The Secret to Getting Out of Debt: Forget Snowballs and Interest Rates

By Staff

I was in debt for nearly ten years, and for ten years I tried every debt elimination method known to mankind. I was like the overweight person who has tried every diet, but years later finds themselves more overweight than when they started.

The last two years of my personal journey to debt freedom something finally clicked. It didn’t matter how I ordered my debts, how many half payments I made, how many times I transferred balances from card to card chasing a lower rate, or how many times I consolidated my credit card balances. The only thing that was going to get me out of debt was boosting my income.

The 70-Hour Workweek

If you don’t do something radical to improve your income, you will be in debt forever. I hate to break that news to those still in debt who spend their nights creating elaborate repayment plans while dropping Netflix memberships to create an extra $15 to throw towards a $37,000 credit card balance. That’s like trying to dip out the ocean with a teaspoon. You obviously need a much bigger spoon.

So how does one go about increasing their income – particularly those already busting their butt 50 hours a week in a full-time job, trying to be a devoted spouse, a parent to their kids and run a household? The answer:  more work.

For a short period of time you need to find more work. Easier said than done, particularly in an economy where unemployment is high and even part-time jobs are scarce. I started my final push to debt freedom in December 2007, so I understand just how bad timing can be. But you can’t use the broader economy as your excuse to staying in debt, limiting your opportunities and stifling your dreams of financial independence.

Exactly what am I saying here? I’m saying you need to work another 20-30 hours a week earning money for the sole purpose of repaying debt. I don’t care what you do (as long as it is legal), but maximize those 20-30 hours to earn as much as possible.

Part-time retail work at minimum wage may not be the answer. Starting your own business may require capital – something you probably don’t have much of if you are in debt. At great risk of sounding like a back-of-the-magazine ad, I highly recommend considering a low-cost opportunity you can do from home. Maybe something related to your full-time gig that doesn’t conflict with your full-time gig.

If you are a teacher, consider tutoring at night and on the weekends. If you are a programmer, consider doing some freelance work. If you like doing yard work, offer to mow lawns for friends and neighbors. And no matter what you decide, start a blog and write about it – landscaping, programming, child care, pet sitting, delivering pizza – all interesting topics that you can develop into an interesting blog if you put your personal touch on it.

I was interested in finance and frugality. I used to work in the financial industry. I also enjoyed writing. It only seemed natural to declare my side hustle writing about finances (after mowing lawns and part-time work wasn’t yielding enough money to make significant dents in our debts).

Idle Hands are Useless at Paying Off Debt

So that’s not quite how the saying goes, but comparing debt to the devil’s workshop was a stretch (then again, maybe not). The point is that while you are sleeping in, watching television, or “just relaxing,” you are essentially wasting time that could be spent developing a second income stream to pay off debt.

I know you work hard, and you have a family, and you deserve a break. You can rest after you are debt free. For now, you need to work.

After starting Frugal Dad, I made a goal to get up every morning at 4:30am to answer emails, comment on other blogs, write new content, research and do anything else I could do to help build my blog before heading off to my full-time job. Those three hours each weekday morning were some of the most productive times of my life. I was completely focused on my mission.

On lunch breaks, I carried a memo pad and pen and brainstormed ideas for topics. At night, after the kids were in bed, I set things up for the next day, reviewed daily statistics, etc. On the weekend, I carved out a few hours dedicated to trying to get ahead for the next week. I banked a couple posts, cleared my inbox and read 20 other blogs in the personal finance niche to stay current.

It wasn’t easy. My first month blogging I earned $33.88 – that’s only a fraction more than a dollar a day. But I pushed ahead. In six months, I had earned a total of $4,600 (after taxes) to go towards debt repayment. Now I was getting somewhere.

I stayed at it for two more years from that point, and my family just recently celebrated debt freedom. I can’t say it was easy. There were a couple times I wanted to quit. There were many setbacks. There were more than a couple times we were tested with a medical emergency, or something breaking, but we just refused to stop until we got back to zero.

Snowballs, Interest Rates and Spending are Still Important

The order you pay back your debts with the money you earn from your 70-hour workweek is still important. And of course, if you don’t reduce, or at least hold firm, your spending, you will simply spend all this new money and remain in debt (I like to describe this as running faster on the treadmill while someone increases the speed – you’ll sweat a lot harder, but get nowhere).

There are risks associated with working a 70-hour workweek. It puts a strain on your physical health. Relationships may be strained as well. Your social aptitude will suffer. You won’t have a clue who won American Idol, that Lost is finally over, or who’s playing in the Superbowl. It’s alright; you can catch up later and you can always use an pay off our mortgage early, though not quite as hard). We own our cars free and clear. We have an emergency fund for the first time in our lives. We are beginning to learn about investing and savings products that we could never afford. And most importantly, we have options.

Debt has a way of trapping you – in bad jobs, in bad relationships, in bad locations. It’s a suffocating financial cancer that eats away at your future dollars, and your current enjoyment. It adds immeasurable risk to your life. It is not to be ignored for another moment.

You simply cannot win, financially, while you keep debt around. Draw a line in the sand today – no more new debt…ever. Make a plan to boost your income. Make a plan to reduce your expenses. Throw every single extra dollar that comes into your life towards that debt. You aren’t throwing it away, you are investing it in your financial future.