Although I write personal anecdotes in most blogs, this blog is a very personal story. It’s about how deep I got into financial debt and what I did to dig myself out of it. This week marks a milestone in my financial journey. It’s the week I paid off my credit card and reached my savings goals. 

In mid 2014, I began plunging our family deeper and deeper into financial debt. With my transition from full-time employment to full-time self-employment, there were many, and sometimes big, expenses being paid out on a regular basis. My income was so low, it might as well have been non-existent. 

The second half of 2014 was dismal and depressing. Those six months were spent going further and further into debt. Although 2015 began with optimism and I thought we’d turned the corner, the situation got worse before it got better. I was receiving letters from the bank for insufficient funds on a fortnightly basis and at one point, received a summons for failing to pay our rates.

There were two major events that occurred in 2015, which had a profound impact on me and my relationship with money. 

Firstly, I was paying off my new website. The awesome team at Dash Media had me on a payment plan. When every payment went through, they would send an automated email with how much I’d paid off and how much was left. I remember at one point in the middle of the year, looking at one of these emails and being surprised at how much I’d paid off. I realised that if I put this same amount of money on my credit card debt, I’d have paid it off by Christmas.

Secondly, later in the year, my grandmother passed away. She was the most influential person in my life. A few years ago, she told me that I should keep a float of money in my bank account for emergencies. She suggested that I pick a value and consider that my ‘zero point’. For example, if your zero point is $1,000, then anything over that is how much you actually have in the bank. If you have $1,500 in the bank, then you really have $500. It’s like putting your money on the scales and pressing the ‘tare’ button. 

While I respected my grandmother’s advice, I never took concrete action; however, with my poor state of financial affairs, I had to do something. I’d had a poor relationship with money and that needed to change. The financial challenges I faced and the loss of my grandmother helped to change my relationship with money. I dragged myself out of a deep hole and got to a point in my financial affairs that I’d never previously been able to achieve. 

How I Dragged Myself Out of a Financial Hole

• Create a plan. Decide what you need to pay off and create a plan to achieve it. Work out how much you can afford each week (be optimistic - I bet you can allocate more money than you think). Then work out how many weeks it’ll take you to get there. It will likely be daunting in the beginning, but stick it out. The feelings of accomplishment, success and pride will be in abundance when you achieve it. 

• Create a contingency fund. Work out what this is for you. It could be $100, $1,000, or $10,000. Using your plan, set aside that amount of money in a savings account. When you reach that figure, transfer it over to your everyday account and commit to maintaining that as your baseline. Even better, continue to grow it in the following year. 

• Be consistent and persistent. Even the best plans are useless if you don’t stick to them. Be relentless with your plan. When sailing toward an island, it might look like a long way away in the beginning, but as you sail closer, it becomes bigger until eventually you can step onto it. Do a little bit each and every week. Before long, you’ll look back and be amazed at how far you’ve come. 

• Prioritise. Some people find it hard to save because they don’t prioritise savings over other expenses. Prioritise your savings as high as you would a loan.

Wherever you are financially in your life right now, take assurance that you can be exactly where you want to be with a plan. Have faith that with a plan, you can pay off your debts and create a contingency fund. Be consistent and persistent. When you get there, the rewards will make the time it took feel very short. It will certainly be worth it. 

What have you learned from financial adversity?

Leave your answer to that question in the comments section below.