How I Paid Off $100,000 of Debt in 2.5 Years

Let’s talk about bad debt and how to pay off debt. I’m so grateful to say I am FINALLY in a position where I am debt free and now able to save a house.

But rewinding to 2-3 years ago that was not the situation I was in. I quickly got into around $100,000 worth of debt. Here’s how I managed to pay it off in such a short period of time.

0:00 – Introduction
2:05 – #1: Write Down ALL My Debts
3:26 – #2: Accept Where You Are
3:48 – #3: Write Down All My Assets To Know My Net Position
4:20 – #4: Calculate Minimum Required Payments
5:37 – #5: Cut Spending DRASTICALLY
7:23 – #6: Increase Your Income
10:20 – #7: Keep Expenses Low Even As Income Increases
11:19 – #8: Create a Buffer Fund
14:04 – #9: Have Great People Around You

Recommended Videos:

How I Got Myself Into Debt

How I’m Paying Off Debt

Transcription

Ryan 0:00
Let’s talk about debt. Let’s talk about bad debt. And let’s talk about how to pay off debt. I’m so grateful to say that I am finally, finally, in a position that I am debt free and actually saving towards a deposit for a house. And I found out yesterday that I may actually even have most of my deposit ready and be able to go way faster than I thought. But if you rewind to about two, two and a half years ago, that was not the situation that I was in, I quickly got into a lot of debt, around $100,000 worth of debt once it was all tallied up. And let me tell you, that is a scary, scary figure. So in this episode, I want to talk about the things that I did to get out of such a significant amount of debt debt that was crippling debt that nearly sent me bankrupt. And so if you have bad debt and your life, whether it be as bad as me, or maybe just some credit card debt that you want to get rid of, what are some things that you can do to start to remove that debt, and actually get ahead in life? Hey, I’m Ryan from OnProperty, helping you on your journey to financial freedom. I’m currently at the beautiful garden falls on the Sunshine Coast. And it’s taken me a lot of heartache, and a lot of hard work to get here. But I’m excited to share this story with you. I have been financially free through my businesses twice now been in extreme amount of debt and been able to pay that off. And I’m now saving towards my first property, which I should hopefully purchase this year. But if you’re in this situation like I was in when you’re in debt, how did I go about actually paying that off? and wiping that debt completely? Because I didn’t do what everyone told me I should do. I actually tackled this my own way in a way that was true to myself. And I’m obviously really happy with the result having cleared that debt in just two years, but not just cleared it but also created financial freedom through my businesses, again in that two year period. So what did I do that was different? And what can you take away from this? Well, the very first thing that I did was actually sat down and wrote down all of my debts, I lived in denial for a little while thinking, Okay, now I just need to get by, I was going through a married separation. So there’s a lot emotionally happening for me, I wasn’t ready to write down my debts and deal with that. So I just kind of swept it under the rug, didn’t think about it, and was just kind of going on in life. But one day, I remember sitting down in my dad’s garage, which was my office at the time, line by line, I went through every debt that I owed from existing debt that I had payment plans on to money that I owed family members to future tax that I would have to pay, which I knew was debt that just wasn’t quite jus just yet. I wrote it all down. And it was extremely overwhelming to realize that I was around $100,000 in debt, the exact figure I don’t remember. But I do remember that feeling of looking at that and just being like, I am absolutely screwed. There is zero way that I can get out of this. What the hell, how have I got myself into such a mess. But I sat with that overwhelm. And I sat with that fear and terror, and just kind of asked myself, okay, what now? It’s like, this is where you are, and accepting that this is where you are, was a big step for me and to just say, okay, pass, Ryan got you into this, as Ryan was a bit of an idiot. But this is you now, this is what you got to deal with? How are you going to get out of this. So I wrote down all the debts, I also wrote down all my assets and things that I could potentially sell in order to clear some of that debt. And I knew that I had businesses that I could sell and probably liquidate around about 50 to $60,000. But then I’d have to pay tax on that. So you kind of more looking at around maybe $40,000. So at least that took 100 grand down to 60 grand if I ever had to sell but that also kind of wiped the idea of selling my businesses, because it wasn’t even going to pay off my debt in full. So I realized I need to work my way out of this next step. After I wrote down all of my debts was I looked at all of them minimum required payments on those debts. So this was just to keep me afloat because at the time, my businesses had gone through a downturn, I knew I needed to build these back up again from scratch, what’s the minimum that I can pay on these debts so that I can stay afloat cash flow wise, that I can work out the next steps along the journey, which we’ll talk about soon. So what are the minimum required payments? What debts Do I need to have payment plans on now? What debts Can I delay so debts, for example that I had with my mom, I was able to talk to my mom and say, Mom, I can’t pay you back Right now I need to focus on debts that I have, like with the government, that’s a pretty serious debt. Can we delay this payment? And can I pay you back later? And she was very gracious to say, yes, that’s okay. And it was probably around 18 months until I started actually paying her back. So being able to delay some of those debts, putting minimum repayments on the other debts and stretching them out as much as possible. While isn’t ideal, from an interest standpoint, for me at that point in time was really important, because cash flow was tight, and I needed to build up my businesses. The next thing that I did was I looked for every area in my life to cut spending drastically, we are talking as much as you can cut spending, cut spending. So I moved back in with my dad, that was a big one phone bill, you know, I had $120 a month on phone, I moved to prepaid, which felt like I was going back to being a teenager, again, paying for prepaid and went to around $30 a month. on my phone there, I caught Netflix, all of those sorts of subscriptions that I didn’t need no gym membership or anything like that. Even my car, I really minimized down the insurance that I could, which probably meant taking a bit of a risk with a higher access. But I just was trying to cut my expenses, absolutely as much as possible. And along the journey, my car actually broke down and completely died, it was a ride off. And I didn’t buy a new car, I was super fortunate to be gifted a car by my partner’s family, an old little beat up car, it was a two door car, and to be driving around in that with three kids. So they’ve got to climb through the back. Look, it’s not ideal, but I needed to cut my expenses in order to pay off debt as quickly as possible. So really going through your life and looking for ways to cut those expenses, shopping it outtie, shopping smarter, not going out as much making coffee at home was the big one. Not traveling at all, coming up to the Sunshine Coast is one of my favorite things to do, and to do for work. And I just had to cut that out. Because spending 500 to $1,000 for a trip away just wasn’t something that I could do when I had so much debt. So I cut my spending drastically. And everyone told me Ryan, you need to get a real job. Now I was fortunate enough that I had businesses that were making me some passive income. So if I stopped working on the businesses, I’d still get some income coming in. Everyone told me go and get a high paying job in marketing, because that’s what I’m good at is internet marketing. And to be fair, I did go to a few job interviews and didn’t land any jobs. But I quickly realized that the way that I was going to get out of this was to actually build up my businesses and increase my income. So while I didn’t get a job, I did focus on increasing my income. And I realized for most people, the best way to increase your income is through your job through getting a promotion through asking your boss for a raise through moving to another company or building up your skills so that you’re more valuable. But increasing our income is absolutely key. For me, I didn’t get a job, I actually went and worked at minimum wage in an espresso bar. So I was on the till I learned how to barista. I was working three days a week 6am to 12pm, just to get that short term cash so that I could pay child support so that I could pay for food for my kids and the basic necessities that I had in life. So I really needed that short term cash. But at the same time, I was focusing on growing my income. So I’d work six to 12 at the cafe, and I’d go home, and then I’d work you know 1pm until sometimes 11pm. At night, sometimes I only worked for five or six. And then I’d get up in the morning and do it again. Thursday, Fridays, I had my kids I couldn’t work in the cafe. But I would work when they were at school, and then again when they were in bed, so constantly trying to grow my income. And that was what really enabled me to get out of debt. Now I’ve talked in the channel in the past about grow my income, how it was a long term process for the first year of work that I did, I basically got no return. But because of the way my business works, over time, you start to grow your income and get passive income. So I knew that this would work long term, I just had to believe in myself I had to put in the work. And it was hard doing those big long weeks getting a barista paycheck, which was not very much and then my business earning next to nothing, because I was just building the foundation of the business. So in the beginning, I nearly went bankrupt I was hemorrhaging cash. I was robbing from Peter to pay Paul. So basically borrowing from the future in order to pay debt now which just meant I was kind of in a downward cycle, but I knew Ever who grow my income, I could stop that downward cycle and eventually pay off my debt. And that’s that’s honestly, exactly what happened, there was bumps in the road, it took time to build up my income. But over time I really built up my income significantly. Got it over the six figure mark. And that’s what allowed me to pay off the debt. So quickly, I kept my expenses extremely low. And any money that came in from the business that I didn’t need to buy the basics like food, and petrol, and to pay for car insurance, and my $30, phone bill, anything that I didn’t need, went straight into savings or went straight into paying off debt. I work online. So having a good computer is key. I film YouTube videos, having a good camera is key. But for so long, I worked on an old iPhone that didn’t have that great camera, I worked on really bad old laptops that cost me you know, $200 to buy because they were 10 years old, that was so slow, but it just made it work. Because I didn’t have the money to invest in the things to increase my productivity. I just made it work. So after I increased my income, I tried as hard as possible not to increase my expenses. So I just kept living on a really tight budget and being frugal any extra money went to paying off debt. Or what I actually did was traded a buffer fund what I realized going through the business downturn in 2018, when I had no buffer fund, and was the reason that I got into so much debt in the first place was actually having a buff avant to give yourself time to work out a solution is so key, give me 12 months, and I can work out a solution to my finance problems and my income problems. But if I need to do it straight away, or within a month, that’s not going to happen. And so that’s what happened for me and why I got into so much debt, because things change really quickly under my nose didn’t expect to I was going through a separation. So expenses were extremely high paying for two houses, etc. And I just didn’t have the funds to buy me that buffer period. And so I had to get into debt in order to survive until I could cut my expenses and start to catch up on things again. So this time, rather than actually paying off the debt, I kept those minimum payment plans and the extra money that I earned went into a savings fund. So right now, technically, I’m not debt free, I still probably have around $50,000 worth of debt. But I actually have that money put aside as well, that I could pay off that debt in any point in time. But I have aggressive payment plans to pay off my debt. So by the end of the year, it’ll be completely paid off anyway. But what it does is it gives me about a 12 month buffer fun that if things happen and things change in my business, I could adjust those payments plans to stretch them out and make them longer. But also I’ve got that savings that I can then, okay, this will get me by while I work on growing my income again. So I didn’t pay off my debt all straightaway and leave myself with no buffer, I made sure to give myself a buffer. And now that I’m actually saving my deposit, I am considering just paying off the debt, wiping it out completely, because I’ve got a bit of a buffer fund in place anyway. So yeah, that is how I went from being 100 grand in debt, nearly bankrupt to actually paying it off in two years, and also achieving financial freedom through my business. I knew at the time when I was working on the business, if I go and get a job, I may pay off my debt in the same amount of time. But I won’t be set up financially as well to move forward and buy properties as if I grew my business. So I thought similar sort of timeline or it might take longer growing the business. But at the end, where will I be better off and I thought once I’m debt free, if I grow my business and passive income, I’m going to be better off at that point. I could go and get a job now and basically double my income if I wanted to. But I looked Yeah, into the future along the way. And the last thing that I would really add is I had good people around me that encouraged me. I told some people about my debt and they were really negative what because 100 grand, right? That’s gonna freak out. Pretty much everyone. But I had some people in my life like Ben, in particular, who was like, dude, 100 grand is nothing Do you want to trade with me hands a whole bunch of properties and has like good debt to buy assets. But he’s like, do you want to trade with me and trade your debt with me? He’s like, you can do this. You can smash it. My partner at the time. She was amazing. She was like, look into the future. Ryan in 10 years, will you still have this debt? And I was like, No, I won’t. And she’s like, stop stressing so much about it. So that really gave me mental clarity and the ability to push through. Having good people having good friends in your life was absolutely key. So if you’re in debt at the moment, hopefully this helps give you some encouragement that if I can come back from $100,000 worth of debt, then you can probably pay off some credit card debt. Go ahead and check out the video that I’ve done on how to completely take control of your finances. If you feel like you’ve got this debt, and you’re hemorrhaging cash and you just don’t know how to get on top of it, or even start really being able to make the repayments. There’s a really simple set method that I use in order to quickly gain control of my finances. So I wasn’t spending more than I earned, and that I could start actually paying off the debt. So go ahead, check out that video. If you’re in that position. I wish you the absolute best in your financial freedom journey. And until next time, stay positive