that you don’t need.

Nancy and Grandpa Joe

So, how did we go from being $40k in debt two years ago to having no debt; taking vacations to Panama, China, and the Philippines; having about $15k in an emergency fund; and having concrete plans to save enough money over the next 2-3 years to travel the world for an extended period of time?


Our turn around comes down to three life decisions. 
  • I realized that I was not being paid any where near what my skills were worth, so I changed jobs & worked hard.
  • We attended Dave Ramsey’s Financial Peace University.
  • We moved to the 5th most expensive city on earth for expats.


Increase Income

While budget is of key importance to living a life debt free, income is critical when you are working out of a hole.  I worked for eleven years at a wonderful company in Seattle, and during that time I was ‘satisfied’ with my work life because I was learning and growing.  There came a point, however, when I was the big fish in a very small pond, and the only way for me to move was to kill my boss (he is a friend, so that was out of the question) or to change jobs.

Unfortunately, fear and trepidation set in and even though I was offered the role of IT Manager with a local PR company, I ultimately turned them down.  I think it was God working his plan in our life, because when an opportunity with my current company came knocking two years later, I was open.  While this move alone would increase my annual take home by about 20% over the next 2 years, I worked by butt off during that time to become a key contributor on our team and earn healthy stock grants.  Add to this, a dash of fairly technical consulting engagements, and we were well on our way to digging out of our hole.

In 2011 a business trip to China caused us to reevaluate our life strategy.  After spending a month in China as a family – me working and Sharo and Nancy traipsing around Beijing as tourists – both Sharo and I realized that our lifelong dreams of traveling and living in faraway places had been quashed by years neglect.  Then, Sharo brought home ‘the article.’


Get Educated

As God’s timing is perfect, when I read the article we also happened to be attending Dave Ramsey’s Financial Peace University (FPU).  Whether you have debt or not, I encourage you to find a local FPU class.  I can say that this class, while chock full of basic and ‘common sense’ financial advice, revolutionized our relationship with money.  I am amazed that we hadn’t implemented these simple strategies earlier in life, but as the saying goes, we didn’t know what we didn’t know.


Change the way you live

Can you live in the 5th most expensive city in the world and save money?  Can you pay $3200 rent for an 840 sq ft apartment and feel like you are coming out on top?  What if everything you currently do to spend money all of the sudden changed?  What if you no longer needed to spend $500 – $1,000/mo on gas, insurance, and auto repairs?  What if life was a bit more simple because you no longer had 14 years of routine that you had built around your life, much of it costing money?  More importantly, what if you no longer spent close to $1,000/mo on credit payments?

When the opportunity came to move to Singapore and spend a few years living in the heart of SE Asia, we knew that the only way we would be able to afford it is if we were debt free.  I wish I could say that I got some amazing package offer that included a posh salary and allowances for Nancy’s education, housing, and a car.  That didn’t happen.  Instead, I received a local contract with a very minimal increase that was less than the % increase in cost of living between Singapore and Seattle. If we had to continue to fork over almost $1,000/mo to credit companies, we would not be able to do it.

Thankfully, we had started the process over a year before we moved, and months before the opportunity to move came our way.  By the time the end of 2012 rolled around, we were within sight of debt free and could see light at the end of the tunnel.  We sold the three cars that we could actually sell, some other household items, a bit of stock, and used part of our small relocation funds to pay off most of our debt.  The final bit fell on May 21, 2013 after saving for a couple of months and cashing in additional stock.  Thanks to the fairly basic steps that we took to getting out of debt, we were debt free!


Five basic steps for getting out of debt:
  1. Have a budget:  Tell your money where it will go before the month begins.
  2. Use cash:  There is a psychological difference between cash and plastic (even debit cards).  You spend less when you have to hand over cash.
  3. Stop buying stuff you don’t need: Stop trying to keep up with the Joneses.  They are tired of competing with you.
  4. Sell anything you can:  You don’t need it anyhow.
  5. Have fun:  You got yourself into this over years, it will take more than a couple of months to dig out.  Have fun in the process, make it a game.  Don’t live stressed out by the process.  Make sure your budget includes blow money and entertainment.


Have a budget

While this is simple, it can be difficult to get in the swing of if you are new to it.  Stay persistent.  Spend your money before the month begins on paper, and have every dollar accounted for through a zero balance budget.  If there is any money left over, don’t find someplace to spend it – throw it towards your debt.  If your budget doesn’t seem to cover all your expenses, remember your priorities:  Food, Lodging, Transportation (cheap car or bus, not a new car loan).  Outside of these items, everything else is a luxury.  Kill your kids’ cell phones.  Cancel your cable/Satellite TV.  Stop going out for dinner.  If you need to, remember that many people survive around the world on a diet of rice and beans, with an occasional egg or piece of meat.

This is not a time for one partner in the marriage to tell the other how much they can spend.  It isn’t a power struggle.  It is husband and wife getting together and deciding as a team where they want their money to go.  One key to making peace in the process is to have a “blow money” category – this is a specific amount that each person gets to spend on whatever they want to spend it on.  If the husband has a penchant for Starbucks, he can do it from his blow money.  If the wife needs a pedicure, she can do it from her blow money.  It is theirs to spend, however they feel fit – without judgment.  The key here is that it is a pre-determined and limited amount.  When it is gone, it is gone.  For Sharo and I, this has been $80 – $150/mo each.


Use Cash

There is something psychological about using cold hard cash.  The act of handing over cash is very different from handing over a plastic card with a bunch of numbers on it.  Even using a debit card, which is considered by many to be “the same as cash,” separates you from your money and allows you to overspend.  The concept of “budgeting” changes when you stand in the line at a grocery store with a $100 bill and the total comes to $103.  Something has to go from your life, and quickly.  You won’t do that with a debit card.  Most likely, you are like us and have overdraft protection.  You will charge the $103 on your debit card, and the overdraft protection will kick in and transfer $200 from your personal line of credit to your checking account.  Amazingly, when you check your balance the next time, you will now have $197 in your account.  It’s like magic!


Stop buying stuff you don’t need

Yep, I am going to go there.  You don’t need a Starbuck’s today.  You don’t need that new pair of shoes.  You don’t need that new car.  Oh, and by the way… you don’t deserve it either.  When you are out of debt, have 3-6 month’s of living expenses in an emergency fund, are contributing 15% of your income to retirement, and are on your way to either paying off your mortgage or saving for a 20% down payment – then you maybe deserve a Starbuck’s.  Now, am I saying that I have gone 18 months without a Starbuck’s?  No.  Remember, we have a “blow money” category in our budget?  I don’t drink alcohol. No video games.  No lotto.  My one vice is a tall soy Mocha at Starbuck’s.  If that is what I want to spend my blow money on, then that is what I am going to spend it on.  No judgment.


Sell anything you can

I know you love your car, I had four of them.  But, do you really need that car?  Let’s say you have a car that is worth $15,000 and you still owe $13,000.  How much will you pay over the next 2-3 years in interest to finish paying it off?  What if you saved up or scratched together $2,000 and sold the car for $15,000.  That would give you $4,000 cash to buy a “pre-owned” car.  Did you know that you can actually get a decent car for $4,000?  You would also be $13,000 “richer” by not owing the money to a bank.  I know you love your car.  Selling our cars before moving to Singapore was the single largest impact on paying debt –  even though we didn’t have expensive cars (for those that know me, an 11 year old BMW has a lot lower resale value than you might think).

Guys, do you really need an Xbox, PS3, Wii, and all the associated games?  Is it really necessary to spend $70/mo on the cable TV sports package?  How old are you?  I am assuming that if you have read this far you are no longer in college and you want to change your life.  Stop acting like a college student and wasting your wife’s retirement on video games, beer, and watching your favorite sporting events.  Sell the video consoles and cancel the sports package.

Have a garage sale.  Get rid of the clothes that no longer fit you, your spouse, or your kids.  Sell the sporting equipment that has been piling up unused.  Have your kids sell some lemonade.

Jurong Bird Park

Have fun

Make sure you schedule and budget for date nights.  Both for your spouse and for your kids.  Moms, take your sons out for monthly mommy / son dates.  Dads, take your daughters for monthly daddy / daughter dates.  Husbands schedule dates with your wife at least 2x a month.  It doesn’t have to be expensive – a walk in the park with our dog is some of the best time spent for Nancy and I.  What matters is that you are doing something alone with each member of your family on a regular basis, and that you have it in your monthly budget.

Brad and Sheena from Drive Nacho Drive describe how they saved for a around the world trip.  In the process, they got to know each other better and actually discovered that life was better because they started doing free things and spending time together.  Being on a budget doesn’t mean sitting around watching paint dry, there are way too many things to do for free throughout the world, even in Singapore.

2 thoughts on “Debt Free – Our Journey in and out of Debt

  1. Chandan

    Hope all is well on your end! Congratulation on the achievement of becoming debt free 🙂
    Great post. I would like to add one more comment – sometimes I find we live in a society that peer pressures us to just buy things because the perception is the more things would lead to happiness. However this type of materialist behaviour leads to buying more things and with credit being so cheap these days one can easily take on more debt than they can handle.
    Thanks for sharing your story.
    ps – I like reading your blogs. the stories makes me smile, they are authentic, and simple. I really liked your post on “Meeting the Nomadic Family”

    1. livingontheglobe

      Thank you Chandan! You hit the nail on the head! While I would love to say that peer pressure ends at high school, the fact of the matter is that many people are concerned with what their friends or family think of what they drive, where they live, the schools they send their kids to, etc.

      Sometimes it is very difficult to break out of this situation, and sometimes it takes a dramatic life altering event.

      Thank you for following our blog!

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