How I Stopped The Debt Cycle In My Life

July 15, 2008

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It was March of 2002, and my mother was dropping me off at our local community college. It was that point that I realized my life had come to a low point. I had no car, no job, and I was in a ton of debt at the age of 20. I came home from an expensive Christian school where I racked up $12,000 in student loan debt and $4,000 in credit card debt in just a year and a half. I made a big mistake by picking a school that I couldn’t afford. I made a bigger mistake by signing up for a credit card at the age of 18. I had no clue how to manage money, but I stopped the bleeding. I enrolled in an affordable community college, my dad gave me an old family car for free, and I started working two jobs. But, it wasn’t until a year later that I started changing my financial habits.

I was driving around Gainesville, Florida one fall evening and I was flipping through the radio stations. I came across The Dave Ramsey show, a radio show about personal finance. Many of you are familiar with Dave Ramsey and his style of teaching. I listened to the entire three hour show that night, and I realized that I needed to drastically change the way I handle money. I was listening to various callers express their joy about getting out of debt, and I found myself wanting to get out of debt as fast as possible. I stopped the debt bleeding, but I hadn’t stopped the debt cycle. I wasn’t getting into more debt, but I also wasn’t doing anything to prevent myself from getting into more debt.

Here are a few steps that I took to stop the debt cycle.

  • I cut up my credit card. It was time to get rid of the vice in my life. I relied too much on my credit card, and it was too tempting to use. I racked up $8,000 in just four years. It was a combination of horrible decisions, emergencies, and numerous small purchases that quickly added up. I put gas, food, eating out, car maintenance, and various other expenses on that card without paying it off at the end of the month. The worst charges were the expenses from a backpacking trip to Europe that I couldn’t afford. You may be responsible with your credit card, but is it really helping you to keep it? Do you think that using a credit card will help you become wealthy? Getting rid of the debt cycle means taking away the things in your life that tempt you to buy something you can’t afford.
  • I built up an emergency fund. I built up a huge debt on my credit card, because i had no money saved up for emergencies. When the alternator died in my car, I charged it. When I was evicted from my apartment and lost my security deposit, I took a cash advance from my credit card to pay for another security deposit on an apartment. When i married my wife after college, we always keep at least $1,000 in a separate savings account specifically for unexpected expenses.
  • I attended a public university. I left an expensive private college and transferred to the University of Florida, a Florida public school. At the private college, I was taking out $5,000 in loans per semester. At the University of Florida, all of my tuition was paid for the Bright Futures scholarship, and I received a Federal Pell Grant that went in my pocket for living expenses. It was a big financial turnaround in my life, If I would have stayed at Toccoa Falls College, I would have graduated with $40,000 in student loan debt. Instead, I am currently paying off $15,000 in student loan debt.
  • The monthly budget became my best friend. I started spending my money on paper before I spent it. I paid all of my monthly expenses and set aside a specific amount for groceries, gas, entertainment, and clothing.
  • I educated myself about personal finance. If your parents don’t teach you sound financial principles, no one will. High schools and colleges significantly lack the capacity and the desire to teach young people about personal finance. If you don’t understand compound interest, the stock market, budgeting, and interest rates, you’ll never learn how to make good financial decisions. The fastest growing wealth of free information about personal finance is the blogosphere. There are hundreds of great personal finance blogs out there, including Money Smart Life, dedicated to helping you learn about personal finance and make better decisions.

I’ve paid off $10,000 in debt in the past two years. My wife will start working this August, and we will continue to pay off all of our debt. We plan on being debt free in two years, and we will get the chance to call up the Dave Ramsey Show and yell at the top of our lungs, “We’re debt free!” I stopped the debt cycle in my life, and you can too. But, there must be a point in your life when you tell yourself that you are sick of being in debt. Then, you must take the specific steps necessary to break the debt cycle in your life.


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Erik Folgate is a husband and father living in Orlando who's been writing about money online for 6 years. Digging himself out of $20k of debt after college and his former experience in the insurance industry give him some useful insights into personal finance issues.

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7 Responses to How I Stopped The Debt Cycle In My Life

  • ladyd3500

    You are one of my heros, the awesome way you took on debt by the horns and kicked it butt. You have showned me the way. Thank you, Thank you

  • The Happy Rock


    Kudos for righting the ship. The transfer from private school to public was a huge jump.

    It is always exciting to see someone who has changed their behavior and is on the verge of becoming debt free. It’s a huge step in life.

    I will say that I felt even better to get our emergency fund topped out. That was the point I really felt free to pursue my dreams!

    Keep attacking!

  • Erik

    Connie – yes, we’ve stuck to his debt repayment plan for the $10k. We always carry at least a $1000 emergency fund and we pay off smallest debts first and work our way up. We will do this with our student loans and hope to pay of $50k in the next two years since our income will more than double starting in August when my wife starts a position as a physician assistant.

    Matt – Always glad to meet a fellow gator! I graduated in May of 2005.

    Emily – I completely agree with you. If I would have learned in high school what i taught myself at the end of school, it would have saved me about $20k. One of my life’s passions is to start a financial counseling company that focuses on educating young people.

  • Emily

    This story goes along with what I’ve been thinking/saying for a long time — financial education NEEDS to be taught to high school seniors before they head off to college. At my high school, senior year, we took government one semester and economics the other. The economics class was extremely difficult and complicated and we had to draw supply and demand curves and calculate GDP and GNP. I always asked my teacher why they would teach us those things (which we’d probably never use) but neglected to teach us anything about credit, balancing a checkbook, taxes, or insurance — things that could make or break our lives. He was as puzzled as I was. I’m glad some states have started doing this, but they’re in the minority. I think everyone should go to college with this basic, important information so they don’t have to get lucky by hearing Dave Ramsey on the radio.

  • Matt M

    If your not a Gator your Gator bait!!! What year did you graduate from UF, I just recently graduated from UF.

  • Connie

    Hey Erik,

    That’s an enormous accomplishment. I am wondering, did you follow Dave Ramsey’s debt repayment plan exactly? I was on his site the other day and I really respect his advice on Term vs. Whole life insurance, but I never did read a lot of his debt repayment advice. What was the hardest part for you?

    Paying off 10k in two years is huge!


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