This guest post from Ian is part of the “reader stories” feature here at Get Rich Slowly. Some reader stories contain general “how I did X” advice, and others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity, and with all sorts of incomes. I think this story offers an interesting contrast to last week’s story.

I used to think that a $40 per month finance charge was a reasonable cost for the credit card companies allowing me to carry a balance of greater than $3000 dollars. How naïve I was! In the last two years I’ve turned my finances and my attitudes towards money around dramatically.

Two years ago, I had more than $4500 in credit card debt, two auto loans, and a snowmobile loan. [J.D.'s note: A snowmobile loan!!!!] In the last two years I’ve eliminated credit card debt, paid off my all my non-mortgage loans, built a sizable emergency fund, and increased my investment contributions. It wasn’t just frugality, debt snowballs, and coupon clipping that helped me achieve this. I made a tough decision to dramatically alter my living situation in order to lower my expenses, which allowed me to reduce debt and build wealth.

Over my head
In 2005, I bought my first house. It’s a nice big house in a desirable neighborhood of a college town. It was certainly more house than I could afford at the time. For the next three years, I lived at the house and rented rooms to friends. Even with a little income from renting rooms out, I still paid a significant portion of the mortgage myself. Between mortgage, utilities, and upkeep, my living expenses were sometimes greater than 40% of my monthly take-home pay. This burden made paying off debt and living within my means challenging.

In late summer of 2008, while rafting with a good friend, he mentioned that his mother-in-law was looking for a tenant for a house she recently bought — she would be retiring and moving in within the next two years. She wouldn’t be asking for very much rent, but the catch was that it would be undergoing a major remodel before she moved in. She wanted someone she knew and could trust to keep an eye on things. My friend asked me if this is something I’d be interested in.

I gave the proposition a lot of thought. It would mean completely moving out of my house and renting it out. This made me nervous; I didn’t have aspirations to be a landlord. The house I’d be moving to is a nice place, but I really enjoyed my own home for so many reasons, and the thought of moving made me feel like I’d be giving up a part of myself. However, after geeking out, making a spreadsheet and crunching the numbers, I realized I could reduce my living expenses by nearly $600 a month.

Fortunately, my house is in a desirable neighborhood of a college town. Also, since I allow pets, finding renters wasn’t a problem. With all of this happening right before the start of a semester, I had the place rented out in just a couple of weeks. I completely moved within a weekend. To lower housing costs even more, I brought a roommate with me to split the already cheap rent.

Out from under
I moved in and everything was going great. I starting to chip away at debt and put a few bucks aside. Also, renting out my house was proving to be pretty easy. I was lucky to find good renters, and they were happy with the fact that I’d fix things immediately if something went wrong. I was on a roll. Then, after six months, the contractor called to discuss the upcoming remodel.

The remodel was long and tried my patience. We had a temporary sink, and our kitchen consisted of a hot plate and microwave. The backyard was completely torn up. Unexpected power outages and utility shut-offs became the norm. Contractors were in and out all the time — and they still are with re-work and additional projects. Despite all the hassle and inconvenience, this temporary change has been extremely worthwhile. In just 18 months I’ve eliminated all my consumer debt, auto loans, personal loans, built over $8,000 dollars in savings, and increased my 401(k) and Roth contributions. And I just paid for a recent trip to New Zealand in cash.

I’ll be moving out next month, and not back in to the house I own. I’ll keep renting out my house and will be moving in to a place with a higher rent, but without a major remodel looming ahead. These 18 months have helped me to dramatically turn things around financially. Even if my living expenses increase in the next few months, this experience has helped me forge strong habits for saving and managing my money.

I encourage everyone to take a little leap of faith, and perhaps do something a little unconventional to help turn your financial situation around.

Reminder: This is a story from one of your fellow readers. Please be nice. After nearly a decade of blogging, I have a thick skin, but it can be scary to put your story out in public for the first time. Remember that this guest author isn’t a professional writer, and is just learning about money like you are.

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