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Louise Wallace and her husband have changed their lifestyle to start repaying more than $50,000 in non-mortgage debt.

Louise Wallace handout

On Jan. 1, Louise Wallace took her first step down the long road toward debt freedom: She drafted a budget.

"Nothing fancy. Just a list of my revenue and my expenses so I can see where the money comes in and where the money goes out," she said in a post on her blog, which launched New Year's Day.

Every day since then, she has updated 365 Debt Defying Acts with various ways she has found to curb her family's spending and chip away at their debt. "I've made a daily commitment to something that was once so overwhelming."

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The overwhelming thing Ms. Wallace is referring to is the $52,200 in non-mortgage debt she and her husband had slowly accumulated. The 47-year-old small business owner and her husband, who live in Salmon Arm, B.C. with their two sons, also refinanced their home. They bought it in 2001 for $94,000 and now have a mortgage of $217,000.

"All of this borrowing – it kind of sneaks up on you," Ms. Wallace said.

Ms. Wallace's debt woes might sound familiar to small business owners. Her marketing, advertising and design company, which employs four people, has been growing its sales between 10 and 15 per cent a year.

To fund that growth, they needed access to capital. Because their business was too small to qualify for a traditional business loan or line of credit from financial institutions, she says they used a personal line of credit and credit cards, as well as the money from refinancing their home. "In a way, we became our own lenders. That's where we got into trouble."

Late last year, they lost a client who had been instrumental in boosting the company's cash flow. "All of a sudden, I had no wiggle room left. I realized this debt was like a runaway train. And I needed to push this train back into the station."

Ms. Wallace, who has an undergraduate degree in economics and a masters in publishing, decided it was time to educate herself about money and repay the debt. There were, of course, no easy answers.

She and her husband slashed their salaries in half, reduced their household expenses and eliminated almost all of their discretionary spending. That means no eating out on Friday nights, no buying gifts and no annual May long weekend camping trip with friends. Instead, they have had to drum up ways to save money. They visit consignment stores, buy groceries on sale, and repair old articles of clothing instead of buying new ones. Along the way, they have made some surprising discoveries – like dining on pancakes at home can be fun.

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Sandi Martin, a fee-only financial planner who works in the Ontario town of Gravenhurst, says many small business owners she works with struggle to access capital and end up borrowing against their personal homes. "For business owners, the line between business money and personal money often blurs," she says.

In her experience, many people think that because they can refinance their debt or make the minimum payments, they have a handle on it. "Unless they run into a shock, they don't even realize how close to the danger line they are. And by then, it is too late to put measures in place to avoid it."

The key to repaying the debt is to maintain that sense of urgency, Ms. Martin says. "Very often, people experience debt and budget fatigue, somewhere around 18 months into extreme frugality, especially if they feel like the goal is really far away."

For Ms. Wallace, the financial changes are paying off. By July 1, she and her husband will have lowered their debt load by around 10 per cent to $46,800. "It will still take two to three years but we've made good progress and have turned the momentum around from debt to savings," Ms. Wallace says. "But really, this is about changing our lifestyle, about how we live."

Some of the changes she has made are holding off on upgrading her phone, air drying her laundry, filing taxes on time, and on a more philosophical note, being happy with what she has. On her blog, Ms. Wallace invites others to make a daily debt-defying act until they too are debt-free.

Here is her seven-step pledge:

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1. Evaluate every purchase. Is it a want or a need? If it's a need, ask yourself, how much do I need and when do I need it. If it's a want, postpone it until your cash flow can easily meet your needs.

2. Seek independent advice. Get second opinions. Ask for quotes. Never bank alone.

3. Try saving, even if it's only a tiny bit at a time. The more you save now, the less you need to save later. It's not about the amount – it's about the commitment.

4. Resist reward. Sometimes the best efforts to save are undone by a moment of weakness. Stay strong.

5. Avoid envy. Protect yourself from the culture of excess.

6. Maintain what you've got. Your home, your car, your assets, yourself. Neglect is a form of debt.

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7. Be fearless and think big. You're going to need to believe in yourself.

Ms. Wallace believes many Canadians are overwhelmed by debt. "Banks are packaging and promoting debt, and we are buying it. But these people who are in the debt, they are not part of the dialogue."

She sees her blog as an informal place where people can connect and talk through their financial problems, without feeling embarrassed or ashamed. "I did not set out to be the poster child for debt, but if I have to be – so be it. Since so many of us have it, we really need to start talking about debt."

If you have gotten out of debt and want to share your story with Globe readers, click here.

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