HOW I GOT OUT OF DEBT
I worked for it, and it was not easy, nor was it fun.
I was $60,000 in debt and I put every free penny I had of my net income towards my debt.
This was probably 50% – 90% of my income at times while earning about $65,000 grosss per year (which is around $50,000 after taxes and fees).
Note: I was a consultant living out of a suitcase, so by the nature of my job, I was able to channel a lot of my net income each paycheque towards my $60,000 in debt.
I watched every penny, and followed a budget exactly like the one I created for myself below.
And that’s it. The big secret.
Of course, there are a lot more details to the 18 months it took to clear my $60,000 debt, but that’s the gist of it.
WHERE AM I AT NOW?
Here’s my net worth at the end of 2009, and my net worth at the end of 2010 (I was up by +$130,100 at the end of December 2010, or by 235%).
I went from November 2006 being $60,000 in debt to the start of January 2011 being $180,000 in the black.
You can see most of my budget roundups starting in 2010 for the most part here.
I don’t have my old posts because I wasn’t organized AND I lost all my old monthly budget roundups when I moved from Blogger to WordPress 🙁
In about 4 full years, I increased my net worth by almost a quarter of a million or $240,000.
I hit $200,000 net worth in March 2011 but then had to pay my taxes, so I’ve dropped down to about $180,000 again in April.
For all of 2011 I decided to not work at my full-time job as a consultant, and take the year off to travel to Asia and spend the summer in Europe before traveling around the U.S. for the remainder of the year.
I am expecting to be at about a $160,000 net worth after my little yearlong adventure, and I ended up being at $155,000 net worth at the end of 2011.
SO HOW DO YOU GET OUT OF DEBT?
You can start by reading these posts:
- Stay motivated to get out of debt
- How I got out of debt
- Are you suffering from frugal or debt fatigue?
- Cut everywhere, not just where YOU want to save
FB Favorite Budgeting Tool
Being super motivated to pay off your debt is the #1 step. But once you are super hyped about your new resolution, you need a plan. There are all kinds of plans in life; you can make plans to have a new boyfriend, a plan to get a promotion or a plan for a new design for your bedroom. But when you talk about personal finance, there is only one plan that works. This plan is called Budgeting!
There are tons of budget spreadsheets across the web. I know it’s hard to find the right one! This is why I’m giving you my suggestion. The best part is you can get a free copy to test out and then, you can use The Super Deluxe Budget for only $15.
What I like about The Super Basic Budget (the Free one) is that… it’s super basic and easy to use! You even get on screen explanations to make sure you enter the right number in the right cell.
Why Go for the Super Deluxe Version?
Yeah… good question! Why should you spend $15 after making the decision to pay down your debts? Doesn’t this sound like an expense? This is where you are wrong; The Super Deluxe Version is an Investment in Your Future. The Super Basic Version is great and offers the following features:
- Track One Income Source
- Track Regular Income only
- Track up to 10 Expense Categories
- 12-month Timeframe
But if you want a “taylormade” version that will require no adjustments, the Deluxe Version comes with the following:
- Select your Currency
- Track up to 5 Income Sources
- Track Regular Income and Irregular Income
- Track up to 20 Expense Categories
- Track up to 20 Subcategories within each Expense Category
- Set Recurring Expenses
- Adjust your budgets by month
- 12-month Timeframe
- Includes 6 months worth of FREE updates
This is the perfect tool to track your expenses and modify your spending habits along the way and watch your improvements! Once you will have run 12 months with your budget, you will feel so darn proud of yourself because you will have paid down your debts!
Here’s a video explaining how to use the Deluxe Version:
I’m ready to get out of debt! I want to download the spreadsheet!
And Now That You Are Ready to Save Money Aside…
Once you have control of your budget. The very first thing is to start saving money. You need an account that doesn’t eat your money with fees and gives your interest to protect from inflation. The ING Orange Account covers both feature perfectly:
CONTACT ME
Just a girl trying to find a balance between being a Shopaholic and a Saver.
I cleared $60,000 in 18 months earning $65,000 gross/year.
Now I am self-employed, and you can read more about 
En mi opinión, no hay necesidad de pagar una aplicación para organizar las deudas y hacer un presupuesto. Por ejemplo, es gastar en lo necesario y utilizar el restante para abonar las deudas- y las deudas que tengan los intereses mas altos- tarjetas de crédito, prestamos personales etc….
The big question is how much $ you make a year, getting out of debt ain’t that easy or quick
hi there! 🙂 i’ve been following your blog for a few years now. thank you so much for the inspiration!!! i remember reading about your tool being available to purchase, but i’m not seeing where that’s available now… can you point me in the right direction? <3 thanks again!!!
I’ve just been reading through this blog and love it. you can buy the budgeting tool at this link
http://www.thebudgetingtool.com/buy-now/
FB,
I just purchased your sheet and have a quick question. How would you account on the sheet for a 401K employer match? Effectively it’s income, but it’s not reflected in the total paycheck amount – rather, it gets diverted straight to a 401K account (Retirement). But I don’t see how to have the value added to the Retirement asset since it’s not being “paid” via the budgeting categories – it actually occurs *before* you’re paid, in essence. Thanks!
Good question. I’d probably record it as Income in the monthly tabs, and then in the monthly tabs I’d write in an expense to take that ‘income’ and put it under the Category appropriate for “Retirement Savings”, so that it records it automatically.
Hi FB,
I have the same question as Rose. My husband and I use two different bank accounts, and it would be cool to keep track of those account balances on the dynamic spreadsheet. Is that possible? Thanks for the blog! I would never think it would be possible to get out of so much debt, but your story motivates and inspires me.
Rose — I am sorry if I missed your question!
Well if you are talking about debt on credit cards, you can keep track of
each separate credit card and on the budgeting sheets, have joined income
sources and joint expenses listed.
If you are talking about two separate sets of budgets and expenses, you
would need separate budgeting sheets.
If you email me and give me a specific example, I’d be happy to illustrate
what it would look like!
http://fabbroke.wpengine.com/contact-me/
Also, here is my response to Rose FYI:
Yes, you can keep track of different payment methods in expenses. (This was my #1 peeve!)
As for different bank account balances, if you are not referring to debt or a line of credit, under the ASSETS tab, you could always make a note of Bank Account A balance and Bank Account B balance at the end of each month as part of your Net Worth calculation.
For debt or lines of credit, you can have separate debt trackers for each under the DEBT tab.
Other than that, can you please let me know what you mean by “balances of different bank accounts”?
You can contact me here for more info:
http://fabbroke.wpengine.com/contact-me/
and with a specific example. I’d be more than happy to help!
I have a question about future upgrades of the software. This is version 4.0. Will I be able to upgrade my software free of charge when ever a higher version comes out or do I have to pay? Thanks.
Hi George,
You will have to pay. 4.0 is pretty much the good one though. I can\’t imagine changing it. It\’s automated expense tracking to your budget (which was a sticking point with many people).
Hey FB,
I've been reading your blog(s) for a few weeks now, and have really been getting into the PF thing. I want to buy your dynamic spreadsheet but I'm wondering, is there a way to keep track of payment methods in expenses, and the balances of different bank accounts? I'd like to have one system where that is found alongside by budget – instead of looking at separate banking info online. I also need to be able to track my use of cash (since that's my biggest temptation to spend). Can I do this with your tool?
Thanks!
Hi Rose!
I’m sorry for not replying sooner, I didn’t get notification of your message. My apologies.
Yes, you can keep track of different payment methods in expenses. (This was my #1 peeve!)
As for different bank account balances, if you are not referring to debt or a line of credit, under the ASSETS tab, you could always make a note of Bank Account A balance and Bank Account B balance at the end of each month as part of your Net Worth calculation.
For debt or lines of credit, you can have separate debt trackers for each under the DEBT tab.
Other than that, can you please let me know what you mean by “balances of different bank accounts”?
You can contact me here for more info: http://fabbroke.wpengine.com/contact-me/ and with a specific example. I’d be more than happy to help!
I’m very interested in using your spreadsheet, but I have just one quick question before I go ahead and make the purchase: regarding the new category drop down menu for expenses, can we add in our own categories or is there only a fixed amount (and fixed names) for categories?
I did get the comment!
My answer still stands as I wrote in the email:
It is a fixed number of categories but I\’ve given you a ton, about 28. I put in some suggestions but ultimately you can name them whatever you want.
The category drop down menu is set from the list of categories you create for each month. You set the categories at the start of the year (January) and it all copies the same categories to the end of December. 🙂
You can also set it in October or mid-year and it will still copy the same categories right up into December, if you decide to do so but I\’d suggest putting it at the start of January so you don\’t forget what you originally set it as, and you can re-use the same sheet for the next year and compare your categories and spending from year to year.
I\’d also suggest keeping them the same throughout the year (do not add or change categories once you\’ve set them in January), or else your Yearly Summary won\’t work, so think long and hard before you do so!
I can always help you out with that if you have more questions and you want me to help you set up the categories for the year, and so on.
I hope that helps!
can your budgeting tool be accessed from different computers? I have not purchased it yet, but travel quite a bit. I need to be able to access it from different computers because I don't always have mine with me. Thanks you__LT
Perhaps you could put it on a USB key with a password and carry it around with you (Verbatim is a fantastic brand for USB keys), but I wouldn’t recommend (from a security standpoint) that you put it on so many different computers.
I know it won’t have the full functionality in Google Docs, so my best advice is to put the sheet on a USB key and keep it safe with you.
I may have missed it, but I don't see anything that states what version of Excel you would need to run this under. I'm still rocking the old school 2002… does it work fine? Any glitches?
No specific version of Excel required, it has the ending of .xls. You can open it with 2005 onwards, which I think is the version most people have.
How does this work outside US: I noticed the sums are in $, but I would be interested to use €. Of course I could just ignore the $, and pretend it is €, but I think that might still be too confusing and disturbing in the end.
So is there any way to change from $ to €? I haven't bought the tool yet. I would also be interested in general to know, how customizable the sheet is, am I able to do that $ to € change by myself?
Anyway, the sheet looks great in pictures, would be interested in purchasing it, if it's usable in €!
Janne
I can customize it. No problem 🙂
Please contact me here for more info, and/or a screenshot.
Or if you want, just pay for the sheet right now and I will send you the customized version once payment has been received.