Dear DTA, 

It’s my goal to get out of debt and retire debt-free. I have almost $380,000 in debt. I’ll be working until 100 at this rate. I am a single mother and have no idea how to get out of my situation. Regular bills, university costs, the purchase of my house, and a divorce got me here. I don’t have a lot of money and can’t afford much, so I have to start small and work up. Any help or advice would be appreciated.

-Joanna B.

Hi, Joanna.

Thanks for writing in.

We appreciate every reader out there, which is why we do our best to provide quality, actionable content. And it’s also why I’m taking the time to respond to you today.

Your situation is definitely tough, Joanna.

But I commend you for being honest about it. It sounds like you’re ready to confront past mistakes, correct your actions moving forward, and improve your future.

There are a number of ways you can go about this.

I can only give you some basic ideas because I’m not privy to your entire financial situation.

For instance, I don’t know about your age, income, or assets.

Also, the amount of debt you’re carrying is significant; however, I’m not sure how exactly that debt breaks down.

Before we get into some of these ideas, let me tell you a bit more about me.

I went from below broke at 27 years old to financially free at 33 – all on a very middle-class income. I know plenty about digging out of your own hole.

If you’re curious about how exactly that happened, make sure to read through my Early Retirement Blueprint.

Parts of that guide won’t necessarily apply to you, but the core of that Blueprint is all about putting yourself in a better financial position.

It’s about making radical and positive lifestyle changes. That translates pretty well here.

Now, if your debt is mostly unsecured debt that isn’t related to student loans, bankruptcy should be on your radar.

Bankruptcy is a legal status. Nothing more. Nothing less.

Sometimes we put ourselves in financial situations that aren’t realistically correctable, so that’s a legal status that potentially should be investigated.

But if your debt is instead largely a combination of mortgage debt and student loan debt, that wouldn’t really work.

Student loans are notoriously difficult to extinguish (other than paying them off). And the mortgage debt would simply be a symptom of whatever accommodation you’ve set yourself up with.

Regarding the latter, if this is the case, there are some options.

First, I’ll tell you that I’m not personally a fan of homeownership at all. Outside of a few markets in the US, I think most people are better off renting – even over the long run.

Not only are there the direct financial concerns to think about, but the lack of ownership responsibilities frees up a lot of resources (like time, money, and attention) that you could better direct toward opportunities to increase your income and wealth. A house is a huge liability that chains you down and sucks the life out of you.

I don’t know about your exact situation here, but selling your house and downsizing into a more modest rental could immediately eliminate a lot of debt, all while possibly putting you in a far more flexible and enjoyable life situation.

This could free you up to make more money, pursue opportunities in different locations, and/or melt away a lot of stress from your life.

One of the best choices I ever made was to forgo owning a home.

Renting a very modest condo in Florida throughout my journey to early retirement was a key part of my plan.

Reducing your other expenses across the board should obviously be pursued immediately, regardless of what you decide to do on the housing front.

I can tell you that I sold my car, moved to Florida to eliminate state income tax, and cut out the restaurant visits so that I could save more than 50% of my net income.

And I was working at a car dealership back then. So it’s not like I was rolling in the dough.

I also cut cable TV and exercised at home.

I did everything I could to create a large gap between income and expenses.

This freed up capital that I could use to pay debt and invest. 

Of course, I’m just sharing some methods I personally used to save money.

What will work best for you might differ.

But this should open your mind and get you thinking.

There are so many ways to save money. 

Regarding any student loan debt you may have, there are a variety of repayment plans that can be more favorably structured.

For example, there are income-based repayment options that, depending on your income, could drastically reduce your monthly payments. This is definitely worth looking into, if you haven’t already.

If you have credit card debt, a popular option to move quickly on this is to use what’s called the “snowball method”.

You first pay off as quickly as you can the cards with the smallest balances. And you continue to make minimum payments on the cards with the largest balances. You tackle one card at a time, closing them down as you go. This allows you to create as much momentum as possible, as fast as possible.

Whatever you do going forward, I think the most important thing to take away here is that you’ll have to make big lifestyle changes.

Input has a lot to say about output.

If you continue living as you were, you’ll continue to get the same results.

Dave Ramsey has a great quote that I’ll share with you:

“If you will live like no one else, later you can live like no one else.”

Start living like no one else today. Then you can later have options and freedom like no one else.

As unrealistic as it might now seem, Joanna, it’s possible that you could find yourself in a much better financial position sooner than you think.

And if/when you’re finally ready to invest your excess capital and get compound interest working for you, rather than against you, we have you covered.

My Blueprint talks quite a bit about investing.

Well, the investment strategy I used to retire in my early 30s is dividend growth investing.

By investing my excess capital into high-quality companies that pay me growing dividends, I can now literally live like no one else.

Fellow contributor Dave Van Knapp put together a great series of “lessons” that are designed to teach anyone the tenets of this investment strategy.

They’re his Dividend Growth Investing Lessons.

These lessons focus heavily on the stocks you can find on the Dividend Champions, Contenders, and Challengers list – a compilation of more than 800 US-listed stocks that have paid rising dividends each year for at least the last five consecutive years.

Plus, we provide compelling long-term dividend growth stock investment ideas – for free!

Undervalued Dividend Growth Stock of the Week by Jason FieberI write the Undervalued Dividend Growth Stock of the Week series.

Each Sunday, I discuss a high-quality dividend growth stock that appears to be undervalued.

And I often have my own money invested in these stocks. So I’m putting my money where my mouth is.

It might seem like an impossible road ahead of you.

But it’s not.

You just have to start making some aggressive moves. Today.

I wish you luck and success.

Jason Fieber

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Disclaimer: Jason Fieber is not a licensed financial advisor, tax professional, or stock broker. Please consult with a licensed investment professional before investing any of your money. If your money is not FDIC insured, it may decline in value. To protect the privacy of our readers, any names published in this article are under aliases. In addition, text may be edited, omitted or paraphrased for grammar or length.