Debt Mindset Series: Turning Pain Into Triumph

Welcome to the 4th installment of the Debt Mindset Interview Series. This series is all about connecting with people throughout different stages of their debt repayment journey (from beginning through completion).

The most important ingredient you need to be able to make progress when paying off your debt is the right mindset which is unfortunately, something many people overlook (hence why they fail).

This week’s interview with Chris Peach will resonate with most of us as he describes the actions and mindset shift he had to make to ditch the expensive cars and lifestyle inflation in order to climb out of $52,000 in debt after once thinking debt wasn’t a major problem.

Chris Peach lives in Phoenix, AZ, with his wife and two kids. He is the founder of the site Money Peach and his #1 online program Awesome Money Course — teaching you how save, pay off debt, and take back control of your life and money. Chris wants to change personal finance from a boring necessity to instead showing how to finally make their money fun again!

Describe your debt situation including how much you have/had and how you accumulated it.

In 2011, after three years of marriage and a baby, we had accumulated $52k in consumer debt alone. It started off after we finished college, got married, and did what most normal people do; we leased a brand new BMW.

Once we added the new house to the BMW lease payment, the luxury vacations, the brand name clothing, the designer handbags, and inability to say “no” to anyone or anything, we were officially on the path to financial ruin.

When did you decide your debt was a problem? Did you have an ‘aha moment’ and what triggered it?

I am living proof that pain is the one true great motivator. We would have never thought we had a problem or that we were simply out of control with our money until the phone call I received from my wife.

She was checking out at the grocery store with our 10-month-old on her hip. After 3 of our bank cards had been declined and embarrassment had officially sunk in, she left all the groceries at the checkout and ran out ashamed. She called me in a panic and because she was pretty upset with her husband. We made way too much money to be completely broke.

Beyond the embarrassment, the fear, and the shame, what made things worse is the fact that we had a new baby to raise. That was the moment we sat at our kitchen table and told each other this: “We would never be in this position again”. That was our ‘aha moment.

Did you implement a specific strategy to start paying off your debt? Why did you use that strategy?

We used the debt snowball method – paying your debts off in the order of smallest balance to largest balance and ignoring interest rates. At first, it didn’t make sense to ignore the interest rates because mathematically we would be saving more money (in theory) by eliminating the highest interest debts first.

However, I also realized if we were doing the math correctly in the first place, there is no way we would be paying debt on a credit card at 24.99% interest. The debt snowball focuses on the behavior with paying off debt versus the math. Once you can correct your behavior with money, the math portion doesn’t seem nearly as important.

What were some obstacles you were/are faced with? How did you deal with the days when you lost motivation or slid back into your ‘old ways’?

We were hustling to sell everything, I was picking up side jobs, and we were doing anything we could think of to get out of debt. Half way through, I broke my lower leg and had to get 2 separate surgeries which put me on the couch for a month – no walking at all.

This was a big blow because it meant our side hustlin’ income was going away. However, it also forced us to be more creative with the ways we could save money.

Once I was back on my feet, we started to increase our income again while keeping our expenses low which catapulted us to pay off our debt even sooner. When it was all said and done, we paid off $52k in 7 months. Keep in mind when we started we were completely broke and living paycheck to paycheck.

What motivates you? What would you say to people who think they can’t get out of debt in an attempt to change their mindset?

As I said earlier, pain was and still is our greatest motivator. Every time I think about where we once were and where we could have ended up, I am so thankful we decided to sacrifice a lot to get to where we are today.

When I am meeting with a couple who doesn’t think they can ever get out of debt, I ask them one simple question: “What are your options when you stay in debt?”

You see, debt is a barrier in your life holding you back to reaching your goals in almost all areas of life. If you wanted to start a business, retire early, give more, spend more time at home, have a happy marriage, or travel the world, debt is going to stop you from doing any of those.

When people begin to realize that debt crushes your ability to live out life on your terms, then they start to envision what life would like with debt. Is the pain of sacrificing a lot right now to live the rest of your life free from financial burden worth it? Once the answer to that question becomes a definitive YES, the needle begins to move, and those who once believed it to be impossible, are now the ones doing the impossible.

Learn More About Chris

Visit MoneyPeach.com or follow me on Facebook and Twitter.