I don’t mention it too often but one of the main reasons I started living frugally was because I didn’t want to get into another situation where I had to claim bankruptcy.

The process of claiming bankruptcy was eye-opening and frightening.

Frightening because the lawyer I hired to help me through this made it clear that some of my creditors may not want to be included in the bankruptcy and I would have to settle out of court with them, by that time I was worn down with phone calls I really didn’t want to deal with them ever again; Eye-opening because of how easy it was, back in 1998, to get all of it wiped out and I owed no one but the lawyer. Of course that is before I truly understood the impact my credit score tanking would have on my future for getting any kind of credit again in the next 10 years.

I knew that I would have to re-establish credit because of the bankruptcy, but someone telling you this and then going through it seem to be world's apart. Through the process of trying to re-establish credit, I came across more rejections or 30% interest rates that it scared me about my future.

That is when I realized I HAD to start living within my means. In Denver, it meant downsizing to as small an apartment as I could stand that was close enough to walk to work and getting rid of the car. It also meant using only the money I had on hand, cash.

Using only cash involved a few learning experiences:

1. Putting it off: I had to figure out my priorities, plan for emergencies and put off the other bills until later. My to do list was constantly in flux and I had to be patient.

2. Chasing my money: Every penny I spent was scrutinized to determine if this was the best way to spend it.

3. Creating Money: Some things that were put off until later, were asked for as gifts to save myself money. The ‘stuff’ in my home had little money signs on them for selling on eBay for extra money when times got tight.

4. Tightwad shopping: This is where I learned the art of dumpster diving and making other people's trash my treasures. The same is true with grocery shopping; I had it down pat when the staples would be on sale and how much to get to last me until the next round of sales. And any rebates or coupons that I found for things I already bought were not forgotten on the kitchen counter like before.

5. Advertising blinders: When you have a very tight budget to stay within and no credit to fall back on, you notice all the advertising that tells you how much more complete your life would be with a cell phone, new car or quick pizza delivery. It helped me become more powerful than I thought I could be at tuning it all out.

6. Limited giving: I made it clear to family that I had limited funds and asked for gift ideas that were under a certain range. Sometimes it meant going in together with someone else to buy a gift or giving a gift that was second-hand but looked new.

7. Power of ownership: There is nothing quite like being able to sleep in a bed or sit on a chair that you have paid for in cash and don’t still owe on to a nameless creditor.

Actually the power of ownership still gives me the shivers. To say to myself, I own it and it is mine, no one can take it back because I missed a payment. There were times I would pinch myself and have a goofy grin on my face because I was so happy.

As another anniversary of my bankruptcy nears, this shock to the system has diminished and the power of ownership now barely entices a grin, I not only want to remember, but need to remember the fear and frustration that debt caused me so I don’t do it again!


  1. Clair of Frugal Living Freedom // Wednesday, May 27, 2009 1:03:00 PM  

    Your 7 concepts and tips are all good ones. What I find curious is the number of people that don't consider following such tips as a normal course of their life. It seems if we did, we'd be much happier and have much less stress related to money.

    What could possibly be wrong with prioritizing purchases, making wise spending decisions, getting the best deals, ignoring advertisers, making certain you're okay before giving to others, and enjoying being debt free - all the time? It's a good way to stay far back from the "edge of debt."

    The biggest advantage that money offers us is the ability to choose. In other words, it provides us with options that allow us to exercise our freedom of choice.

    I enjoy freedom of choice, so I incorporate your 7 concepts and many others on a daily basis. This gives me greater freedom of choice, and keeps me from being financially "cornered."


  2. Lawrence @ CRB // Saturday, October 24, 2009 5:20:00 AM  

    Many people are scared to do so but establishing new credit is an absolute must after filing for bankruptcy. You'll have to expect high interest rates and bad terms but understand that these new tradelines aren't really to be used on a regular basis but rather used to demonstrate that you, as a consumer, can be responsible with these new tradelines. Once demonstrating that you can be responsible, you will start to get better interest rates and better terms. It just takes time and patience.