My story begins with a little debt and a lot of ignorance. I had managed to get into a stable situation accounting-wise, but was unable to save any money. My goal was to get out of my appartment and into a house, but I didn't believe that it was possible to do so unless my income increased dramatically - that belief turned out to be a false assumption. On my way home from work one day, I was listening to an interview of a financial adviser who was giving tips about how to become wealthy. One of the tips was in the form of a statistic that, on average, "the wealthy" saved about 10% of their income. I thought "that's great, but I don't have anything left over to save". The interview went on and included what was to be the turning point for me - most people do not realize where their money goes.
I was incredulous, but intrigued, so I made a list of all of my bills and found that my they were barely over 2/3 of my take home pay. Not to be outdone, I tried to think of everything I spent money on - lunch, gas, average monthly car repairs, household goods, movies, eating out, etc. As the total began to approach my income, I began to notice a trend - not only did I not know where I had spent my money, a few hundred dollars a month of it were unecessary. So, I compiled my expenses and saw (after considering everything I truly needed to live) that I could have a surplus and allow myself a little pocket money each week. Furthermore, if I paid off those few debts I had, I could save even more. In fact, I would have enough left over that, including what I paid for rent, I could afford a mortgage.
To enact my plan, I decided that I needed simple system to keep me honest. Bills were paid by check, everyday necessities were paid by credit card, and everything else was cash. I will note, at this point, that I did not have any credit card debt and if I had any, I would have stopped using it until the balance could be paid off monthly - I believe this to be a very important point. Lastly, I signed up for my company's 401k - my contribution was up to the percentage they would match. All surplus money went to paying off debt.
After 2.5 years of following my plan, I was debt free with no savings, but a financial statement that was a few hundred dollars per month in the black and about $7500 worth of 401k. I had good credit because I had no debts and was timely with my bills. More importantly, I felt great. I was in control of my financial situation and was ready to move on the the next phase of my plan - home ownership.
Since I could withdraw 401k funds for a downpayment on a first home without penalty, I found a home to buy and bought it. I now had no savings, no retirement funds, and very little monthly surplus - that's ok, I was young and willing to work any kind of job(s) to get by. I just continued living with my system of check, credit card, and cash. After a few years, my income had increased to the point (and interest rates lowered) that I could refinance to a 15 year mortgage. And continuing the trend, for every increase I got, I paid towards principal. I purchased the house in 2000 and will be throwing my mortgage burning party in 2010.
Although my story could end here, there is something I would like to say about what this process does and what I have learned while following it.
I began in a chaotic state of ignorance - tossed about by the chaos around me. I knew I wanted it to change, but I didn't know how because my actions didn't match my goal - the goal of home ownership was followed by the action of blaming my financial situation on my income. I never bothered to question myself about what I was doing or why I was doing it. I lucked out when I heard that interview because otherwise, I might never have thought to question the results of my actions. It's very important for us to look at what we want and actively measure how our actions help us to achieve things. If we do otherwise, we will never know if what we are doing is working and we will blame everything but ourselves for our problems. I think this is the essence of misery. The alternative is that we take responsibility and do the best we can regardless of what gets in our way. Even when failure comes, we will be able to see it, change behavior, and measure the results again - yet reducing ignorance and increasing effectiveness. No one can be called ignorant who always seeks to root ignorance out.
Enough philosophy - I hope some people get inspired or are appropriately catalyzed to change their own situation. It does work. It can take a lot of time, but once you stop thinking about it, you'll begin to think about other stuff and one day you'll find yourself in a better place with all of this self-determination and stability and you'll look bad and think that it wasn't so bad and that it looks to be getting lots better.