I have a great “get out of debt” story, but I am sometimes reluctant to share the details. When we decided to do this thing, we really did it. Without selling anything significant or inheriting anything or winning the lotto, we paid off $220,000 in debt in just 24 months.
During that period, we had a significant income. I had a great paying job, we had several side hustles and Jim had retirement income.
My reluctance to share the numbers of our story stems from a fear that some will use this as another reason that they can’t win, instead of inspiration that they can. If you hear this and think, if only I made that kind of money I would be debt free and fiscally fit too. Please read on.
People with huge incomes lose all the time, maybe even in similar percentages to those with lesser incomes.
Take for example, NFL players, the minimum salary in 2011 is something like $340K a year yet many of them are considering taking out high fee, high interest loans to get the through the lockout. (Excellent post on the subject, NFL Players, Lockout Loans, and Predatory Lending by Lazy Man and Money). This is despite the fact that the Players Association will pay them $60K over a six-week lockout.
Dang, at least $340K a year and they don’t have any savings to get them through a rough patch even after a $60K payday? What kind of fools are these guys?
Wait a second, they are the same kind of fool that I was. They spend all, or most of, or more than they make. They build no safety net into their finances. Banks have offered them easy money to buy the glittery stuff that their peers were wearing or driving and they took this to mean they could afford it.
The key principal of financial success is the same whether you make $35K or $340K .
Spend less than you make.
If you need to dump debt – spend significantly less then you make.
If you are like me and you really, really NEED in your heart to be free, find a way to live on the smallest possible percentage of your income.
Mine was 21%.