Getting Out of Debt

120k in Debt to 90k Net Worth While Having Two Kids



Full disclaimer and why I debated not even writing this article. About 50% of our debt repayment and following increase in investments comes from one stock pick. All your eggs in one basket type of thing. The worst thing you could do when playing in the stock market.  And that’s why I almost did not write this article.

Why did I change my mind? I decided to tell my story because if I wouldn’t of put all my money on that one stock, I would of blown it all anyway. This was my entry into investing.  Although at that point it was more like gambling.  So just the fact that I started investing and trading myself, whether right or wrong, it still lead me on the path to financial independence.

Should you do what I did? Absolutely not. You should always have a balanced and diversified portfolio to mitigate risk. Bottom line, if I would of started off the safe way our net worth would still be closer to 0, which is far better than negative 120k. Still not to bad for a 4 year period in which our two children where born.

So now that that’s out of the way….

The Build Up

How did we end up with a little over 120k in debt? Very slowly and without even realizing it. We just did what everybody else was doing. Being “normal”.

  • Using our credit cards like they where magical free passes to get whatever we wanted.
  • Eating out whenever we felt like it with absolutely no remorse.
  • Cashing out investments to buy a motorcycle…. Yes I actually did this. In my defence, it did help me land my wife.
  • Doing groceries and not even knowing or caring what the total was.
  • Paying the minimum payments on 10 year old student loans, because hey, you can claim the interest right?
  • Buying a house way out of our price range with a 0% downpayment over 40 year mortgage.
  • Financing a brand new hot tub because the dealer “gave us an amazing trade in for our old leaky one”.
  • Buying a brand new truck because we “needed” one.
  • May as well buy a camper to pull behind the truck right?
  • The list goes on….. you get the point.

Any of these sound familiar?

We only really started paying attention after our first son was born. We wanted my wife to be able to stay home with him as much as possible, so we started looking at ways to save money so she could drop down to part time work after her year of maternal leave.

That’s when we added everything up….. can you say Wake up call! Wow, we couldn’t believe it. And that’s where our journey to Financial Independence started.

Getting Out of Debt

At first, we looked at everything as monthly payments. We made a budget and figured out what my wife would have to work for us to cover the bills. Every payment we could get rid of would increase her time with our son.

So first things first, we sold everything we didn’t “need”.  House(we were moving anyway), camper, hot tub, second vehicle and utility trailer all gone along with their payments. We even made enough money to pay off the rest of our truck. Yea yea I know, we should of sold it and bought something less expensive but we didn’t.  More on that in a different article.

That was a great start. Not only did we eliminate most of our payments, we cleared a lot of the negative equity we had. We were on a roll.

The Big 3

Shelter- Renting Instead of Owning

It just so happened that we were moving to a different city that year, so we were selling the house regardless. Since we didn’t win the house lottery when we sold, we decided to rent a place close to my new job instead of buying.  At least until our debt was cleared. At the time, this was the best option for us.  Here’s why.

We were able to rent a place within 30 min walking distance of my work for 500$ less than a mortgage with property taxes would of cost us monthly. That’s 6000$ a year! Pretty good way to save for that 20% down payment I think. And, for the time being, we won’t incur any maintenance costs while we save.

I’m not saying renting is better than buying. Every situation is different and you have to weigh the options. This is what is currently working for us.  By the time we are ready to buy we will have more than enough for a 20% downpayment.

Transportation- Going Down to One Vehicle

Location location location. This was very important when we moved. We wanted to go down to one vehicle and this was the only way to do it.

We rented close to my work because I would be the one driving the most as my wife was going to keep working part time to stay home with the kids.

Within 5k(3m) of work, it takes me a half hour to walk or ten minutes to bike. I estimate I save approximately 20$ a month in gas by leaving the truck at home. 20$ not sound like a lot? It’s really not.  But remember that’s because I chose to live close to work. My old house was 4x that distance. So really I’m actually saving approximately 80$ to 100$ a month in gas and I’m saving the same in insurance. What about maintenance cost? Time and money? The way I see it, I’m saving around 300$ a month by not having a second vehicle. Is it accurate? I think for my situation it is. But that’s up for you to decide.

Remember, “Vehicles burn money and make you fat, bikes burn fat and save you money”

Food- Eating at Home

Meal planning is key. Especially with kids. If you’ve had a long hectic day and you suddenly realize it’s diner time and you didn’t have a plan…. chances are you’ll be getting take out. Do we always stick to it? No. It’s not always easy but we try the best we can.

A quick fix is to take ten minutes and write down your 7 most common meals and keep them in your phone. That way if you end up going out for groceries and didn’t make a plan for the week, just shop for those 7 meals. Done.  Just cook enough for leftovers for lunch the next day.  We also keep the same list on the side of the fridge for a quick glance.

If you eat out a lot, start adding up the receipts for a month.  You’ll be disgusted how much it costs.

And finally…


Up until two years ago, all we had was basic mutual fund accounts through a broker who cared more about his commission than our net worth. That all changed when I became friends with someone I am very grateful to have met. He was big into investing and stock buying and showed me how easy it was to take control of my own finances.

I won’t go too deep into it because there’s way to much to cover here. The short version; I read all I could about ETF’s, stocks and investing and jumped right in with an online brokerage account. To this day I’m constantly reading and learning. The biggest thing was to just get started. Once you start you can’t stop.

The key takeaway here is to take control.  Learn as much as you can about investing.  You can still have an advisor but if you know what he’s talking about, you’ll know if he’s one of the good ones.

The Blog that Changed my Life

Up until December 2014 I thought we were doing pretty good… That’s when I stumbled upon the Mr. Money Mustache blog. It opened my eyes to a world of waste I was oblivious too all these years. I do plan on writing a whole post to review his blog as I am forever grateful for the wealth of information he has shared.

For now, all I’ll say is this. Go to the first post and read the whole blog like a book. You don’t need to agree 100% with everything, but it’ll definitely give you a boost in your finances and life philosophy.

Now with our family of 4, we spend less money than when it was just the two of us.

Most of our savings have actually accumulated in the 6 months after reading MMM. Seriously, everyone needs to read his entire blog.


So that’s our story in a nutshell. After taking care of the big three;

  • Shelter
  • Transportation
  • Food

The debt started to melt away and we just redirected our efforts towards investing.

What has been your biggest win in the war against debt? If you have any winning strategies, be sure to share them in the comments. Consumer debt is a plague that needs to be eradicated. Together we can achieve financial independence!


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6 comments for “Getting Out of Debt

  1. May 25, 2015 at 10:15 am

    Very cool, MSR. Having a net worth of $90k must be so envigorating compared to where you were at 4 years ago.

    My war against debt included my house mortgage. I’m happy to say that I won, and am now enjoying a 100% payment free life. 🙂 Don’t feel bad about renting. Sounds smart for your situation! Keep up the awesome work!
    Derek@LifeAndMyFinances recently posted…5 Ways to Squeeze More Out of Your BudgetMy Profile

    • May 25, 2015 at 10:23 am

      Thanks Derek! Yes, being mortgage free would definitely be a great feeling. Thanks for stopping by, your blog is one of my regular stops, very inspiring.

  2. Ginna
    May 28, 2015 at 2:22 pm

    Where do you suggest a person goes to start looking into investing in their own. I have used a financial advisor in the past but now that I’m in my 30’s I feel the pinch to get all the money I can out of any investments. After reading your blog as well as “Life and My Finances” I’m really rethinking the route I was using. I feel like I’m lost in the woods with no compass when it comes to investing.

    • May 30, 2015 at 9:09 am

      Gina that’s great that you want to take control. That’s the first step. The next step is to educate yourself. For Canadians, I recommend reading “Guide to the perfect portfolio” by Dan Bortolotti. Then you find a discount brokerage like Questrade or TD Waterhouse and open an account. But start with the book and let me know if you have any more questions. Good luck on your journey to Financial Freedom!
      MrSelfReliance recently posted…Getting Out of DebtMy Profile

  3. May 30, 2015 at 2:31 am

    Just an awesome post Mr SR – Thanks for opening up and sharing your personal background story, it really helps to read about the true stories of real people like you who got out of debt and are giving others hope!
    Lisa Jordie recently posted…How to Get a Location Independent JobMy Profile

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