Tuesday, January 8, 2013

Debt Free

Despite $110k+ in debts from law school, from which I graduated in 2006, as well as a fairly large amount of credit card debt, which resulted from slow business for me from 2006 until 2009, I have finally--as of yesterday--eliminated all of my debt.  Debt free are two of the happiest words in the English language.

I don't handle debt well.  I see other people who talk about car loans, mortgages, credit card debt, and student loans as if they are an inevitable part of life.  They don't like the debt, but they can live with it.  They know they have to work long hours--sometimes two or three jobs--but they just shrug and do it.  It doesn't appear to keep them awake at night very much.

Not so for me.  On a daily basis, I thought about all of the money that I owed.  My train of thought would often follow these lines:

Okay, I owe $144,000.  If I average $4k a month in wages, which isn't even clear for a solo practitioner, you know, I could have two or three months in a row receiving zero cash . . . Assuming I can average that $4k, which is beginning to seem more and more optimistic, I can pay off all of my debt in 3 years.  If I don't eat.  Or pay rent.  Or drink beer.  Or spend a single dime.  

That would make me want to drink several beers.  So I would.

After some time, I'd try to be more rational.  I'd predict that I would be able to pay off $1k per month.  Which would let me erase all of my debt in 144 months.

12 years.

That thought would make me want to drink several more beers.  So I would.

This kind of thinking became my mental snake-that-eats-itself--the train of thought that I would return to again and again and again, without ever working out any promising solution.

Well, it turns out that if you want to get rid of a massive--in my mind--amount of debt, working in a foreign country is a pretty damn good option.  The benefits are clear from the start:

  1. After a year abroad, you qualify for the foreign earned income exclusion, and you don't have to pay any taxes.  You don't have to pay any taxes.  You don't have to pay any taxes.  Yes, I'm aware that I just typed that three times in rapid succession.  You don't have to pay any taxes.  It is a beautiful sentence.  Perhaps the most beautiful.
  2. In many foreign jobs, housing is provided for free.
  3. Based on #1 and #2, the salary you receive tends to go straight into your bank account and sit there.  Until you decide to use it for something.  Like paying off $110k+ in debt.  Oh wait, that's just the student loans.  $140k+ in debt.  Ouch.  Just ouch.
So after 29 months, my debt is gone.  My method was simple: I took about 65 percent of all the money that I received--maybe 75 percent--and sent it off to pay down my debt.  $4k-ish per month.  And I'm not going back down that road again.  I've heard stories of people who want to pay cash for everything, people who never carry a balance on their credit cards, and who pay the full purchase price for a car.  Those people used to sound a bit crazy to me.  Now I am going to become that person.

I haven't slept better since my teens . . . when I got, and promptly put a dent into, my first credit card.

Happy days.


  1. thats pretty awesome. i'm resigned to never being able to pay off my student debts!

    1. Oh man, hope it doesn't bug you much. I just couldn't handle it. Good luck!

  2. Other than my mortgage I think I'm down to $3k in debt that will be gone in just a few short months.

    I'll be excited when I can join in your chorus

    1. Yeah. Not having a Job in a foreign country to fall back on has slowed my progress, but just a couple of years ago my Income was actually less than out Bills....
      I've worked like a donkey to get it down and can't wait for it to all evaporate!!!