:::: MENU ::::

My Debt Reduction Story


This is a guest post from reader Jennifer who is 32 years old, married, with no children, 2 dogs and a cat. She lives in a rural part of Virginia and just started her debt reduction in February 2012.

Debt…A monosyllabic, 4 lettered word, such a small word, but can get you into so much trouble. Like most Americans, I assumed that carrying debt was just a way of life. I graduated from college with debt, bought a brand new vehicle, bought a house 2 years after graduating from college and just assumed that I would always be in debt for the rest of my life.

Fast forward 5 years, by this time I’ve paid off my vehicle (affectionately named Eleanor), married and acquired 2 dogs and 1 cat. Although I loved my little house we decided to sell and buy a larger house with a little land. Luck would have it that we found a foreclosure! The house was originally for sale for $250k; not really in our price range. The sellers kept dropping the price; or rather Freddie Mac and they dropped it into our price range. We put in an offer, it was accepted, and with the money we made off the sale of my house; we were approved for a loan of $169K. Husband’s car goes kaput and we have to get him a new one, a new loan of $17K. My student loan was originally $12k, but I had whittled it down to $6K.

Now with all my rambling from above, are you keeping track of my lovely debt record? Almost $200k in debt…OMIGOD. I think I just had a stroke. Actually, I got really pissed; pissed because I’d been raised smarter. What was I doing?

I had listened to Dave Ramsey on the radio and always wondered how in the world do people get out of debt? So, I went to my library and checked out his book, The Total Money Makeover. I personally found it one of the easiest books to read on debt management/reduction. His ideas and logic made sense to me; my husband and I were just throwing money away each month.

I am in charge of the money and bills for our household. My Type A personality does not want anyone else dealing with the money; I have to know where it goes and when each month. The problem was I did not know when and where it was going. I had no idea actually; all I knew was that we looked excellent on paper, credit scores and repayment histories. Seriously, is that how I wanted to be known? Was that going to be my legacy?

Dave told me to tackle the emergency fund first. DONE, $1000 in the bank. That was actually the easiest part. 2. Start repaying debts, starting with the smallest amount. I had started repaying my student loans in the Fall 2003. My original payment was $120; I consolidated to 2.5% and $88/monthly. Repayment would reach finality in 2019. 16 years of repaying my student loans.

People I would talk to said, “Oh, don’t worry it’s such a small amount it doesn’t matter.” Seriously?? I think it does. Starting in February 2012, I started throwing every extra dollar I could scrounge up at this debt and am happy to report that as of May 18, 2012 that my student loan debt is repaid!!! I am no longer a slave to Sallie Mae; actually she owes me 2 cents (think I’ll see that?). I called my husband to tell him what I/we had done and his response… “That’s awesome, what’s the next debt we are going to tackle?” Um, excuse moi, for reals?

Let me tell you people, this man was skeptical. He told me let’s try Dave’s plan for a few weeks and see how it goes. Well, it went GREAT! He is right on board with the plan now, and I love it! We pay for everything with cash. Here is how Dave’s plan works for us:

1. The beginning of each pay period, I pay all the bills with checks (I know I’m in the stone age, but I don’t like to use automatic debits except the car payment and mortgage).

2. I pull out anywhere from $400 – 800 for spending cash, gas, miscellaneous expenses, food etc.

3. When it’s gone, it’s gone.

4. If we need anything, we save for it. Case in point, my husband wants/needs a new boat battery. I told him he’s going to have to wait until we can pay cash for it. We don’t even use debit cards anymore.

This has been a real lifestyle change for us. But, I also know that I AM going to be one of the very few who has no debt and no credit score BECAUSE I pay for everything with cash. I realize that this might sound silly to some people, saying you need a credit score for some things. Why? Because that’s how it’s always been done? Nope, not anymore.

Both of us have given up a lot of things, I’ve given up pedicures. I loved them! My husband, I think, dreads mealtimes mostly because we don’t eat out anymore. No more restaurant dinners or quick stops to grab something. It’s healthier for him in the long run and I have to say he has lost a ton of weight and is looking mighty fine these days.

So, our debt reduction lifestyle continues. I know it will take a few years to get where I want to be and it is frustrating at times. I don’t by any means want to belittle this plan and say it’s easy; it’s really not. I know Dave’s plan is not for everyone; sometimes it’s just not feasible. I really like the idea of not using debit/credit cards, taking out consolidation loans, to get out of debt or enter into debt settlement. Cash seems to work for us. The one thing I don’t care for with Dave’s plan is stopping your contribution to your retirement plan to assist with paying down your debt. I still contribute $700/monthly to my employer’s plan. My peace of mind is worth it and to my husband, even if he doesn’t know it.

I look forward to the lifestyle we can live after our debt is gone. There are also more money saving/debt reduction tips I could share. Maybe if I’m allowed to write another article I’ll share those. I guess the one thing to remember, is you’re not alone in your fight with your debt.

I’ve shared our plan with my family members and although they made fun of me initially, they are now supportive of my mission. It stinks and sometimes I want to throw up my hands and just use my cards to get what I want NOW! I’ve learned that my sense of entitlement is pretty selfish, and if I wait, I enjoy things more.

We live in a society of right here, right now. It’s pretty sad considering where my grandparents came from and how they lived. Debt was unimaginable to them. How did our society get away from that? It’s astonishing how far my grandmother’s salary could go; we could learn a lot from that generation. Maybe we should.

*Side note…When I told my sister I had paid off my student loans, she told me I was one of the 1% population who had accomplished this. WOW, what a sad statistic.*

Are you interested in guest posting? We love to receive stories about different aspects of personal debt. It doesn’t matter if you are a seasoned debt blogger or you have never written anything before, but have a story that you would like to share. We’re always on the lookout for different perspectives about debt. If you’d like to share your personal debt story, please contact us.


  • Reply Stacy |

    You paid off $6,000 in student loan debt in 3 months? That’s awesome! My student loans were our first debt to be paid off and it was so freeing. Yes it’s just a small monthly payment, but it’s a huge financial obligation over time.

    It’s sad that people think it’s “abnormal” to pay off your loans within a few years of graduating college. This should be the new norm! You’re setting a great example for your family and friends. I don’t think her statistic is real, though. At least I hope not…

  • Reply PersonallyFindNancys |

    That’s such a great story. It’s nice that your husband is into it too. That’s funny that baby step one is the easiest for you. For me it’s the hardest, I find it so hard to let that money just *sit*. I want to get right to step number 2 and start to pay everything off!!! Can’t wait for that freedom.

  • Reply dave |

    While I applaud you for tackling your debt, the last statistic you gave is just ridiculous. Most people pay off their loans. The student loan default rate is between 4% and 8%

  • Reply Liz |

    Why doesn’t your husband know about your retirement contributions? Even if you manage the money, he should be completely aware of where it’s going.

  • Reply TEN |

    Congratulations!! Great job on the last few months. I will say that a lot of people I know have retired their student loan debt ASAP after graduation.

    Also, if you are down to a mortgage and a car payment, I would continue retirement savings. At a minimum save enough for the company match or at least 5-10% of each of your incomes. Increase this after the non-mortgage debt is retired. Starting retirement savings at a young age is very important. Even though I added a small car payment this year that will be paid shortly, I am also working towards increasing my retirement contribution to 15% of income. Since, I never see the retirement income, I don’t consider it money to spend. I also have a mortgage.

  • Reply emmi |

    I think we lost it (the grandparents attitude) when our public spaces vanished and became retail spaces.

    Also, expectations were much lower. Kids just ran around outside. Meals were meat and potatoes, not elaborate gourmet food. Toys were not expensive electronics. Healthcare can get elaborate. Our grandparents couldn’t have spent $1000 on anything. The hospital didn’t have anything that complicated to provide.

    Lots of things have changed.

  • Reply scarr |

    Congratulations on paying off your student loan! Your story is very inspiring and I hope we can hear back from you as each debt gets kicked out the door! When I made my final debt payment, it was probably one of the best days of my adult life and I can’t wait for you to know that feeling!!! Best of luck!

  • Reply Mary Jo Noce |

    I’ve been on Dave’s TMM plan for almost a year now. I even stopped my 401K deductions. The only thing I don’t agree with him about is buying a junker car instead of having a car loan. I got a newer used Camry last fall at 2.9% interest. My old clunker Taurus was costing me more nearly every month for repairs than the car payment does now! I’m single, so there’s no car I can share with someone while mine’s in the shop. I ended up using several vacation days last summer waiting for my car at the shop. I NEED a dependable car that’s not going to break down late at night in an unsafe area. The snowball debt thing really works for me.

  • Reply John Landeck |

    This is a great story! Congratulations! I am heading into a rough patch of debt right now. I’ve been thinking about hiring debt settlement company. Out of all the companies I have spoken with it seems http://www.Curadebt.com to be the most honest with me. Has anyone ever worked with this company or heard of them? I could use all the advice I can get, thanks!

So, what do you think ?