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Written By Colin Graves

Hey everyone!  Today, I’ve got a guest post written by my friend Chris, spreadsheet guru and blogger at Keep Thrifty.  In it, Chris writes about the importance of not just managing your debt, but destroying it!  Enjoy! 🙂

Let’s imagine something, shall we? Imagine you’re in your backyard with family or friends. There are small children running around and everyone is enjoying a nice cold beverage. The sun is shining. All of a sudden, a hornet lands on your drink and starts crawling inside.

Frustrating, right?

Oh well, you can get another drink. Five minutes later, one of the kids starts screaming and crying about getting stung.

The entire mood of your party changes. Everyone’s a bit on edge and every time a hornet flies by, people start squirming.

You grab a flyswatter and do your best to take care of the hornets as they come but they are downright relentless. Eventually you miss one and it gets back at you with a nasty sting on the cheek.

At this point, you decide to move the party inside and the day is all but ruined.

What would you do?

Whenever I find a hornet nest in my yard, the best word to describe how I feel is “offended”.

The nerve

This is my yard where my kids play and there’s no way I’m going to let these hornets hang around.

It’s time to get serious.

Everyone knows that you can’t exterminate a yard full of hornets by just swatting the ones you can see – you have to go for the nest and take them all out.

I get dressed up in long pants, a long shirt, with as little skin exposed as possible and I go straight for the nest, armed with my sure-fire hornet-killing spray.

Isn’t this Supposed to be a Post About Debt?

Sorry, I tend to get carried away with metaphors. Thanks for helping me get back to the point.

You’re right – this isn’t about hornets – it’s about debt.

They are similar though – both can be painful, both can ruin your day, and you need to be bold and direct to eliminate them.

But here’s one big difference between hornets and debt: you can stay inside and avoid the hornets.

Debt doesn’t stay in your backyard – it’s in your house, it’s in your car, it’s everywhere.

If you had a hornet nest in your living room or in the passenger seat of your car you wouldn’t just sit around and pretend like everything was ok.

You’d get serious and go nuclear to take them out.

So why would you treat debt any differently?

How to Go Nuclear on Your Debt

Now that I’ve got your attention, let’s figure out how to forge a path forward. Here’s a 4-point strategy to help you annihilate your debt:

The first three points focus on strategy and measurement. The last one is a mindset shift that can help you find the extra money to make debt destruction a reality.

   1. Start Tracking Your Net Worth:

Perhaps what you measure is what you get. More likely, what you measure is all you’ll get. What you don’t (or can’t) measure is lost.

H. Thomas Johnson

I didn’t start tracking our net worth until well into our debt payoff journey but I wish I would have started earlier.

Net Worth is a fairly simple concept: Add up the value of everything you own and then subtract out the balances of all your current debt. Whatever number is left is your net worth.

I use a simplified approach, since there would be a ton of work figuring out the value for every individual item we own (how much is a used toothbrush worth?).

I only include the value of our house, our savings and investments accounts (401k, IRAs, etc). Basically, I only include the items that keep or grow in value over time.

I then subtract out any debt we have. Thanks to some moves we made this year (dropping down to one car and selling my wife’s engagement ring), we’re down to just having our mortgage left.

Why bother with all the work of tracking net worth? Because people are much better at improving on things they can measure and net worth is the truest measure of your financial state.

Example 1: You own a $2 million house and have a $1.9 million mortgage. You lease 6 luxury cars and have $120,000 in credit card debt. Your net worth is negative $20,000 – and that doesn’t even count what you’re obliged to pay for your lease contracts.

Example 2: You own a $200,000 house and have a $160,000 mortgage. You drive a 15-year-old car with no loan on it and have $20,000 in student loan debt. Your net worth is $20,000.

In example 1, you may feel like you’re living the high life but secretly you’re being swarmed by debt hornets.

In the worst-case scenario, you could sell your house, pay off your mortgage and some of the credit card debt. Even then, you’d still owe $20,000.


In example 2, you are living reasonably and have fairly typical debt.

In your worst-case scenario here, you could sell your house, pay off your mortgage and student loan debt, and still have $20,000 to cover your living expenses while you figure things out.

Even in the worst-case scenario, you’d still be able to make things work.

Once you know your net worth, set some milestones to work towards. Every milestone you hit should be a celebration – you’re improving your financial situation!

  2. Pick your Debt Payoff Strategy:  

You’ll hear lots of debate about whether to tackle your debt using the “debt snowball” or the “debt avalanche”. Let’s go over each briefly so you can pick which one is right for you.

Debt Snowball: List out all your debt in order of smallest balance to biggest. Each month, make the minimum payments on each and apply as much extra money as you can to the smallest debt you have.The theory here is that you want to take advantage of small wins – every debt that you knock off the list is a little victory that you can use to build your excitement and momentum. As this builds, you can keep dedicated to your goal and eventually you’ll pay them all off.

Debt Avalanche: List out all your debt in order of highest interest rate to lowest. Each month, make the minimum payments on each and apply as much extra money as you can to the debt with the highest interest rate.

From a purely mathematical perspective, the debt avalanche is the most efficient method, but lots of people say it’s easier to stick with the debt snowball because you can build on small wins along the way.

My opinion?

Don’t stress about which one to choose – pick whichever one feels right – as long as you stick with it, you’re still taking out the hornet’s nest either way.

  3. Tracking Your Spending and Income:  

Tracking net worth gives you the milestones to shoot for and the progress indicator to show how you’re doing.The limitation though is that it doesn’t give you much of an idea of how to improve your situation. It just measures where you’re at.The other thing you really should track is your spending and income.If you don’t know what you make and what you spend, how can you find any extra money to pay down your debt faster?There are lots of great options out there for tracking – Automated tools like Mint orPersonal Capital, manual tracking tools like You Need a Budget or my tool, Thrifty, or you can just use a spreadsheet or pen and paper.

No matter what, you should be doing an inventory of what you earn and what you spend so you can start to identify where you might squeeze out a few more dollars to put toward your debt.

  4. Shift from “Wants” Buying into “Priorities” Buying:  

With young kids, one of the key parenting goals we have is to help our kids differentiate between wants and needs.Humans (big and small) are wired to think of everything as needs and this leads to all sorts of unfortunate behavior.  Example: Do I need a new laptop? This one is a few years old. I could get one that runs faster with a bigger screen and it’d really help with my blogging and software development.But do I actually need it?I’d like it; it’d be a purchase I’d enjoy.I want it, but I don’t need it.

New clothes? Not unless I’m running low.

New car? Not unless my current car is dead (and even then I should buy used; I don’t needa brand-new car)

Now that you’re tracking your spending, you should be able to assess where your money is going and find some opportunities for savings. Surely you don’t need Netflix, Hulu, Amazon Prime, Basic Cable, and HBO.

All of this said, you don’t have to live a life of complete depravation.

There’s a line above needs that can still work – but only if you’re being very deliberate in what wants you’re choosing to pay for.

As an example, we still have a few years left on our mortgage. We’re making aggressive pre-payments but we are still going on annual road-trips with our kids.

Travel with family is a priority, so we’re continuing to invest there. There’s plenty else we’ve cut in order to fuel our debt pay-down but the travel spending is something important to us regardless of our debt situation.


The Bright Future

So – you know where the debt hornet nest is. You know what gear you need and how to take it out. The next step is action.

Remember, once you get there, you’ve got a bright future, as Mystery Money Man covered in his post on Debt’s Silver Lining.

The financial discipline you develop in paying off your debt will make you an absolute rock star when it comes to getting to the next step – financial freedom.

So get out there and destroy that nest of debt.

Keep focused, keep hustling, and most of all, keep thrifty.

Chris’s goal is to bring his family to debt freedom by 2020. Learn more at Keep Thrifty, where Chris blogs about how they are getting there through frugality, minimalism, and a whole bunch of awesome spreadsheets.


  1. I too tend to get carried away with metaphors, Chris, but this is a good one! Those hornets always find the inside of my beer. One time I actually chugged and almost swallowed one.

    So perfect to look at debt like hornets at a party. Even if it’s just a couple, they’re relentless, get in your head and make it impossible to really enjoy yourself til they’re eradicated. Just like debt!

    Great read!

  2. I agree, debt is like hornets ?.

    They don’t play nice — they want totally take over of your time, freedom, peace of mind, and everything else in between.

    There’s one way to deal with them… total elimination. Great post, Chris! I like it lot.

  3. Thanks Adam! Not much worse than a bug in your beer!

    I once used the bottle opener on our grill to crack a beer open only to find that there was a hornet nest on the grill behind the panel the opener was attached to. Thankfully all of the stings were on my arms and hands but they probably got me 4-5 times. Needless to say, that night did not end well for the hornets.

  4. Great post, Chris. Reading this, it struck me how this is just not the message people get reading ordinary media. It is like a parallel universe! Is it possible that only the blogosphere preaches common sense and sanity to people on the topic of debt?! The message to spend is so ingrained in our culture, in our media. It is no wonder so many people have gotten themselves into so much trouble. We went with the snowball method. I think the mental aspect of it helped keep us motivated…

    • Thanks Linda. I’m totally with you on the fact that this message doesn’t really seem to be present other than the blogosphere and some good books. Mainstream media certainly hasn’t gotten on-board 🙂

      We actually went with the snowball method as well – even to the point of paying off our car loan which was 0.0% before tackling the mortgage. I know this is heresy in some of the PF circles but for us, the simplicity of being down to just one loan left was worth it. Now we can focus all our energy in one spot.

      • The psychology aspect can be an important factor. This is a bit different than the snowball/avalanche example, but someone I know has been successfully paying down large amounts of debt after many years. But they’ve also become very disciplined to save at the same time. He asked me recently if I thought he should take the money from his savings and pay off the remainder of his debt. He’s hesitant because he feels so good about the savings he’s accumulated, that he’s worried about losing momentum. I advised him to keep doing what he’s doing, keep the savings where it is while sticking to the debt repayment one month at a time. If he ever changes his mind, the savings are there to payoff the remainder of the debt.

  5. I never thought about our net worth when we were paying off the mortgage… it would be interested to see me do this in a parallel universe to see if it would have made any difference! Our motivation came from knowing the daily cost of our debt and wanting to stop banks making money off us in interest every month.

    If more people treated debt like they do hornets, irrespective of strategy, a lot more people would be out of debt a lot sooner, that’s for sure!

    • I agree Sarah, Chris used a perfect metaphor for this post! Regarding motivation, it amazes me how many people are ignorant to the sheer amount of interest they pay on debt over the years. Society has been programmed to only think ‘how much is the monthly payment?’ without considering long term interests costs. It’s sad how persuasive mass marketing has become.


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