Getting out of Debt
Getting out of debt is tough. Staying out of debt is much easier and should be part of you frugal living objectives.
Regardless of whether you're in it, climbing out of it, heading down into it, or teetering on the edge of it, you'll probably be interested in reviewing my experiences as discussed below to compare with where you're at.
This can help you better understand your situation and where you might be headed.
At age 35, I had perfect credit. I had serviced several loans with excellent payment records, I had good income, my credit cards were always paid in full each month, and I never bounced checks - not ever. I had no problem getting real estate loans, and I could get a line of credit at the bank just by asking.
There are some folks that say, "you don't want credit" because that's what gets you in trouble. I never said that because it never got me in trouble. Besides, if I were to get in trouble, I know it would be my doing, not the fact that I was extended credit by a bank.
Getting out of debt was the farthest thing from my mind because I had never been in it.
Personal Finance - near perfection
My approach to personal finance was admirable to say the least. It wasn't perfect, nor optimal, but it was as good as I could imagine it to be.
I owned a house, a condo, remote mountain top land, and I had several retirement investments and plenty of cash in the bank. What more could one ask for?
My investment strategy was conservative. I practiced frugal living so I could maximize what I saved, minimize unnecessary expenses, and turn much of my discretionary income towards my real estate investments.
In fact, I gave serious thought to retiring at age 35 and starting a new career path. I just didn't know exactly what I wanted to do.
I wasn't in debt, so getting out of debt was the farthest thing from my mind.
The Financial Cliff
Without going into detail, let's just say that I started to doubt whether the path I was on was the most satisfying that I could take. I started listening to others about a business venture, spending money on fixing up the house, and taking more time for vacations and the like.
I ended up investing in a business (but not running it), spending money for home improvements and generally "living it up" way more than I was accustomed to. The bills were considerable, the business was failing, I made early withdrawals from my retirement accounts and took out a signature line of credit to fund the business, and I could see the "scene of the crash" coming up quickly.
I had run off the financial cliff because I dropped my financially conservative ways, and left my "rules for living" and frugal living behavior patterns behind to see if I could achieve more satisfaction following someone else's drummer.
I didn't know how happy I was until I got myself in this very unhappy place. Getting out of debt was now the first thing on my mind.
Many Spinning Plates
Acts on the old Ed Sullivan show used to feature jugglers who would get plates spinning atop of tall wooden rods. There might be two dozen or so plates spinning simultaneously. It was really something to see.
I must have been something to see as well. I had a full time job that required travel, my credit card was maxed, my line of credit was depleted, I was behind on payments for housing, I sold the condo and house to fund the business, and I was living check-to-check.
Talk about a culture shock. I had ventured into unfamiliar territory following the advice of others, and I had been led off a financial cliff.
I knew that getting out of debt was going to become a top priority for me very quickly.
Bankruptcy - thrice
Drowning in overdue bills, my only hope of getting out of debt was to declare bankruptcy - Chapter 7 for the business, Chapter 7 personally, and Chapter 13 personally for non-dischargeable debts. It was the lowest point in my life. I had led a responsible life up to my mid 30s and then in less than 4 years I allowed myself to take a financial beating that left me with essentially nothing.
I had to homestead my vacant land and move onto it to live out of travel trailers. Not even mobile homes, but travel trailers. It was just one notch above camping.
Getting out of debt and back to my tried and true frugal ways was the light at the end of the tunnel that kept me slogging forward.
I listened to unwise and inexperienced advice, tossed away an entire life's fortune at the encouragement of others, and gotten myself in a place where I wasn't at all comfortable.
I had begun the process of getting out of debt by filing for bankruptcy, so I was starting over financially, but I was still weighed down with unwise associations with irresponsible individuals. I call them tar babies.
So I cut the ties with my past mistakes and moved to Wyoming to get a fresh start in a state where there were no income taxes. This would further assist me in getting back in the game and making some headway in paying off the Chapter 13 debt.
My Own Business Venture - out of necessity
I don't know how many people start a business venture out of necessity, but I sure did. Facing Chapter 13 payments that I just couldn't handle, I took what little money I had and started a business of my own that mirrored my current employment.
That decision doubled my income potential and helped me get my head above financial water. Now, the idea of getting out of debt was a real likelihood. I could envision additional funds coming in that would allow me to do it.
Having experience with lots of "spinning plates," running my own business wasn't especially challenging. It was rather fun. I especially liked the "double your income" aspect of it.
All I could think of was, "why didn't I do this a whole lot sooner?"
Starting the business might sound easy, but it was a huge gamble. I didn't have nearly enough money to start it, and I had to hold my financial "breath" for months before I received my first check.
A couple of months into starting the business, and just before foreclosure of my mountaintop land back in California, a buyer came through with a full cash offer that "stuck" after two others that didn't.
That land sale fully funded my start-up operation and I was saved from another financial crunch.
Bankruptcy Trustee Pain
Throughout the course of paying off my Chapter 13 plan, the bankruptcy trustee would make several motions to dismiss the case because according to his office, I was behind on payments.
I wasn't, but that didn't mean I didn't have to "jump through my ass" to get my attorney to work with the trustee's office to keep the suit active. I even had to show up in federal court once to represent myself (which I was advised against doing) because my attorney couldn't be there to represent me.
If the case had been dismissed for any reason, I'd be back to square one with creditors on my back.
With the trustee having hundreds of cases to manage, I suppose all debtors with payment plans get harassed on occasion. I didn't especially appreciate it since I funded the business on my own, I was paying back the non-dischargeable debts on my own, and my payments were a very painful $3,000 each month.
My thick skin and broad shoulders came in handy during these most stressful times.
After 5 long years paying the Chapter 13 plan, dealing with the trustee's office, dealing with the IRS, starting up and running a successful business, and getting myself relocated in a new home in Wyoming, one day I found myself finally getting out of debt.
With one last payment and a bit of waiting, I received a notice from the bankruptcy court that my Chapter 13 plan was successfully completed and the suit was discharged as paid in full.
Now, I know this article is lengthy, but I have to tell you that this is the condensed version of the story. I would need many pages to tell you all the stress and challenges associated with my ordeal. When I look back at it, I don't know how I held it together.
My father said once, "I don't know how that kid did it." And, neither do I. Just make certain you don't have to do it.
Getting out of debt is a great relief, but it's no fun, especially when you're doing it all by yourself.
Done with Getting Out of Debt, take me back to Mindset of Frugality