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Kick Debt’s Butt! How To Get Out Of Debt On Your Own

You can get out of debt on your own! I paid off $80,000 in credit card debt in about 3 years. It’s not easy, but these rules helped me do it. Learn how.

Get out of debt on your own with the big fat guide to kicking debt's a**.If you want to get out of debt on your own (and fast), this is the post that will help you do it.

Not someday. Not tomorrow. Right. Freaking. Now.

Get ready—here’s the table of contents:

Yes, you CAN get out of debt

I managed to pay off $80,000 in auto, credit card, and student loans debt in just over three years. I know how to get out of debt and I know you can do it, too.

As a debt junkie for almost ten years, I ran up credit card after credit card living like my salary was about four times its actual size. Stupid things I bought on credit included flying lessons, weekends in Las Vegas, and a brand new pickup truck. Hey, I never said I wasn’t having fun. (Remember, I’m on the other side of 25 now, so I started college pre-recession… during the dot-com boom. Back then, I actually thought I could graduate with a sociology major and find a $75k a year job—because I knew people who did!)

We all know that didn’t happen, and soon enough, the debt caught up with me. As I approached my 26th birthday, I maxed out with debt of around $80,000. All of a sudden, I couldn’t keep borrowing my way out of trouble anymore. At the same time, I realized that the stress of barely making my monthly payments and owing twice what I earned in a year was taking its toll.

So I decided to change.

I’m a smart guy. And I don’t consider myself afraid of a little hard work. So several years ago, I resolved to:

  1. Get out of debt on my own.
  2. Go a step further and achieve a kind of financial stability that most people never do.
  3. Blog about it in a way that makes it accessible to others.

And I did.

Today, I have no consumer debt. By choice, I’m not debt-free. I do have a mortgage on my primary residence even though I could pay it off. I also did not pay off my student loans early. In these cases, I’m using debt conservatively and consciously to advance my financial goals. But all the nasty stuff—credit cards, personal loans, and an auto loan—is long gone.

Contrary to what hundreds of marketers and self-described personal finance “experts” will try to sell you—there is no secret to getting out of debt. No right way. No silver bullet.

That said, I think it is fair to say there are a few requirements to permanently ridding yourself of consumer debt.

  1. You must confront your debt by calculating your debt ratio.
  2. Permanently change the behaviors that got you into debt.
  3. You must make enough money to repay the debt.

Throughout all the years I carried this debt around with me, I never wanted to be in debt. But it wasn’t until I met the three criteria above that I was able to do something about it. First, I had to stop living in denial, telling myself my debt “wasn’t that bad.” I needed a reality check and to stare down exactly how much debt I had and what it would take to get out.

Second, I needed to figure out why I was in debt and stop doing those things. I had to tone down my lifestyle. By a lot.

Finally, I had to find a way to earn enough to repay the debt. So I got a second job, worked on a series of job changes that increased my income, and started this blog which—in time—created yet another income stream.

Now, let’s break this down and see how you can apply these three requirements to your debt.

1. Confront it: How much debt do you have?

I know you might be afraid of how much debt you have, but ignoring the problem will never make it go away.

There was a time in my early 20s, when my debts were steadily mounting, that I knew I was in trouble, but I was too scared to actually tally up how much debt I was in.

I paid minimum payments and forgot about them until the following month. If this is you, or if you simply need a refresher as to your current (negative) net worth, let’s go take a look. Tally up all your debts.

Credit cards. Student loans. Auto loans. And anything else. For now, we’ll leave your mortgage out of it.

That’s your number.

Although your absolute total debt is important, it’s not as important as how that debt compares to your annual income. It’s time to calculate…

Your debt to income ratio

This is a commonly used figure that puts your debt into perspective relative to how much money you earn.

A debt-to-income ratio (DTI) is often calculated different ways. For example, when you apply for a mortgage, the banks calculate your DTI as the percentage of monthly debt payments of your monthly income.

A few years ago, I reviewed the book Your Money Ratios by CBS MoneyWatch columnist Charles Farrell. I liked Farrell’s idea of simplifying financial planning by applying ratios to personal finance (something that financial professionals do all the time, anyway).

Although not one of Farrell’s ratios, I like to calculate a debt ratio as the amount of total debt (excluding mortgages) as a percentage of gross annual income.

  • Example 1: You earn $50,000 a year and have $25,000 in debt. Your Debt Ratio = 0.5.
  • Example 2: You earn $100,000 and have $250,000 in debt. Your Debt Ratio = 2.5.

To get out of debt, the first thing you should do is calculate your debt-to-income ratio.

This gives you a benchmark for how indebted you are (and what it will take to escape).

In case you’re wondering, my debt was way above 2.0 for a while.

So whatever your debt ratio, don’t despair. If yours is way up there, it just means you have some work to do.

2. Change the behaviors that got you into debt

Getting out of debt begins by eliminating the reasons you went into debt in the first place. Even winning the lottery won’t solve your problem if you never learn how to spend less than you have.

To get out of debt, you have to stop the cycle that got you into debt in the first place.

People get into debt for different reasons. School, job loss, medical bills, or, if you’re like me, stupidity. But why you got into debt doesn’t really matter. What matters is that you don’t let it happen again! Here’s what not to do.

  • If you took out $50k in student loans for a bachelor’s degree, don’t take out $100k more for a PhD.
  • Did you fall into a pile of debt after losing your job? Resolve (once you get out of debt), to work on an emergency fund so this will never happen again.
  • If you, like me, spent years living a life you couldn’t afford, then figure out what the life you can afford looks like, and get there.

This last step is easier said than done. In fact, that goal alone is responsible for about a third of every personal finance article every written. “Live within your means,” “Spend less than you earn,” etc., etc. Why has so much written about such a simple concept?

Because once we get accustomed to living a certain way, it’s incredibly difficult to change. You know, how do you start living on ramen after two years of The Capital Grille?

That’s where this comes in:

3. Earn enough to get out of debt

If you want to get out of debt by yourself, you need to earn enough money to survive AND enough money to pay down your debts.

Put another way: You need to go from a situation in which you’re spending more than you earn into one where you’re earning more than you spend. And the faster you want to become debt-free, the more you have to earn above and beyond what you spend.

Why earning more works

Personally, I knew I was never going to get out of debt just by cutting spending—unless, perhaps, I lived with my parents until 35. (No offense, Mom and Dad, but no thanks.) I simply didn’t earn enough money. I had to earn more.

So I did several things: I got a second job (at Starbucks), I looked for higher paying day jobs and moved (a couple of times), and I started this blog. Between the second job, a career change, and starting this blog, I added $15,000 to my annual income.

And in about four years, I went from earning just over $30,000 to making over six figures.

I do not say this to brag or to claim that I’m anything special. I say it only to make a point. If you put your mind to it, you can get out of debt, you can increase your income, and you can get a better job. If you put your mind to it, you can start a part-time business.

Not everybody has to earn more money to get out of debt, but it makes it a lot easier.

There are literally endless ways to earn extra money, but all could fall into these three categories.

1. Sell stuff

If you have stuff, then you can make money. Find stuff you don’t use anymore and hit up eBay or Craigslist or a yard sale.

The good thing about selling stuff is you can get cash fast. The bad news is, it’s not sustainable; sooner or later, you’re going to run out of crap to sell.

2. Work harder

Get a second job or work overtime, if available. I’ll be blunt, second jobs are no fun, but they sure do help pay the bills. Think of how tired/stressed/soulless you feel after your 9-5 already; now imagine getting in your car, battling rush hour traffic, and putting in another four hours from 6 to 10. Then you get home around 11, just in time to watch the Daily Show and pass out.

Putting in extra hours earns extra dollars, but it can suck the life out of you. If this is the route you want to go, however, there are options: food service, babysitting, mall stores, delivery routes, security guarding, tutoring, teaching prep classes, bartending, cab driving, etc.

3.Work smarter

This is my personal favorite way to increase your income, and you’ll see why. Working smarter is about getting promoted at work. Or, if your job won’t promote you, finding a higher-paying job. Or, if you can’t find a higher-paying job, working for yourself. If you make the decision to earn more money by working smarter, you just have to do.

Note: I can’t take the space here to list a million business ideas, but I have always found inspiration in the Inc. 5000, a list of the fastest-growing companies in America. My first college internship was with Inc.—my job was to interview the CEOs of these companies to ask about the secrets of their success. It was one of the best experiences of my life. I still think of that list as “5000 ways to make money.”

Tools to help you get out of debt

Motivation is half the battle, but if there are tools available to help you get out of debt yourself, why not take them?

Someone looking to get out of debt in 2017 has it way easier than debt fighters of just a few years ago. The credit crunch is long gone. Unless you totally scorched your credit score, you should be able to use the credit system to climb your way out of the hole.

Balance transfers

In some cases, a 0 percent balance transfer credit card can provide immediate relief from high APR credit card debt. But balance transfers are not, by any means, a cure-all.

Here’s how balance transfers work: As a way of attracting new customers, credit card companies will let you transfer a balance—in other words, a debt—from one credit card to a new credit card at 0 percent interest for a certain number of months. For example, if you were to transfer a $2,000 balance from one card (15 percent APR) to a new card (0 percent APR for 12 months), you could save up to $300 in interest.

But there are plenty of pitfalls to this approach.

  • There is often a fee to transfer a balance, which can eat into your savings.
  • Transferring a balance doesn’t solve your debt problem if you can’t make big enough payments—it simply buys you some time.
  • You need very good credit to get approved for new credit card, and if the balances on your current credit cards are too high, you might be denied anyway.
  • More credit means more temptation to spend.

How much could you save? Try our balance transfer calculator to find out.

Debt consolidation loans

It’s becoming much easier to find unsecured personal loans that you can use to consolidate multiple debts into one affordable monthly payment.

Eventually, I got to a point where:

  1. I had too much debt to get new credit cards and
  2. Balance transfers obviously didn’t work for me because I would transfer the balance and just spend again on the old credit card. Sound familiar? If so, you may find help in peer-to-peer lending.

In 2006, I consolidated my credit card debt with a personal loan.

You’ll still need good credit to get a personal loan, but you may be able to get a loan when you wouldn’t be approved for a credit card. And if you’ve got excellent credit, you might even get a lower interest rate with a personal loan. Either way, the thing I love about personal loans is that you get a fixed term, usually three or five years, and monthly payment—you can’t be tempted to make minimum payments and you know your debt will be paid off at the end of the term.

If you’re serious about this route, there is a great new company we’re partnered with that finds you the optimum personal loan based on your individual needs and situation. You can check them out here to find a loan that’s right for you. Also, check out our full review here.

If you think consolidation loan could help, learn more about when a personal loan makes sense for debt consolidation or compare some of the best personal loan options.

See if You’re Pre-Approved for a Personal Loan Up to $100,000

Credit counseling and debt management

Although you can save money by getting out of debt on your own, sometimes it just doesn’t work. That’s where credit counseling and/or debt management may help.

But proceed carefully. Although the government has cracked down a bit in recent years, there are a lot of companies out there that advertise these kinds of services that will only make matters worse. Avoid debt settlement scams or any service that promises to reduce the total amount you owe. Avoid any service that charges big upfront fees.

The National Foundation for Credit Counseling is a nonprofit organization of reputable credit counselors that can direct you to somebody in your area that can help you make a plan to get out of debt. They may charge a fee for their time or on a monthly basis.

Another reputable organization is Accredited Debt Relief. They partner with well-known Debt Relief companies to negotiate your credit card debt. The process takes two to four years (in some cases a little longer) where you are paying set monthly payments towards your debt while the negotiation takes place.

You may also want to research (either through your counselor or on your own) entering a debt management plan. Under such a plan, a third-party company negotiates interest rates, payment amounts, and fees with your creditors. You make one monthly payment to the third-party company and they pay all your creditors.

Read 10 things to know about debt management companies to help you decide if this is a route you want to go.

Now, take action!

Are you still reading this? Amazing. Thank you! The bottom line is, none of all that I’ve just written is worth anything unless you take action. Getting out of debt is a long process, you CAN start today. And that’s what I ask you to do:

Within 24 hours I want you to do something—anything—towards getting out of debt.

Here are just a few ideas of things you could do, but I urge you to get creative!

  1. Cut up a credit card
  2. Post something you own for sale
  3. Write down a goal to earn more money
  4. Submit an application to a new (higher paying or additional) job
  5. Transfer a high-interest rate balance
  6. Confront your debt (write down your total debt and debt ratio)
  7. Reexamine your budget
  8. Make an extra debt payment
  9. Look into credit counseling

How are you going to get started?

Want more powerful ways to earn and save more money? Join over 31,052 other successful readers on my free email list now.

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About David Weliver

David Weliver is the founding editor of Money Under 36. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

Comments

We invite readers to respond with questions or comments. Comments may be held for moderation and will be published according to our comment policy. Comments are the opinions of their authors; they do not represent the views or opinions of Money Under 36.

  1. Philip Stanfield says:

    Thank you for writing this. I am currently a dental student and think about this a lot. I plan to refinance my higher interest student loans right when I get out of school. I also plan to put the rest of my lower interest rate loans on a longer amortization so that I have more money available to begin saving and investment.

  2. Bryan Bouchard says:

    Very detailed post; impressive!!
    This is the type of advice that many, many people need! It is way too easy to get into bad debt these days. The temptations are everywhere, and the lenders are looking out for their own “INTEREST” first.
    Well done!

  3. Dawn says:

    David thanks for this article. My issue is my income is variable because of my job so its hard to calculate my DTI. I think at this point I have no choice but to file bankruptcy. However, i say this article https://dumpdebt.info/debt-settlement-right/ on debt settlement. Would you recommend that over bankruptcy and why?

    Thanks!

  4. Cole C Weis says:

    This is a great post David! Thank you for sharing your story and for giving me some good information about getting out of my own debts.

  5. Alan Muller says:

    That’s an amazing article. Your well-researched content is really helpful and worth sharing. Keep up the good work.

  6. Ahmad S. says:

    I read a few comments posted and I must say I have to agree with everyone… this was really excellent information. Usually you will get the Presenter pitching the purchase of a book or cd or something.. You gave from your heart all the information you could and that is wonderful. Thank you.

  7. Bulletproof Bookkeeping AZ says:

    This must be the ultimate debt guide, I help so many people with their finances and you explain their options so well here. And you give the necessary hard truth! Great post, David

  8. Camille - Financial Planner says:

    Great article. We are in the process of paying down debt, and the freedom we feel in watching that number decrease is a beautiful thing! Doing something RIGHT AWAY is key because, as your chart above shows, the greater the amount of money going into paying debt, the less you have to spend (even on the things you truly need!), so the debt pile increases and you never get out from under it. Everyone can do something NOW to see a shift in that picture. It all starts with an earnest desire to confront and change. Thanks for sharing.

  9. Brent says:

    Hi David,

    OK.. this is a really good post. I would add IMHO that some people really need to consider self employment over trying to get a promotion. The tax code is better to my wife and I being self employed compared to when we were working for an employer.

    And with self-employment you can give yourself a raise anytime you want. (usually)

    I’ll go a-tweeting this one now.

    • Jamie Brown says:

      Pardon me for being rude, but – are you insane, bad at math, or only joking? In what way do you believe “the tax code is better being self employed”? Unless you make over $127,200 the taxes are much HIGHER on self-employed individuals. I say this as a former employee, now an independent contractor and small business owner being taxed literally to death for the last 13+ years. Self employed people making under the Social Security cap pay an additional 7.65% tax. And yes, you can “give yourself a raise” but YOU are the one paying yourself, so…

  10. C. Ghaith says:

    I agree with all your tips. people should be more conscious about their expenses. I just want to say, stop worrying about the mistakes that got you into debt and start focusing on the steps that will help you get out. I have found an excellent information in your blog. Enjoyed your work. Thanks for sharing.

  11. C.B. says:

    Man, I’m in trouble! Just calculated my DTI ratio and it’s not pretty! A year ago I started taking charge of my credit problem and decided to do a debt consolidation. The problem is, now that I had this loan in the exact amount of what I owed in credit card and line of credit I figured I would pay most of it and then keep a little money to get stuff I needed (a new mattress and some furniture). Stupidest move I ever did! Now, a year later, I’ve maxed out my credit card once again (I should have lowered the limit after I had paid it off a year prior…..but I thought I was good), I still owe over $5000 on my line of credit and now, I also have to pay that consolidation loan! Within a year, my debt amount went from $14,500 to $33,500! And the worst part? I don’t even know how I managed that! I don’t think I spend a lot of money on trivial things………but clearly I’m spending somewhere. So according to your calculator, I’m at a 0.62 DTI ratio. I mean I make over 50K a year, if I cut down on…..everything, I should be able to pay this off. My car loan is at 0% interest so I’m not too concern with that one. I do put money away every month in an RRSP (it’s the Canadian equivalent of a 401(K)) which cuts down my income tax payment at the end of the year. I’m also a federal employee so I have a pension plan at work with a lot of good benefits so I’m set on the pension plan side. But I can’t manage to save enough money to cover even one month of my income. I mean I’ll be 30 in 3 months and I’ve always been a pretty smart girl……..but I can’t get a hold on my finances! Anyway, I’ve been going through your site and checking out all your tools. It’s giving me a hope.

    • Brenda says:

      C.B. I believe what you need is to invest in a financial coach. What you described is not uncommon. Once you find out why you are spending, possibly to fill a void or the ‘I deserve’ mindset, you can stop the unneeded spending. A good coach will also put together a plan to help you get out of debt and reach your financial goals and life goals. If a coach is not something you are willing to look into, please find an accountability partner. Someone who will not accept excuses and will keep you focused. You have the income and the drive to make things happen in your finances… that is HUGE!! Everyone needs a little help now and then. You got this!!!

  12. Amanda says:

    My husband and I have always had separate bank account and financially we did what we wanted and never talked to the other about our spending. I feel like I make decent money and I am at my wits end because I get paid and everything goes to bills or to minimum payments. I stopped about 1.5 years ago putting more money on my credit card payments because I needed the money for bills. Today I just calculated my debt to income ratio (putting my husbands debt and income with mine) I was shocked! even after taking our mortgage out oft he equation we owe $40,972. When I was looking at just my credit cards or my car payment it didn’t seem like an awful lot of credit. But now, I feel like the wind is knocked out of me. I am not even 30 years old and I owe almost as much as I may. I feel really really scared. but I am thankful for this article but it is just what I need to motivate me! things are going to change! things NEED to change.

  13. Julius says:

    Thank you very much . this article has really opened up my eyes and i will embark on my debt recovery journey
    with very high hopes. My trick will be to earn more money than what am spending to create a surplus which i will
    use to pay my debts.

  14. Jaren says:

    I started today while reading this article by putting 5 dollars into my savings account. I feel like I’m drowning in debt and living from emergency to emergency. I know they key for me to getting out is establishing savings…and I’ve procrastinated. No more! Today I started, next pay check I’ll put in 50, next 100, maybe I’ll get to 200 in a few months. I want to see $2000 in there so I can afford things like car maintenance and medical co-pays!

  15. Daniel says:

    Refreshing article! I feel a lot more confident after reading what you had to share. I am currently 147k in debt (Student loans, Car, personal loans, credit cards) and I’m making 104k annually. I don’t have kids or any major responsibilities so I want to really focus on paying down the debt in order to become more financially stable.

    I have been out of school now for about 4 years and I’ve find it difficult to maintain a consistent payment program. I’m almost 30 and I’m tired of my bad habits. I will make a habit to come back to this threat and post updates on my progress because If you inspired me then I know I can inspire the next person and that’s important to me.

  16. Chelsea says:

    I’m about 70k in debt (which includes a car loan and student loans). I was very naive in thinking that earning a Bachelor’s degree would award me with a high paying job and I would be able to take care of this mountain of debt no problem. Of course, that’s not reality, and I make 25k a year. I’ve been working at this job for about a year and a half now, and I have FINALLY found a better paying job after a year of active searching. Although it’s not much, I’ll be moving up to 29k a year. While I pay off my 10k car loan at 250 a month, I’ve been completely avoiding my student loan debt, I don’t even look at it. Right now my loans are in deferment but I owe my first payment in August. I’m really starting to panick. I appreciated your article and found a lot of useful advice in it. I think my first step to paying off my loans will be to work as hard as possible at my new job so maybe after another year or so I can increase my salary more substantially…. Other than that I’m really at a loss for what to do. Any specific advice regarding such a high amount of student loans? (That honestly, I’m almost too embarassed to admit to in this post)

    • Lindsey says:

      Try to put some money down on your higher interest student loans. The way I paid off my bachelor loans was whenever i got a refund back from the college or from taxes a portion of that went to the student loans. The more you tackle your higher interest loans the better your credit. Now if you have like tiny ones like 1,000 try paying those off if your not financially ready to tackle the bigger interest rates ones.

      • Jeree says:

        “The more you tackle your higher interest loans the better your credit.”

        The interest rate of your loans has no effect on your credit. You will pay off the loans quicker if you concentrate on the high-interest rate loans and as a result your credit utilization ratio will go down which will improve your credit, but you could achieve a lower credit utilization by paying off the loans with the lower interest rate as well so your statement is misleading.

  17. Mary says:

    I am from Papua New Guinea and I am so glad to have found this site and read thru. It has given me confidence to face my debts and write them down. I know that I am on my own to meet this and I will do it. I am thinking of doing a salary sacrifice from my employer I know it will be tough with 3 kids but I know God will show me a way.

    I am thankful to Mr Weliver sharing his experiences with people like us.

  18. Mike N. says:

    I earn 60K/year but after 401K (sorry, but I cant turn away free money), medical insurance premium & taxes I make only around $3600/month. I am doing tutoring on the side, but income is not great and it fluctuates (during the summer I get virtually zero side income).

    In 2015 we finished our lease prematurely, we got all our deposit back and 300 bucks extra (we were in a very desirable but cheap location) and then we lived with brothers and parents. In this time I made a 4000 lump payment to my wife’s highest interest loan and increase by 50 bucks the monthly amount that goes against it. We owe just a bit over 2K on that account. She has another 11-13K in student loans.

    I had 14,000 Canadian dollars in student loan but when my sister came this Christmas, I gave her $3000, I asked my dad for $5000, and my sister agreed to lend me whatever is required to make up for paying the entire balance. I already paid that so I went from owing 14000 CAD at 5% interest to owing ~6500 USD at almost no interest !

    I just paid another 2000 into my credit card a few days ago, and at the end of February I will pay all the credit card and then I will cut it. Then, with God’s help I will pay back my 6500 loan to my dad and sister.

    I have a 10K car loan which will turn into a 6K once I sell one of my cars. I look forward to paying that off this year because it was from a friend.

    My goal in 2016 is to have only my wife’s student loan which is 4-5% and to have 10K saved for a downpayment. I am applying for out-of-state jobs for higher income, lower taxes and lower housing prices. Please pray for me and my family – although we are doing our best, we cannot do this alone.

    • Mike N. says:

      One thing – if you are in the unlikely situation to have foreign debt, please use the foreign exchange rates to your advantage!

      Also, when I will move to a new job, I plan on rolling all my 401K (for which I get free matching funds) into a IRA. For IRAs, you don’t have to pay the 10% penalty if you use it for buying your first house. I need to double check this info – has anyone done it?

      • trevor says:

        we got a loan from Swift Finance – getting the loan was easy – paying it back was hard, I was made redundant 3x and their charges more than doubled the debt – the debt has long since been paid but the charges just go on and on. how can loan shark companies like this exist?

  19. Jake says:

    I earn 74340/year and I have 25500 in debt so my debt ratio would be poor. I find that interesting since the debt interest rate is 4% and costs only $230 a month on a 10 year plan. With no other debt, each month I save around $2K after expenses.

    • Martin says:

      it would make sense for you to pay this debt in its entirety right now while you can afford to. You may not have the 74K/yr forever.

  20. Faith says:

    I have read many blog posts, but this one seemed to spark something in me and re-motivate me to pay off my debt. I know that I am not alone in this, but I can do this on my own. I’m ready to refresh my system of repayment, earn more cash, and limit my spending activities. With Christmas around the corner, it’s hard not to push getting seriously about paying off debt until the new year, but I know if I can manage it now, I can do it all year. And that’s one less month I’ll be in debt.

    Today, instead of spending time on a Christmas gift, I will complete a work-related project that will earn me an end of the year bonus I can put towards my debt. Thanks for the awesome tips. I will have to revisit this blog soon!

  21. Lynnie says:

    I began before finding your article. I wrote down my debt and with your help I figured out my debt ratio. I handed my credit cards over to my mom and now I will look into balance transfers. I am determined to do this on my own, I can do it.

  22. Travis says:

    You said within 24 hours… I started a little sooner before finding this web site.

    I graduated college in 2014, spent a year in law school before realizing it wasn’t for me. Although I have a good paying job now, I didn’t realize how expensive law school really was! My credit card debt for networking and socializing was drastically higher than it was for undergrad (where I paid it off every month). I’m now confronted with this and working to pay it down (3 months in and $2,000 down!). But I’m trying to get even more so that I can start saving for a ring! I didn’t sell any of my textbooks back in college and posted them online last week. So far I’ve earned almost $600 off of them, all of which is going towards my credit card. Additionally, my security deposit from my old apartment is coming back. I don’t have my entire emergency fund built yet (about 1.5 months worth saved), so 1/3 of it is going towards that, the other 2/3 towards my debt. I should be able to pay off another $2,000 in the second half of August/first half of September.

    I’m also going to start back up my college business. I ran a small business in college that brought in a couple hundred dollars a month. Although in college I did it by travelling, I could provide similar resources and work via a web site. I only work 14 days a month at my job, so I know I have time to build this and work towards it. Hopefully it can generate an additional $500 per month for me as well which will greatly help!

  23. Harris says:

    Love this article. Almost feel like it’s insulting to call it an article. It’s much more than that.

    I have been trying and struggling to get out of debt. I’m a dummy.
    I took advantage of some 0% BT cards and went into more debt. I feel like the people who have the most trouble are the people who THINK they have it under control. They are eventually the people who are stressed out and looking for help. (me).

    I have recently cut everything up and transferred my high interest cc to my lowest int credit card. I’m not able to use any of them anymore. I have $2k in savings at a seperate bank. I am married with no children but I still worry that $2k isn’t enough. My DTI was .88 based on your system. Very depressing but helpful. I’m going to try something drastic and get rid of about $68k in debt on what is currently $71,500 of annual income by the time i’m 30. That gives me almost 3 years. Don’t know why but I feel like writing that actually helped me. Thanks again. I really enjoy the site and this post! Hopefully in 3 years or less i’ll write in with a success story!

    • josephmorrison says:

      thankyou for the imformation it was very helpful and as of today i’m going to my up stairs and get all of my childrens toy’s and different things that are in really fair condition and start selling thing to get out of dept i’ve always been a stay at home mom i’m going to get a part time job and start doubling up on certain depts thankyou we recieved a letter from out morgage company and they told us our house payments went down and i told my husband no you still need to pay the same amount but add more money to the payments

  24. Andrew says:

    Just paid off a $25k HELOC with a lump sum to start off 2013. It’s our last major debt hurdle, as everything from this point forward is earmarked for savings, investing, and real estate acquisition.

    Thanks for the great content on this site, I just wish it was aroung when I was Under 30!

  25. Monti says:

    Hi everyone, in the UK we have student loans, but these are paid back through your salary when you start earning over lb15,000 Gross Salary. Depending on when the loan was taken out, interest rates vary from 1-3% (so quite low). Basically if you’re not working, they cant take the money from you. Is this how it works in the US? Great site by the way it really puts things into perspective.

  26. Dan says:

    I really liked your article! It was well timed for me today! I have faced a little bit more my financial situation, I have paid some bills today and got a vision of the other ones coming in the next weeks and started an excel spreadsheet of my financial situation. So thanks for the swift kick in the situation! I allready have brought my lifestyle to a more aligned position I am currently in! Now for the rest! Now to face the fears of managing the money!

    Thanks

  27. vanessa says:

    I have just stumbled upon your website and I am very motivated to pay down my debt i have acquired since 2002. It is under 6,000 so its not too bad. I do have a student loan for 24,000 but i will pay that off over time as its not hurting me as much as my credit cards.
    I have gotten a small settlement check in the mail for 500, so that will go towards my debts for sure.
    I hope to get a second job or a new job with more pay to pay down my debts. I hate living pay check to paycheck just to make end meet. Thank you for your great blog. I have also looked at joining mint.com as that helps with debt and setting goals for yourself.
    Thanks

  28. Bill says:

    My wife and I are about $7,000 in debt, her car is falling apart, and she is having a tough time finding a job. We are in debt because of about $4-5000 in medical bills that came (that werent covered by health insurance), and slow business/slow commission.
    Because of the medical bills, it put us off track with our rotating credit card payments and put us WAY behind. We have tried the balance transfers, but only found that we are still falling behind. We have cut out most of our spending, but can’t seem to get caught up.

    I’ve done some research on debt consolidation loans from financial institutions, and have found one for a $10,000 loan @ $197/month for 5 years, fixed rate of 6.99%. This will allow us to consolidate all of our credit card & medical bill debt (normally costing around $1000-1500/month) and allow us the cash to get her car fixed, paying one low monthly cost. Once we get her car fixed we are going to start paying more than the $197/month to pay the loan off quicker.

    What are your thoughts on acquiring this personal loan to consolidate, free up cash, and get things done we need?

  29. Cara says:

    This site is great! I have the confidence that I can overcome this weight on my wallet. It will take time but it’s clearly possible.

  30. Arlinda Loewenstein says:

    I simply want to say I’m beginner to blogging and truly enjoyed your web site. Most likely I’m likely to bookmark your blog . You absolutely have superb stories. Regards for sharing your blog.

  31. Gemma says:

    I have a financed $40k that I voluntarily turned in…
    Subsequently, my credit shows “Vehicle Repo” and I am unsure as to what to do. I’m trying to pay down my consumer debt (credit cards, etc.) however, I’m in a bind as to what to do with the turned-in vehicle as I want to put it behind me.
    Any advice is much appreciated.

  32. Bill Cofield says:

    The most important message is to DO SOMETHING. I would encourage folks to do the reverse of taking on the larger balances first and paying more on them. Pick a smaller balance, high interest card and pay it off. This gives motivation to get the next one up the ladder in your payoff plans. For the sake of your credit score, remember length of history and pay history go together to determine your score so closing that account may actually lower your score over time. If you cannot trust yourself not to use it, close it anyway.

  33. Jessica says:

    I LOVE LOVE LOVE this article – I’m planning to share it with my husband tonight. Your approach and honestly in the article is so freshing since I myself was in a crazy amount of debt as of last year ($22K at the peak). Essentially, I followed all the steps you mentioned (took a hard look at my total debt, got a higher ($7K more) paying job, transferred balances to a 0% card and paid off a load of consumer debt. I’m scheduled to pay off all my consumer debt by April 2011.

    During the process, I’ve maintained my contributions to my 401(k) to get the max. company match (free money) and have excluded my student loan ($13K remaining) from the process (even though I do pay an extra $50 each month to chop off 6 yrs.) since the low interest rate (2.125%) on the student loan were okay in my mind.

    The one thing I want to mention about the 0% balance transfer offer is to be careful not to open too many, in addition to the warnings offered above, opening too many new accounts in a short time frame can negatively affect your credit score.

    Anyway, I’m 27, married with a daughter, and expecting a son in April – I mention my stats as encouragement that you CAN do this! Now we need to work on my husband’s consumer debt…

  34. Christine says:

    I recently became fed up with the credit card debt that I have been carrying for 6 years and have *finally* taken action to eliminate it, such as making a budget (and sticking to it!), trying to negotiate a lower APR rate, selling stuff (au revoir, gitane bicycle) and making additional payments on my credit cards. This article was EXACTLY what I needed to read. It’s affirmation that I’m on the right track (:

  35. Alicia says:

    I just negotiated a salary increase at work and got the good news today. There is ALWAYS more money to make, and you ARE valuable. Don’t forget to tap into the resources already available to you – your CURRENT job. You don’t always have to leave to make more money, especially if you like your job. Be proactive.

  36. Question says:

    so – Money Under 36 – how long did it take you to become consumer debt-free? and how old are you now?

    • David Weliver says:

      I’m 29. If you consider the fact that I was IN DEBT since I was 19, then I guess you could say it took me 10 years.

      If you consider the fact that I STOPPED piling the debt ON and started digging OUT just before my 27th birthday, then it took me almost exactly two and a half years.

      • Brian says:

        On that note, what happens next year when you’re 30? “Money Under 40”?

        • David Weliver says:

          Brian, you have NO idea how many nights that question has kept me up.

          That said, there are no changes planned so far…I’ll be keeping the perspective focused on finances in the first part of adult life, however you define that–30, 35, 40, etc.!

  37. Jody says:

    I stopped midway through reading this and made an extra online payment on a credit card. Thanks!

  38. SS4BC says:

    Very awesome article. I especially love the picture on why people stay in debt – so very true!

  39. cpascal says:

    A good tip that I found on debt reduction somewhere is to try to pay 10% more on the highest debt each month, and that should speed up the time needed to pay it. Then once the highest debt is paid, continue with the next highest, then the next, etc.

  40. twentysomethingmoney says:

    Wow, this is a really good post. I’m bookmarketing it.

    I find with debt, it hangs over you — I’ve got a student loan, that I’ve been working to kill for years… this year is the one where It’ll be gone for good

  41. Amy says:

    This year, my husband and I made a few changes… we put ourselves on a strict budget and gave ourselves a cash allowance so we wouldn’t even be tempted to use the debit cards “just to grab lunch,” squirreled our credit cards away so we wouldn’t use them, and went through TONS of stuff that we weren’t using anymore and are planning a neighborhood yard sale for the spring.

    Thanks for always having such great tips!

  42. Brian says:

    Oh, and I happened to do several of those steps this morning before reading this article (write down total debt, examine budget, and made an extra payment).

  43. Brian says:

    Excellent article.

    I’d just like to add a point on the 0% balance transfers:

    I’ve use this method in the past and it greatly helped me pay off debt more quickly and cheaply. However, make sure you read the fine print….

    Many of the 12 month 0% balance transfer offers will charge you interest FROM DAY 1 if the balance isn’t paid IN FULL at the end of the promotional term.

  44. Bishnu says:

    Great article, it puts alot of the things you have already posted into one consolidated post.

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