The Resources That Helped Me Get Out of Debt

As the warm weather begins to cool off, and the Summer of Weddings comes to an end, I’m starting to get ready for what comes next – in my financial life, that is. Even though I’ve been debt-free since May 21st, I haven’t had a chance to save much of the extra money that used to go towards debt repayment – yet – but that’s going to change in September. First, however, I need to start mapping out some new financial goals and the steps I’m going to take to make them happen.

I’ve been writing out a list of possible new goals, starting to research investing strategies, etc. but it’s felt impossible to pick just one goal to start with and know where to begin. First of all, I’ve barely gotten used to the idea that my monthly budgets no longer include debt repayments. Second, this car accident is a bump in the road that has changed my spending (big time). And I honestly still don’t know what’s next for me. So, I finally posed this question on the new Blonde on a Budget Facebook page:

I’m working on a couple posts explaining what life after debt is like. Are there any specific questions you’d like me to answer about how I budget now? Or where the extra money goes? Or what I plan to do next?

Simonne answered:

I’d like to know what your turning point was & how you got started on your journey & the tools you used & tips you have being on the other side.

Well, Simonne – this post is for you!

I’ve decided to start this whole “life after debt” series with some background information on how I got started with my first goal, which was to reach debt zero. I’m going to skip the part about “being on the other side” for now and just start from the beginning. I know I’ve explained it in bits and pieces, and have written a guest post or two about it, but I don’t know that I’ve ever fully explained on my own blog: 1) the way I taught myself how to budget and 2) which resources ultimately helped me get out of debt. While I would love if this posted helped at least one other person start their own journey, I’m also using it as a motivational kick in the pants to get started on whatever is next for me.

The Turning Point

I’ve written before that in June 2011 I found myself completely maxed out. What I don’t think I’ve mentioned is the fact that I knew my finances were in bad shape for about 8-9 months before I finally reached that point. In fact, I actually started Blonde on a Budget in October 2010, when I had about $24K of consumer debt. I knew back then that I wasn’t happy with my financial situation but, unfortunately, I still wasn’t ready to get serious about repaying my debt. In March 2011, I deleted the first version of the blog (and the email address, which is why I’m now stuck with “blondebudget” at gmail).

Between March and May is when I let my credit card balance creep closer and closer to its limit. During those few months, I would literally only peel back the top corner of the envelopes holding my credit card statements so I could see nothing but the minimum payment. Talk about denial. In my gut, I knew I was being stupid, but it wasn’t until I was within $100 of my limit that I realized I had to stop and do something about it. I had $100 left in my chequing account and another $100 of wiggle room on my credit card and all of that had to last me for 6 weeks. I was at my absolute limit. At that point, there was no other option but to start repaying my debt – all $28+K of it.

How I Got Started

The first thing I did was borrow a copy of Gail Vaz-Oxlade’s Debt-Free Forever from Krystal and read it from cover-to-cover. My biggest takeaway from the book was that I needed to start tracking my spending – immediately. Everyday, I wrote down all of the transactions I made – from the paycheques I received, to the debt repayments I made and the $2.91 I repeatedly spent at Starbucks. It only took a few weeks for me to see that I could categorize my purchases into what you see in my budgets today (i.e. groceries, gas, restaurants, gifts, etc.). I did this for three months straight.

At the end of the 3 months, I took the totals from each category, added them up and divided the sum by 3. For example, let’s say I spent $200 on groceries in Month 1, $225 on groceries in Month 2 and $250 on groceries in Month 3. In this example, I would have added up the monthly totals ($200 + $225 + $250) and then divided the sum ($675) by the number of months I tracked my spending (3) to come up with the average amount I spent each month ($225). I repeated that process for all of the categories and, with those averages, finally wrote my first realistic* budget.

The Tools I Used

Obviously, Debt-Free Forever changed the way I thought about money – so that book is the first tool I used. After that, I tracked my spending for 3 full months – by hand, using nothing but a pen and an old notebook that I was happy to scribble in. At the end of the 3 months, I took the averages and wrote my first monthly budget in Excel – making that the third tool I used. At the same time, I became obsessed with Gail’s interactive worksheet Build a Budget That Works. I literally moved numbers around in that thing for hours, until I was satisfied with the results.

I tried a couple other things throughout my journey, like switching to a cash diet and budgeting bi-weekly instead of monthly, but nothing worked for me the way a pen, paper and Excel did. To this day, I still track my spending by hand. And I just finished writing a September budget that I am so excited to share with you all! (Yes, I get excited about my budgets!)

Now, I’m dying to know. How did you know it was time to make a change in your financial life? What was your turning point? And what is one resource or tool that helped you?

*Please note the importance of writing a realistic budget. If you can write a realistic budget that is based off numbers you may actually be able to stick to, the chances of you coming under budget are huge. If you’re like me, going over budget leaves you feeling discouraged. But it’s an incredible feeling when you can finish a month and feel like you stayed on track with the goals you made for yourself. So, always be realistic!

  • Reading this is as I’m reading my own story. I just started my debt reduction journey.

    I did exactly what you did – corner tear of the credit card statement. Make minimum payments, ignore and repeat in approx. 30 days time. Scary busineess that is!

    I’ve had Gail’s book from the library, too. I must admit though I didn’t read very much of it. I may have to revisit that issue.

    I appreciate you sharing your beginnings. I’ve hit a few bumps in the road already – long story for that, but I’m hopefully and determined to make progress. Maybe not as fast as you, but I’m plugging along.

    Thanks for sharing and giving me hope. :)

    • I’m sure the book won’t help everyone the way it helped me, but I love Gail’s no-BS style of writing. I needed someone to tell me how it was and tell me what I needed to do, and that’s exactly what the book did.

      Good luck with your debt repayment journey, Tammy! And only go at the pace you can afford to, but know that debt fatigue is a real thing and I think it’s worth trying to pay it down sooner than later.

  • Thanks for sharing Cait! I also love pen/paper and excel. Hubby ans I are still tweaking our budget looking for balance. I know we can have a successful budget that, like you said, we come under each month we just need to be more diligent with tracking. It’s more difficult with two people spending the same pool of money I think.

    • Absolutely, I can see how that would be an issue! Now you’re making me wonder what it’ll be like when I have to make my monthly budgets for two (one day)… scary thought! hehe

  • Excellent “from the beginning” post. My “aha” moment for my debt was when I realized that I literally could not afford to pay for my car, my rent, and my student loans. Something had to give. I started out with excel and, and my budget has been an evolving piece of work ever since.

    I was actually looking through my old budgets from several years ago recently, man where they ever different back then!

    • Nice! Is it cool to see how they’ve evolved? I feel like I’ve been pretty steady with my budgets – not paying attention to how much my spending patterns have changed, etc. and still sticking with my old numbers. September looks a bit different. I’m excited to share it!

  • Good for you Cait!! When I was single and living in the Uk I never used a budget but I also paid cash for everything I owned because I was afraid of debt. Probably a blog post on it’s own. When I moved to Canada in 2007 the same mindset came with me BUT the budget was what changed our life as well. It wasn’t until we designed our own excel budget spreadsheet and tracked our expenses that we noticed we were spending too much in certain areas that we could cut back with. I believe that anyone can use a budget and the results will speak for themselves. We have 2 choices, we spend less, we earn more, full-stop. Cheers Mr.CBB

    • Thanks, Mr. CBB! I have a friend now who does what you used to do when you were single: she doesn’t have a credit card and only uses cash. You should definitely write a post about what that was like – I’d love to read it!

  • I hit my turning point when I couldn’t pay all my bills anymore. :( My biggest resource, in the beginning anyway, was the online community of my debt relief provider which provided me with the support I needed to keep moving forward!

    • Love that, Travis! I’m actually working on a blog post for Thursday re: my “other” not-so-secret resource: the PF community. :)

  • Like you, I knew it was time to make a change in my financial life when I found myself maxed out. Sadly, I had just spent the last of my savings and had the credit card company increase my credit limit to help fund an unneccessary purchase that I couldn’t return because the store was closed and I was flying home the next day before the store opened. *insert breakdown here*

    A pen, paper, and Excel were also my tools of choice, and like you I knew something was wrong months before I actually hit my breaking point and actually did something about it (6 or 7 months). The part that helped me the most was keeping track of my bank balances at the end of the month so that I could compare them from month to month. It didn’t help with my day to day spending the way that writing everything down would, but it helped with overall epiphanies like “If I’m paying $400 on my car loan every month but the debt balance stays the same, that means I’m taking on $400 worth of debt somewhere else”.

    Great post!

    • I love that you keep track of your balances; that’s something I’ve never done but it would be a great way to a) see your progress and b) total up your net worth. I think I’ll have to try that sometime – even just for myself.

  • I love this post so much. Thank you for sharing your journey from the beginning. It is eerily similar to mine in that I was in denial about money long before I finally made the jump to trying to fix the problem, and that Gail vaz Oxlade was a big part of mine. I am a year and a half behind you at roughly the same debt load, but I hope to get it done and join you at zero debt soon!

    • I still can’t believe how bad my denial was… at least we’re both done with that stage now! Good luck, Alicia!

  • After almost a year covering utilities with a credit card and having my credit card numbers + customer service phone numbers memorized from calling to check what little credit I had left so often… I knew something had to change immediately when I was going to lunch with my boyfriend (my idea) and had to purposely leave my wallet at work because I didn’t have more than $20 of credit on any one of my 4 credit cards or in my checking account to cover the meal. Talk about an embarrassing wake up call. That was 4 years ago!

    Today I use Excel for budgeting, and for tracking expenses more specifically.

    • That’s definitely a moment you’ll remember forever, eh? Scary but a wake up call for sure! Thanks for sharing, EM.

  • After graduating with a 40 thousand dollar student loan (that I used as like a bank account, not a loan!) I knew my finances were in a mess but felt powerless to do do anything but meet my bare minimum payments as I struggled though an uncertain job market. After 2 years of part time jobs and contract work, barely covering covering rent and deferring debt payments, I finally landed a full time job in my field and took control over my finances.
    The turning point was that first paycheck and knowing I could now count on that amount showing up every two weeks and making a budget that allowed me to pay 30% of my income every month towards my debt.
    My biggest tool/resource was the internet! I must have read over a thousand personal finance blog posts and would search the internet for postings on topics I was struggling with that particular month. To this day I regularly read about 10 of my favourite personal finance blogs, including this one :)
    I am getting close, I have about a year left before I am debt free, so I am excited to see what steps you take towards your financial future!

    • Yay! I’m honoured to write one of your favourite PF blogs :)

      One year is closer than you think. Just imagine: this time next year, you’ll be where I am now! Being in a position where you can put 30% of your income towards debt is huge – so congrats on both finding work in your field and having it pay the bills (literally).

      So happy you commented. Good luck w/ your journey, Kristyn!

  • My turning point was when I finally got out of a crappy relationship and regained control over my life, my house, and my finances. I had dug a pretty big hole (with his help) but once I was able to start fresh I was determined to fix it. Looking back I actually can’t believe I ever lived without a budget… what a life changer!

    Myself, I do my budget every two weeks, I have a budget book where I track all my bills and fixed expenses + all my variable spending. Then I categorize each item of the variable, plug the numbers into a spreadsheet, and at the end of every two weeks I print the spreadsheet and tape in into my book. Sounds kind of complicated but it works for me. I also check my online banking every single day and sometimes multiple times per day.

    Congrats again,

    • It sounds a little complicated but I’d love to see the book! That actually sounds pretty cool. I feel like I should print off all my budgets and put them somewhere… just as a record of what I’ve done. Thanks for sharing, Dayle!

    • Couldn’t agree more. I’ve played around w/ a few apps, but writing something down really makes it stick with you… you know? Especially when you write the same thing down over and over, day after day, and realize you’re just throwing your money away. Eek!

  • this is a little off topic, but I noticed in this post and your San Francisco post that you mention journaling a lot. Do you journal ideas for your blog or is it more just for your own benefit? I realize I need to start journaling more so I can track my budgets better as you have mentioned.

    • It’s purely for my own benefit. I’m journaling more day-to-day stuff, reflecting on some things, writing down goals and dreams, highs and lows of the day or week, etc. But I am constantly making notes of blog post ideas, etc. so my place is usually covered in random pieces of scrap paper!

  • Nice! Now, you should know that some of it talks about Canadian bank accounts that may not mean anything to you… but Gail’s no-BS style of writing is – for me – really motivational!

  • Our turning point was an unexpected round of layoffs in June 2008 at my former workplace. I wasn’t let go, but it was the scariest thing ever. I realized right then that if I HAD been let go, there was no way we would make it even through the next month. We didn’t have anything in savings, we had CC & student loan debt, and didn’t ever track our spending. If we had money in the bank account we figured we could spend it.

    My mom had always harped on me to listen to Dave Ramsey, but once I had the daylights scared out of me I decided maybe she was right. So I started listening to his podcast. He is very no-BS as well. He mentioned that a lot of money stupidity comes from immaturity. “Well, I work hard, so I deserve it!” But he’s right – sometimes you don’t deserve it, or just because you work hard doesn’t mean you can do whatever you want with your money. It really struck a chord with me. I just tune out the religion part.

    So basically we used his cash flow plan and modified it a tiny bit in Excel. We also are using his “Baby Steps” plan. (Almost done with Step 3a now – step 3b is save for a house down payment.) And we pulled our checking account statements for the past 3 months and tallied up what we were spending in each category to start with a realistic budget. We were spending $1000+ on restaurants each month. I could NOT believe it.

    We use to more easily track our categories, and I transfer the data by hand into Excel. I make a point to update our Excel spreadsheet every day. That way we always know what we’ve spent and what we have left.

    • That would definitely be a scary feeling, A. It’s neat to hear that most of Dave Ramsey’s stuff helped you guys! And cool that both him and Gail suggested the same thing re: adding up 3 months’ worth of spending and creating a realistic budget. We should exchange spreadsheets in October :P

  • Blog stalker here….

    My tipping point came when I had lost my job and had no way to pay the minimums on any of my credit cards, or my car payment or etc., etc., etc.

    Gail’s book was the first I bought and read cover to cover. Love her. Love her attitude! I do use Gail’s budgeting excel sheet but have also created an entire workbook where I track all of our debts.

    Love your blog Cait!

    • Woo hoo! I love when readers come out of hiding :)

      Sounds like you’re pretty serious about budgeting now, which is great. When you say workbook, is that in Excel or is it an actual book that you can hold in your hands?

      Thanks for commenting, Hallie!

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