The back story

So, things got rough in about 2009.  I discovered that I was heavily in debt, with very little to show for it.  I had some interesting discussions at home about this.  The result of the discussion was that the responsibility to manage the bills shifted to me now.  I decided to pay off the debt.

Start Playing Defense, make a budget

So, I dove in and made a plan on a spreadsheet to track our cash flow each month including paydays for the month and a list of  every monthly payment amount, due date, and balance.   Then I assigned each one of those payments to a payday for that month to try to make sure things got paid with some money left.   I listened to Dave Ramsey quite a bit at the time, and was applying the “debt snowball” to my plan.  Things were going OK after about 3 months and my confidence was improving that we would have this mess cleared up in about 3 years.  Well, just about that time, I was notified that everyone in our company who made more than $50K per year would be getting a pay cut.   If you understand how the debt snowball works, its easy to see that any decrease in your income can really extend the payoff plan for your debt, so you have to take action immediately or change your plan.

Start Playing Offense-Immediate actions!

Deal with lenders

The day after I found out about my pay cut, I made a list of all the credit cards I had, and contacted each of those companies to tell them about my salary cut, and try to work on a plan to reduce interest and minimum payment requirements so I could pay off faster or at least stay current if I received another pay cut in the future.  Some of the credit card companies were very receptive, and some tried to sell me credit counseling services, even though I was current on all my accounts and merely wanted to discuss options to change the terms of the account.  I will tell you that this exercise gave me extreme clarity about which companies I would pay first if my finances took another hit, and which companies would be at the back of the line.

Increase your income

That night, I made a list of every person I had ever worked with who might be able to use me for some project work.  I also went online looking for cold-call leads in Craigslist for software  and computer gigs.  The following day, I contacted everyone on my list during my lunch break.  I need to get another income source so I am protected from my employer’s decisions to reduce my pay.

Follow your gut, and believe in your plan

When asked me how I was going to grow a consulting business this way…working on it very part time, starting from zero, it seemed like something unlikely to succeed.  It may have been false confidence to cover my frustration at the situation, or even fear because of how vulnerable I felt after getting my pay cut with no warning.  Regardless of the motivation, I answered this:  “I will seek out 10 new clients this year that will hire me to do work.  Of those 10 clients, 2 will be worth doing business with a second time.  While I am doing repeat business with those 2 clients, I will seek out 10 more clients that will hire me to do work for them, and 2 of those will be worth doing business with again.  In 3 years, I will have 5 or 6 decent clients, or 2 really good, steady clients and will have 30% or more of my income provided by consulting work.”  I do not know where that answer came from, but it seemed to be percolating in me for some time, and just came out at that moment.

Outcomes from the plan

Growing the consulting business actually worked!  And pretty closely to what I planned!  I was making some good money.  Did I do anything wrong?  You bet I did.   In hindsight, I lost a bit of my focus on paying off the bills as fast as possible, and for the first time I was able to do a few extra nice things with my family.  In hindsight, I probably felt excited that my entrepreneurial activities were letting me keep up a lifestyle and I did not mind working if it protected my kids from what I considered to be pain or sacrifice.  The result is that I stretched out my over-working period to about 5 years instead of the original plan of 3.

Lessons Learned in Hindsight

What should I have done?  I should have cut our activities, sold more of our belongings, and cut out luxury things much more aggressively so that I could pay things off in no more than 2 years.  I think that any mature adult can change their habits for 2 years to achieve a goal.  After 2 years though, something happens.  In that third year, your schedule and work habits start to change you.  The excessive work starts to feel normal.  The time spent working instead of taking downtime with your family and friends starts to make your relationships a little less warm and close.  You also become less patient with people, because you really do not have time for a lot of nonsense.

After 4 years, I wondered at times if I am going to achieve the original goal at all, but I could not afford to stop the crazy schedule. I had way too many irons in the fire and I was used to having a lot of extra money in the cash flow.  I did not feel like I could afford to stop working so much, as it took a long time to get this consulting business going.  I noticed that I did not laugh anymore.  I also did not cry.  I just worked.

During this time frame, I worked a day job in excess of 45 hours per week (sometimes 55-60 hours for day job), plus I had multiple, mostly solo projects running. This required an additional 15-30 hours every week of additional time.  So for almost 5 years, I had been working an average of 60-70 hours a week, while not missing my kids sporting events, and eating dinner at home most nights.  My sleep was very bad during this time, I abused coffee in a grotesque manner, and drank a bit too much on the late nights.  I did not drink to get drunk or lacked control, its just that I went from drinking maybe 2 beers a month most of my adult life to drinking too many nights while finishing the work.  I was numbing whatever I was feeling so I could finish this one last cycle of projects.

When I hit the 5th year, I started firing my clients, unless I loved what I was doing for them, or the bill rate was very high and I could not resist.  I started to change my focus away from giving myself consulting jobs to do, and toward finding a business that would scale better than me working 24 hours a day.

I did the best I could given my experience and self-awareness at the time, but if I had to do it over again, I would have cut everything out of my lifestyle and simplified first….then I would have worked my ass off for a much shorter time to fix my money problems.  I would love to be able to take my 10 and 7 year old kids camping one more weekend, but they are 15 and 12 now, and you never get that time back.  This is not a pity party either…I was there for my kids, and I had to pay off the bills while I was able to work so much, but I would have done it differently knowing what I know now.  At the time of writing this, I am still waiting for my internal creativity and natural fire to return to me.  I am surrounding myself with people I like being around, doing more things I like, and taking time to feel all the things I stuffed down and worked through for all of those years.