How I Got Out of Debt in Less Than Two Years

Hi, my name is Ben, and I’m a debtor. Or at least, I used to be. Two years ago I had $3,000 of credit card debt and didn’t know how to pay it off. I was lucky that I had some powerful things on my side in my fight against debt (more on this in a minute), but at the time I didn’t realize that. All I knew was that I had accumulated thousands of dollars of debt over the course of six months while I was transitioning to a new career and going through an extended job search.

To be honest, the debt had snuck up on me. I quit my full-time job in February with plenty of money saved up and lots of ideas for my new career (I was aiming to be a writer). I worked really hard for the next few months to find opportunities and build up my portfolio so I could get a full-time job doing what I loved. Five months later I got my dream job with ReadyForZero, a company that — fittingly for me — was creating tools to help people pay off debt. But I had not yet grappled with my debt.

Start by Changing Your Mindset

At the point when I finally got my dream job, I had used up my savings and was putting monthly expenses on my credit card. I was happy to have a job, but I was in denial about how much debt I’d racked up. The funny thing was, when I looked at that $3,000 number I didn’t feel a sense of urgency. It was partly because I was so focused on the new job, but the bigger reason was this: despite all logic, the number felt like something abstract when I looked at it on my credit card statement. It didn’t feel like it affected my daily life.

What needed to happen for me to start making progress was for me to change my perspective on the debt. And fortunately, that did happen. It happened gradually over a period of about three months. I half-heartedly tried to pay down the balance but continued to see that debt rolling over every month, with little change, as if it was quietly mocking me and my inconsequential payments. That’s when something snapped and I began to really want to have that debt gone.

Once that desire was burning inside me, my mindset changed and I realized I would have to be 100% committed and willing to do whatever it took to pay off this debt. Whether it meant no more going out to eat, no more movies, no more trips — until my debt was paid off. When my attitude toward my debt changed, that’s when my progress started for real.

Making a Plan Gives You Peace of Mind

That desire alone, though, was not enough. Or at least, that’s what I found to be true for me. I needed a plan that would specify exactly how I was going to get rid of this debt, because simply staring at the number on my statement and getting angry and paying extra was not making me feel like I was in control of the situation. I set up a plan using ReadyForZero and was able to see how much I could afford to pay every month, as well as the date I could be debt free.

For me, seeing the debt-free date and my monthly plan helped me quite a bit. The date I set my sights on was less than two years away. I set my monthly payment at $480 per month and resolved to pay it each and every month, which is why the plan is so important. Because if you just try to pay whatever you can, you’ll lose focus and get off track. Having the concrete plan with a specific number in mind keeps your eyes on the prize.

You Must Stay Motivated in the Long Run

Still, even with the right mindset and a good plan, staying motivated is going to be your biggest hurdle. There were a few tricks I used, after some trial and error, that kept me motivated. Hopefully some of these will work for you, too:

1. Share your goal with others. When you have debt you can sometimes feel all alone. Instead of stewing in it by yourself, share your goal of being debt free with loved ones. That way, they can give you encouragement during the hard times and celebrate your progress with you. Knowing that they are rooting for you will make it much more serious — and will make you less likely to give up.

2. Make a dream board. This one might sound silly to some of you, but if you try it you’ll see how powerful it is. Use a large cork-board or whiteboard and put pictures and other items on it to represent your goals and where you’re headed. For some reason, this really helps you stay focused on your positive vision and helps you avoid getting discouraged and quitting before you reach your goal.

3. Split up your goal into smaller ones. For a long-term debt repayment, you’ll need more small goals aside from your big picture goal. It may help to chunk your goals – for example, you could aim for paying of 25% of your debt by the end of this year. Whatever goal you choose, just make sure it’s small enough to feel reachable soon.

4. Give yourself small rewards. When you reach those small goals, give yourself a reward! It’s okay to celebrate a little — in fact, that makes it more fun, and means you’ll probably want to stick with it and keep going. To avoid spending a lot of money on your small rewards, plan them ahead of time and include them in your budget. That way, you can have a guilt-free restaurant meal, picnic, trip to the movie theatre, or whatever else you like!

Hopefully these tips will help you as much as they helped me. Getting out of debt is not easy but with some perseverance and support from friends and family you can definitely do it! If you need some further help, check out our Budgeting Tips and Credit Card Debt resource centers for tips on saving money and paying off your debt as fast as possible. Good luck!

Published or Updated: September 20, 2013
About Benjamin Feldman

Benjamin Feldman is a personal finance expert at ReadyForZero, a company that helps people pay off debt with free online tools and educational materials.

Comments

  1. Great story Ben. I found that getting out of debt comes down to two things: a plan and motivation. With these, you can really change your financial life.

  2. Great tips! I have a constellation of student loans, and tackling them loan by loan has helped me feel like I can get the entire balance paid off — eventually!

  3. Leo Ostapiv says:

    Well done Ben!
    Here is my approach to debt (extract from my home finances book actually)

    1. Mortgage: It’s okay if it’s a fixed-rate loan, and you can afford paying it through your foreseeable income.
    2. Student loans: This is the only one I disagree about in Dave Ramsey’s advice to “pay for education in cash.” There are no guarantees of a high-paying job after college, but most of the time, you do need a college degree to get a decent salary. There are a number of grants and scholarships to help you pay your tuition. And, there is always the option to work during college, like I did during my last year.
    With all that in mind, I would still take a student loan, if it’s a “go or don’t go to college” decision. I strongly believe in good education, since it’s not only about job prospects, but also about friends, knowledge, alumni networks, opportunities and vital life experience.
    3. Car and home electronics loans: Avoid these because no matter how attractive the advertising looks like, at the end of the day, you pay much more than the item’s cash price.
    4. Credit cards: Let me quote John, a blogger from Frugalrules.com: “Avoid Credit Card Debt Like the Plague.” In my opinion, credit-card issuers are legalized bootleggers of the 21st century. Just for the sake of clarity, I do respect honest bankers. It’s just that credit cards create irresponsible spending and consumption. You are basically spending money that you don’t have yet.

    .
    FAQ
    What is it so bad about using Credit card for rewards and bonuses if I don’t use credit money?
    Nothing. In big audit firm they say “Substance over from”. If you have own money on your card and use only them for shopping and getting rewards, then it is effectively a Debit card, even a technically it’s called Credit.
    I had my personal experience for 4 years with doing that, but the problem was I did used credit card for purchases, while covering all the debt by the end of the month. I have not paid any commissions, however I was living one month upfront of my income. So I finally closed it.

    Leo Ostapiv

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