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The 4 Lessons We Learned While Digging Out of Debt

David Auten and John Schneider

We once had more than $51,000 in credit card debt. When we realized the gravity of our financial situation, we ignored our debt like a drunk uncle, worried about it like Woody Allen, talked about it like Oprah and were overwhelmed by it like the Denver Broncos in Super Bowl XLVIII (yes, we're still bitter). We ultimately gained focus like an Olympian that led to us becoming debt-free.

As we climbed out of debt, the following four facts became apparent to us. If you're on the path to becoming debt-free, these facts will prepare you for what's to come.

1. It's Easier to Get Into Debt Than Out of Debt

"Well, duh," you say. Hear us out. On several occasions after paying off our initial $51,000, we found ourselves in credit card debt again. Although our newer debt never came close to $51,000, we were still anti-investing. Whether it was an unforeseen event or poor money management, our debt didn't stay at $0 when it first hit $0. A few times over, we needed to climb out of debt again.

The reason is because we rewarded ourselves extravagantly and became fiscally lax. We felt we deserved better and more. We quickly adapted to living and spending unconsciously. We had to remember that each success required a resolve to embrace the principles that got us out of debt in the first place.

2. Debt-Free Consumers Are Targets

For us, getting out of debt was a lengthy process that required laser-like focus to make monthly payments, eliminate non-essential spending and cut out the credit cards. As those things happened, we improved our credit scores and became more creditworthy. (You can keep an eye on your credit by pulling your free annual credit reports at AnnualCreditReport.com or getting a free credit report card each month on Credit.com.)

Banks, credit card companies and lenders circled overheard. Our mail, email and voicemail boxes flooded with refinancing deals, "convenience checks" and pitches from telemarketers calling to sell low-interest credit offers that lasted long enough to be left to our heirs. (Maybe not.)

We had to exercise caution. We canceled all but one or two of our oldest credit cards and locked our remaining credit cards in a fireproof safe out of John's reach (John's short). We reduced our lines of credit on those cards.

Finally, we virtually and literally trashed all credit card offers immediately and called the Direct Marketing Association at 1-800-407-1088 to be removed from mailing lists. You can also go to www.DMAChoice.org to avoid the marketing associated with the phone line. Either method lets you cancel junk mail, including credit card offers — which has the dual effect of saving paper, if you're a paper-saver.

3. Saving Money Happens Disproportionally Faster Than Paying Off Debt

We remember our perpetual angst as we paid off our credit card debt. A nagging voice in our heads, like the back-beat of every Top 40 song, incessantly said, "You stink."

Once we paid off our credit card debt, that voice disappeared like an aging diva's. We began accumulating funds instead of watching them leave faster than they came. We built an emergency savings account and started to aggressively invest.

This is when the fun began! As we now accumulate money, we've become avid watchers of our savings and investment growth. Calculating our net worth each payday is better than calculating how much money we must put towards our debt.

Our limited mindset disappeared and an abundance mindset emerged. Our assets appreciate disproportionally faster than our debt depreciated. This is because our return is better with the elimination of 20%+ interest rates. This leads us to our last point.

4. Mo' Money, Mo' Money, Mo' Money

Immediately after we paid off our credit card debt, we didn't earn more money. We just kept more of the money we earned. It felt like we earned more because we didn't make interest payments. We gave ourselves a raise.

We no longer spend 10%-to-30% annually on interest payments for tired clothes, eaten food and visits to the Pacific. We no longer pay for the past. We spend cash on the present and invest in the future.

It's a great feeling to be back in the black. We've joined the Investing Class. When savings and investment growth aren't suppressed by fees, money and independence grow exponentially. You'll reach your debt-free goals and knowing these four facts ahead of time will make the journey better.

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