How to Pay Off $30k in Debt

Financial writer MP Dunleavey details how she and her husband paid off $30,000 in debt. It took them over five years, but they did it. How? Not by winning the lottery or getting an inheritance, but by good, old-fashioned, tightening their financial belts. Here's what they did:

• Cut expenses.
• Budgeted, budgeted and re-budgeted.
• Identified and changed bad habits.
• Adjusted expectations for our lifestyle.
• Took in a roommate.
• Moved.
• Tripled and quadrupled our minimum credit card payments.
• Quit using the cards.
• Saved a cushion for emergencies.
• Relied on automatic payments.
• Switched to a superlow-interest card.
• Found ways to earn more money.
• Were honest with friends, family and ourselves about this priority.

In other words, they made more money and saved more money. Last I knew, these were the only two options for increasing the gap between income and expenses. The bigger the gap, the more you have to pay off debt. And the more you have, the faster that debt goes bye-bye. ;-)

Unfortunately, most people want a quick and easy solution to getting out of debt. I can't tell you the number of people I've counseled who wanted me to solve 10 to 20 years of bad financial habits (resulting in a mountain of debt) in a two-hour counseling session. They wanted me to give them the 1-2-3 step version of how they could keep doing what they had been doing and still get out of debt. At most, MAYBE they were willing to give up something and change their lifestyle for a month or two. Sorry, folks, it doesn't work that way. You have to create a surplus (and the bigger the better) to pay off your debt and often you have to scrape and claw to get that surplus. If your debt is big, it always requires massive changes and a willingness to sacrifice -- something not everyone's willing to do.

Dunleavey's piece illustrates these points -- that it's a hard-fought battle to get out of debt. Congrats to her for making the tough choices and sticking to them so she could get out of debt. I'm sure she's feeling great now.

Comments

[Eden]

I've paid off about half that much since starting my blog and my financial turnaround (almost a year and a half ago).

It really is easy in the sense of being easy to figure out what to do. The hard part is the effort and execution to follow through and stick with it.

[Studenomics]

I would consider paying off debt similar to losing weight. It took you many years to gain that weight, so chances are you will not lose in over night. In fact if it took you x amount of years to gain all that weight then it should technically take more than x amount of years to lose it all. This is exactly how debt elimination works. It took you many years of careless spending, maxing out credit cards, and not tracking your expenses to get you where you are today. Now once you realize the situation you are in you must take control of your spending and get serious about your finances.

[Nicki]

For certain, there is nothing glamorous in the journey to get out of debt, but most things worth doing require work and make the outcome that much more rewarding.

[rdub98]

I see two things that have contributed to the skyrocketing personal debt people have: 1)materialism and 2) immediate gratification.

Those two things cause people to spend out of control. Those same two things are the reason more and more people CAN'T get out of debt. The habits that these people create based on those two things are so ingrained in their lifestyle, it is almost like trying to quit smoking (or any other dangerous habit).

Unfortunately, my family is included in that group of people, but we are changing our habits (and making financial RULES) which is really helping us complete our "financial detox". The good thing about it is that we have very little debt in relation to our income, but our spending is putting a damper on our savings which is where we are trying to improve. I have found it fairly easy to put the kibosh on my materialistic tendencies because I was never really that way to begin with, but my wife is a little slower to change her evil ways. ;-)

Good luck to everyone who has set financial goals for 2009 (I'm not going to call them resolutions).

[thomas]

yeah, money and weight have the same answer to be successful. In money you spend less than you earn and in weight loss you burn more calories than you take in. Guaranteed success.

[debt free]

Whether you have the intentions of lowering your current credit card interest rates or want to transfer your balance to a different credit card, there is a lot of money that can be saved by having low interest rates. By paying a lower interest rate on your credit card, it allows you to focus more on the principal balance. The ending result will be a lower total balance when you receive the bill in the mail.

[Be Debt Free]

Many people have been taught that you cannot get ahead without debt. We are also inundated with advertising telling us we can have anything we want. All we need to do is put it on our credit card.