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Foot Loose and Debt Free!

September 19, 2013

If you follow me on Twitter, you know that last Friday was a HUGE milestone for me. I officially became debt free with a final payment to the financial gods at CIBC bank. That payment capped the end of a two year journey that began when I realized I was living well beyond my means and ignoring a steadily growing LOC and CC debt that could financially destroy me if I let it.

So here I am, 24 months later with the knowledge that moving forward my entire pay cheque is mine to save, invest, and yes, even have a bit of fun with occasionally.

If you’re in the same boat as I was, listen up because I’m going to pass on some tips that just might help. Keep in mind, I’m no expert, this is just a list of what worked for me.

1 – Accept that you will need to make sacrifices. A lot of them. Going out, buying “stuff” and eating out won’t be part of your life for a while.

2 – Make a budget. Figure out where, and how much, of your money is going to needs vs. wants. Needs are food, accommodation, savings etc., NOT a new smart phone. Then, budget enough money to cover just the needs every pay cheque plus some extra for wiggle room/mad money and put the rest on your debt. All of it. You’ll be amazed at how quickly large(r) lump sums can put a real dent on your principle.

3 – Pay off your higher interest debt (likely credit cards) first and/or get a consolidation loan with a low interest rate. I was lucky enough to have a LOC with a great interest rate so I paid off my credit cards with it and just focused on the one big bill. Make sure you don’t run the cards back up once they’re paid off!

4 – Distract yourself as much as possible. You’re going to feel deprived because you ARE deprived so do what you can to have fun. Go to free shows/festivals, have potlucks with friends instead of going out for dinner and drinks, get outside and do something active. This is a great time to get in shape! Hike, bike, run, swim…whatever you can do so you’re not holed up at home feeling sorry for yourself.

5 – If you want something badly enough, save up for it. I still took a couple of vacations down south but I put money aside for them from the extra unused “mad money”.

6 – Impose a deadline. Knowing this was only going to last for two years really helped during the first six months. After that, just seeing the numbers getting smaller after every pay cheque was motivation all on its own.

So there you have it. Nothing earth shattering but definitely not always the easiest things to do. There were a lot of missed concerts, dinners and nights out with friends in there but knowing that I don’t owe anyone anything has more than made up for it. Financial stability comes with a price and for me it was $37K. How much is your peace of mind worth?

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