Overcome Debt and Find Freedom

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$24,000 of debt. Knocked out in 2 years! That’s my buddy, Matt Koenig. My brother-from-a-different-mother who is packing up himself, his wife and their two sons, to take off on a 1 year sabbatical in Indonesia! How does a family of four find it possible to wipe out that kind of debt? Take it away, Matt . . .

If you have debt right now, you are a slave. It may sound harsh, but it’s true. You are indebted to others and that makes you a slave. Some might argue that there is good debt and bad debt. I don’t want to debate that but, in my mind, debt is debt and when you owe someone else money, you lose your freedom. I get that some debt may be necessary but I think we get ourselves in over our heads way too easily and unnecessarily.

Losing Freedom

Debt has a strong effect on us. In 2001 I lost my job and spent a year looking for work and piling up credit card debt just to pay the bills. When I was working again, we needed a bigger car because our kids were born and a pickup truck just wasn’t cutting it, so that was another monthly payment. We ended up over $24K in debt.

When you have that much debt riding on your back it affects you in many ways. You feel like Atlas holding the world up on your shoulders. You feel trapped. You feel constrained. You feel like all your dreams are on hold because you have to pay down this mountain of debt before you can live. You are, in effect, a slave working for your freedom.

I suffered depression, anxiety and stress just thinking about what we owed and how we were going to pay it all off when we were already living paycheck to paycheck. There wasn’t a light at the end of the tunnel. To make matters worse, I wasn’t feeling any fulfillment in my job. I was simply working to pay what we owed.

For years, my family & friends hounded my wife and I to consider buying a house. “You should really buy a house” they would say; “It’s a good investment in your future.” So we started looking at different properties and crunching numbers to see what we could afford. But I didn’t like any of the options because they encroached on a dream.

That dream was freedom. The freedom to know that I didn’t owe anyone anything. The freedom to pick up and move to Indonesia- or wherever- if we chose to. The freedom to be location independent if it suited our desires. And that sense of freedom was worth more than owning our own house. You could argue that owning a home is a good investment. One can build equity or rent it out as a source of income. But regardless, it’s still something that ties you to a single location. For some this is great but, for me, I prefer my freedom.

Taking Back Our Freedom

Being $24K in debt is a giant hole to climb out of. In many respects it seems impossible. But we made lifestyle changes that resulted in amazing results and I’m happy to claim that we are now $2K away from being completely and totally debt free.

How did we do it?

We realized that in order to get out from under our debt we needed to make paying that debt off a top priority. The first thing we did was decide on the day when our debt would be paid off. This had to be a realistic time frame. We chose 2 years. Then we took our total debt and divided it by that time in months. This resulted in a monthly payment of $1000 per month.
At first we had no idea where that extra $1000 per month would come from. But then we realized that we were looking at it all wrong. It wasn’t an “extra” grand we needed; we simply needed to produce that grand from what we already had by making cuts. We had to change our lifestyle.

Finances are like a tree. Money usually comes from a single source (tree trunk) and goes out in a multitude of different ways (branches and leaves). It’s easy to lose sight of things in the multitude of leaves. We easily see our money inputs (gains) but have a difficult time seeing the outputs (losses).

We started tracking our money with excruciating detail. If we bought a pack of gum we recorded it. Soon we were able to see areas that we could cut back on (prune our tree).
We stopped eating out except for special occasions. We drove less and walked or rode bikes more. We cut out impulse and frivolous purchases (this was huge). We cut out all junk foods. This not only saved money but got us eating healthier which saved on doctor visits. We took refunds and tax savings and applied it to debt payments rather than purchasing a new TV or item we didn’t really need. We implemented a 1 month hold on all major purchases. At the end of the month we found most items didn’t have the same urgency.

While it wasn’t easy, we were able to average the $1000 per month. Of course, some months we had to contribute less due to unforeseen events, like a washer and dryer breaking or medical bills. But we always found ways to make up the difference and get back on track. And you can too.

It’s Your Life and Your Freedom

The key is to make paying off debt a priority. This is your life! Do you want someone else making decisions for you? Or do you want the freedom to pursue your dreams on your own terms? Debt can only hold you back. Pay it off and find true freedom.

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Matt Koenig is a husband and father who decided the best way to live life on his own terms was to get out of debt and start his own business. He and his family are starting a new chapter of their adventure by moving to Indonesia. You can follow their journey at 1 Year Sabbatical or check out his photography at Matt Koenig Photography.

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Have more debt-elimination ideas and approaches? Share in a comment below!

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(photo by SqueakyMarmot)

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