Barney, Our Total Debt Credit Card Debt Was $52,000:

October’s inspirational person has asked to remain anonymous. This is quite familiar with us as they don’t want friends and family to know their financial problems. We will just call this man who is 49 years old Barney.

Barney contacted me around 12 months ago, telling me he had big debt problems. However he now seems on top of it. He is married with no children.

Barney let’s look back 12 months ago, how was your home budget going?
We had 3 credit cards, one car loan, a home loan and outstanding debts to my parents. Our total debt except the home loan was around $52,000.

What forced you to change?
It was definitely the money we owed to my parents. We had borrowed it around 5 years earlier when things got financially problematic. The amount borrowed was $20,000 and we had only paid back $5,000. My Dad passed away and my Mum needed every cent. When she asked for the outstanding money we just didn’t have it to give to her. I felt like I had let not only her down, but Dad as well. It was tough for me to sleep. We had to borrow money with interest to pay back a non interest loan to my Mum. However I really would have preferred her to have the money, than me save a few bucks on interest. It was then, that I decided to change my life.

So what did you do to start changing?
Well, at first we tried to change our budget on our own. However, nothing we did seemed to work. There was always a bill coming in or some unexpected expenses. After about 12 months of this we decided to start trying even harder again. We contacted a financial guidance company. However, one week before our meeting with them, we came across your book. We started reading and were finished before our meeting with the guidance company. We cancelled the meeting with them and started working on the five steps.

How have you gone with it?
It has not been 100% smooth sailing, as with any change in life. However, we didn’t expect that it would be smooth sailing. We have moved in leaps and bounds and our attitude has changed around money. We have even paid off and got rid of our 3 credit cards and car loan. The biggest thing we took from your book is to get out of debt. We now understand that debt is the cause of most of our problems. The other thing we understand is that small amounts of money spent here and there add up to big amounts over time. Thank you so much for your book.

If you could go back in time to your 21^st birthday and talk to yourself about money, what would you say?
I would say. “OK, listen up boy. I have made every mistake under the sun with money. Nearly 30 years of making mistakes equals a lot of heartache for me and our family. Don’t go into debt. Start tracking every dollar. Forget chasing newer and better status symbol items. And run as far as you can from credit cards. Look for a property/house to purchase right now, don’t wait 15 years. You will never win X Lotto. And never borrow money from family, no matter how much you need it.”

Barney, where do you hope to be in 10 years time?
My biggest goal right now is to have our house paid off. This is really our only debt to pay off. We want to pay it off by the time we’re 60 years old. Work 5 more years and then retire. We really won’t have enough money in retirement to live on a tropical island somewhere or travel around the world. However, I would like to take 12 months to shoot off around Australia in a caravan. See all those places that tourists come to Australia to see but we never go to. If we can achieve this, I will be happy.

Barney, what was the biggest mistake you made with money?
17 years ago we purchased a “new” boat. We would use it every weekend when we first got it. Then every second weekend. Then monthly and finally it sat there for a whole year not getting used. We even took out a loan to buy the boat. We sold it three years after we purchased it for 50% less than we bought it for. Add in the interest costs, petrol for the boat, petrol to get to the river and back, rego and finally accommodation at the river. We must have spent at least $10,000 on top of what it cost. Also would you believe when we sold it, we had two years of the loan to go? We could have paid it out with the money from the sale of the boat but we wasted the money (on God knows what) and continued to pay the boat loan off monthly. What a silly, stupid idea. Now we rent a boat once every year; much cheaper. My advice to anyone reading this, is to stay away from buying boats, it is a waste of money.

Barney, what was the best thing you have done with money?
We purchased our home around 15 years ago. It has gone up in value like most homes in Australia. But that is not the reason why it was our best decision. The reason why I say this is because in a way it forced us to save money; we would have to put money into the loan each month.

The second best decision we made with money was not to touch the equity in the house. We would get letters at least twice a year from our bank saying we could take money out from our home loan. I knew in my heart that even if I did this once, I would start treating this cash like our own personal bank account. It was very tempting at times. We even looked at getting a holiday home with the money. But we came to our senses. Had we touched this money it would have been an extremely bad idea and we would probably still owe the value of the home loan 100%.

Thanks a lot Barney. Good luck with your goals.