How I paid off $18K of personal debt in less than a year
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Disclaimer: Anything you read here should not be taken as financial advice. I’m not a financial advisor. The strategies and principles we’ll look at are things that have worked for me and may or may not work for you. Please research and consult a certified financial expert if you want personalized advice.
It was November 2018, and I owed $18,000 to a debt collector.
After a recommendation from a mate, I picked up the book Barefoot Investor by Australian personal finance educator Scott Pape.
After reading the book, my wife and I put our “Barefoot plan” in place. Our money management plan involved dividing our income into three separate ‘buckets’:
a Blow Bucket, for everyday bills, the odd extravagance, and some additional money to handle unexpected costs.a Mojo Bucket, to provide some ‘safety money,’ anda Grow Bucket, to build long-term wealth and total financial security.
Here’s how we allocated our income (at the time):
I also set some personal money rules for myself:
1. Always have 6-12 months of emergency fund cash.
2. Put 12.5% away for debt reduction (this will become my investment fund once I clear all my debts)
3. Invest in learning, experiences, and giving back.
As a sole proprietor, my income had fluctuated since the pandemic hit, but I managed to cover my rent and put away money each month towards clearing off my personal loan debt.
This debt started as a $30K personal loan for some educational training programs that I took (which ended with a one-week event in Maui) and has been following me since 2009 (eleven years!).
So it was approaching Xmas Dec 2018, and I called up the debt collector and negotiated 50% off the total amount owing. (Shout out to Ramit Sethi for his great debt negotiation tip!).
Fast forward five months, and in May 2021, I paid off the last $9k of my $18K debt.
As you can imagine, at the ripe age of 42, I felt a great weight off my shoulder and was positive about the future. I also had the best month in terms of sales for my business that year.
The important takeaway from this experience:
You’re never too old to improve your personal financial situation – but you’ve got to learn from trustworthy people.
In my next newsletter, I’ll look at the problem with financial advice, and how we as a society got into the mess we’re currently in. I’ll also share some principles and strategies for saving, investing, and achieving financial freedom from credible sources.
What’s new this week
1/ New blog post: 7 Skillful Examples of Long Form Content
2/ Coming soon… Notion + AI = magic! Join me in the alpha waitlist!
3/ I’m currently writing this from Suvarnabhumi Airport, Bangkok. C and I had a 24-hour stopover here and we’re literally waiting for our plane to Phuket. We’ve got a week’s vacation before heading back to Danang.