This guest post is from Rickey Willis, a Money Talks News reader in Virginia.
I’m a 56-year-old social worker supervisor, and my wife is a 51-year-old elementary school teacher. We have four children, from 14 to 26. Two live with us. We have two grandchildren.
It was early last year while preparing our 2010 taxes that my wife questioned where our $121,000 combined salary had gone. I had no answer, and neither did she. It was as if we’d been living in financial darkness. Then I had an epiphany.
From that moment, I went on a quest to find out what happened to all our money. So determined was my desire, I meticulously combed through all of our bank statements from the past year. It was there I found most of the answer.
The huge elephant in the room was called debt.
An inordinate amount of money had gone toward interest alone. I began visualizing driving down the street and throwing dollar bills out the window – a clear picture of what we had done. Over the next few days, I totaled all of our debts and came up with $151,218.
I went back and picked up Life or Debt by Stacy Johnson, a book I’d read a few years ago. I gleaned some astounding insights, not the least of which was the concept called the Debt Destroyer.
Stacy puts forth the notion of coming up with funds that total 10 percent of your gross salary and using that money to start tackling debt. Since I’d already gone through last year’s expenditures, it was easy to identify money to start our Destroyer. We simply devised a plan by using a calculator, paper, and a pen.
We immediately made a decision to stop incurring debt! We gathered all our debts and arranged them from smallest to largest, along with time-frames for each to be paid off. We used the snowball method by using the Debt Destroyer to get rid of the smallest debt. Then we took all the money we’d been paying on the smallest debt and applied it to the next one – and so on.
We did this while making minimum payments on our other debts. But when it came to the credit cards, we focused on the one with the highest interest first.
I began visualizing myself being debt-free. When the first debt was paid off, we received an emotional jolt and a psychological lift. Debts started coming down so rapidly that we beat our self-imposed deadlines. We didn’t alter our lifestyle much, but I did give up my gym membership for seven months.
Because we’re part of a faith community, our church was emphasizing the need for parishioners to retire debt too. Our church sponsored a 15-week class, but we weren’t able to attend. However, a friend provided us with material that was covered in the classes, which was helpful.
As a way to stay on track, I devote at least one hour a day to listening to debt-reduction tapes and reading something about debt removal. The first day of the month, I also posted our progress throughout the house, which we view daily.
A few months after beginning our debt-destroying odyssey, I decided to contact Stacy with the purpose of seeking guidance about what to do with $15,000 we had in the stock market. He replied immediately with some advice for us to consider that revolutionized our thinking.
We learned that the proverbial cart had been put before the horse. Subsequently, we sold the stocks, took the proceeds, and put money toward our emergency fund and the rest on debts.
We have paid off a department store bill, a personal loan, a vehicle note, and a credit card for a total of $36,838.57. By doing so, we have unencumbered $860 a month. We still have a car loan, credit card (which will be paid off in 3 to 4 months), student loan, and mortgage.
Total debt freedom is within our reach – it’s not an elusive dream. I’d like others to know that it takes unwavering focus, tenacity, a resolute mind, considerable discipline, and a determination to remove the burden of debt from one’s life.
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