Your Debt Reduction Story

[Joel]

Hey everyone,

I'm not sure this is the right place for this thread (Mods, please move it if its not) but I figured this may be a good question to ask.

What is YOUR debt reduction story? Care to share?

Here's ours:

Only a few years ago, we were on the verge on bankruptcy. We even paid a lawyer $100 to consult regarding the bankruptcy process but we decided to make a last ditch effort to pay back our debts. We joined a debt elimination program, went consistently paid beyond the plan minimums. We also took most of our tax refunds and used them toward paying down debt.

Long story short, we paid off over $30,000 in debt including credit cards and our 1998 minivan within 4 years. ($20k of that we paid off in the last two years.)

[Coleroo]

:-D

Mine started when I started visiting these forums in 2005!

I had just met my (now) husband, and had been using credit for 4 years. I had a 15k car loan, 3k lasik eye loan, and 2500 in CC debt. I started my debt reduction in august 05 and by february 06 i had the lasik and CC's paid off. Unfortunately my hubby and i got trapped in the 5% back CC only trap - from april to november we racked up 11k in cc debt, and a 9k car loan for him.

We had an epitomic (is that a word? ) moment in November - and stopped cold turkey using credit cards.

Since then we have reduced my car loan to 8k, hubby's to 5k, and the CC's to 3500! Its a great, great feeling to have accomplished so much in 7 months.

[megenic]

Our situation is pretty unique since my husband is in Afghanistan with the military, which means for the past 6 months he's been making huge amounts of money. In January we started with over $100,000 in debt (not even including our mortgage!). We sold our house and I moved in with family while he's been away. We've been able to bring our debt down to just under $30,000 and will pay off the rest by December. It's been really hard being apart, but in the end this year will have been very worth it financially!

[Ima saver]

I have been lucky in that I have never had a lot of debt, other than car loans. I did have a few credit cards with about $5000 in charges a few years ago.
I made my new year's resolution in 2005 to pay off all the credit cards and never carry a balance again.
My house has been mortgage free since I was about 32, so the only debt I ever carry is my car payment.
My husband is a car "nut" so we never buy a used car; only sporty expensive cars make him happy. However, he works 7 days a week to make that car payment, so he deserves the car he wants! (plus girls, he does all the housework and cooking)

[PrincessPerky]

Our story is pretty boring, a bit of medical debt plus some stupid...pampering to make up for the misery of debt (plus new baby...ok fine she is a joy, but the onslaught of work is always hard)

Anyway we started around when I got pregnant with my third 2004, and finished in about a year...no amazing numbers...around 7K (5 for the kid, rest in interest, and stupidity)

Now we are trying to pay off the car quickly (so we pay less interest, minus the interest it was a good deal)

then I want a new mattress , then we will pay off the house.

[disneysteve]

I graduated medical school in June 1990 and finished training in June 1993 with $102,000 in student loans. The loans had a 25-year repayment schedule. I vowed to pay them off in 10. Otherwise, I would still be paying for my own education when my daughter was in college. Even though the rates were low and I probably could have done better investing elsewhere, I wanted those loans gone.

We lived frugally in many ways and made large extra payments on the loans. Due to a job change and brief period of unemployment in 2000, I didn't hit the 10-year goal but I did pay them off in 12 years which I was perfectly happy about.

We sacrificed a lot of "stuff" to do that but it was well worth it and it taught us to live below our means, which we still continue to do, except now it allows us to save and invest at least 20% of my income for the future.

[marmatt]

In February of 06 we were in debt, not includung the mortgage, $70,963. as of today that # is $34,250, a reduction of $36, 713.

We've basically done the snowball method and it's worked well. We could probably do this faster, but I still take vacations and I don't want to give them up. Everything is a cash only basis and I haven't charged anything since 2/06. (Well, I do charge for rewards/convenience at times, but it's always payed in full immediately, I don't even wait for the statement. I pay it through my online banking the next day)

[Broken Arrow]

Let's see. I finally woke up and smelled the coffee when my now ex-wife and I were grossing about 37K/year combined, and yet we had a total debt of more than 330k (with mortgage and student loans being the two biggest ones). I remember feeling dizzy just thinking to myself, "1/3 of a million dollars!" Naturally, we also couldn't meet our monthly expenses. The mortgage alone ate up almost everything.

I wanted us to buckle down to turn us around, but she apparently found an alternate option by cheating on me with someone that made more money. I guess I can't blame her. I just wish she would share the guy's wallet with me as well.

I'm just kidding. Suffice to say, my divorce is probably the toughest thing I have ever had to go through so far.

Fortunately, everything panned out in such a way that I ended up being responsible for only 40k of it, which was mostly my own student loans. That was about a year and a half ago I guess? Since then, I went from a net worth of -38k to +1k. I wish I could've done more, but I'm also glad things aren't much, much worse than it could have been.

I always was money conscious to some degree, but now that I am getting a "second chance" so to speak, I am completely determined to be financially healthy from now on. I don't ever want to experience that level of financial mess again.

[buzz]

After spending 1 1/2 years of (my) scrimping every penny to pay off DW's credit cards, she blew up when I asked her to watch her spending during a month of high unexpected expenses.

At this point, since we married 16 months ago, she has had $20k of debt paid off, and I've seen $5k of savings go away. Good for her, huh?

As part of her fit, we have agreed to separate our finances. She is apparently too financially illiterate and stubborn to realize/admit how much that costs her. We make nearly identical salaries--she is already, after 1 month, struggling to make ends meet, while I am saving 35% of my net pay to rebuild and grow our savings. I just told her flat-out "You go ahead and spend every nickel you make, I'll try to save enough for both of us." I really don't expect much more.

I shouldn't be too hard on her. She is not that extravagant, but we make rather humble pay, and she is not equipped to analyze what we can or cannot afford. I hope she learned her lesson with the credit cards.

[anonymous_saver]

My debt story is REALLY basic. I went into $7,400 in subsidized school loan debt for grad school. A month before repayment started, I paid off the loan in full with one check. I literally was shaking as I put it in the mailbox!

I have never paid interest on anything in my life, and I only plan on starting when I buy a house.

I have always saved 25%+ of my income towards retirement, and I save an additional 35% or so toward a down payment and emergency fund. I only make $35,000 a year, but I live as if I make around $10,000. I'm happy as it is, why mess up my savings?

I like this thread, it's interesting to see where everyone comes from...

[Joel]

Originally Posted by megenic

Our situation is pretty unique since my husband is in Afghanistan with the military, which means for the past 6 months he's been making huge amounts of money. In January we started with over $100,000 in debt (not even including our mortgage!). We sold our house and I moved in with family while he's been away. We've been able to bring our debt down to just under $30,000 and will pay off the rest by December. It's been really hard being apart, but in the end this year will have been very worth it financially!

WOW!! Going from 100K to $30K is incredible! Kudos to you for that!

And thanks to your husband as well. Too often people get caught up in the anti-war movements and they take it out on the military personnel (or their families) who are serving overseas, who are just doing their jobs.

[Joel]

Originally Posted by marmatt

In February of 06 we were in debt, not includung the mortgage, $70,963. as of today that # is $34,250, a reduction of $36, 713.

We've basically done the snowball method and it's worked well. We could probably do this faster, but I still take vacations and I don't want to give them up. Everything is a cash only basis and I haven't charged anything since 2/06. (Well, I do charge for rewards/convenience at times, but it's always payed in full immediately, I don't even wait for the statement. I pay it through my online banking the next day)

Way to Go! Keep it up.

[minnie1928]

In Feb of 2005 my mom and I took the Dave Ramsey course that my employer offered. I got infinitely more out of it than she did.

Since 2005 we've paid off $62,000 worth of debt. We were big on the car debt (2 relatively new BMWs at the time), but no CC debt. Now the BMWs are paid off, I even traded one in on a 2007 Camry Hybrid (cut my gas costs by over half! ) at basically an even trade. Now we are car payment free and focusing on our Disney Vacation Club which will be paid off by year end-ish. Then it's nothing but house! Our generic plan is to have our 30 year mortgage (originated in 11/00) paid off sometime around 2014.

We REALLY want to retire at 55, and at this rate I think we can do it.

[Joel]

Originally Posted by minnie1928

In Feb of 2005 my mom and I took the Dave Ramsey course that my employer offered. I got infinitely more out of it than she did.

Who is Dave Ramsey?

[disneysteve]

Originally Posted by Joel

Who is Dave Ramsey?

Dave Ramsey is one of the personal finance gurus. He's written a few books, does stuff on tv/radio and runs classes around the country. Most of his advice is good and sound though I don't totally agree with everything he says.

[rebeccae55]

My husband used to make a really good income...about $200,000. Still, we were SO stupid about money, spending everything he made and then some, with nothing set aside for a rainy day. Well, rain it did so we used credit cards to stay afloat. Once DH was back at work, at a much lower income, we had about $50,000 in CC debt plus a mortgage. We gradually reduced the CC debt to about $35,000. That stayed pretty level for a number of years. Then about 3 years ago we finally set some goals to get out of debt and save for our futures.

We are now 57 and 52, with one child finished with college and one to start in Fall 2008. We still have a mortgage of about $120,000. We occasionally pay a little extra on it but our primary goals right now are the second child's college expenses and our retirement. We expect our son will use the HOPE scholarship here in GA and pay most of his other expenses. However, we want to help some. We have a lot of catch-up to do for retirement. We only have about $100,000 in combined retirement savings as of today.

At this point, I can't imagine EVER taking on debt again. We just can't afford it, because if we had additional payments, we wouldn't be able to save for our future.

This forum really inspires me to stay on track!

[anonymous_saver]

Originally Posted by rebeccae55

My husband used to make a really good income...about $200,000. Still, we were SO stupid about money, spending everything he made and then some, with nothing set aside for a rainy day. Well, rain it did so we used credit cards to stay afloat. Once DH was back at work, at a much lower income, we had about $50,000 in CC debt plus a mortgage. We gradually reduced the CC debt to about $35,000. That stayed pretty level for a number of years. Then about 3 years ago we finally set some goals to get out of debt and save for our futures.

We are now 57 and 52, with one child finished with college and one to start in Fall 2008. We still have a mortgage of about $120,000. We occasionally pay a little extra on it but our primary goals right now are the second child's college expenses and our retirement. We expect our son will use the HOPE scholarship here in GA and pay most of his other expenses. However, we want to help some. We have a lot of catch-up to do for retirement. We only have about $100,000 in combined retirement savings as of today.

At this point, I can't imagine EVER taking on debt again. We just can't afford it, because if we had additional payments, we wouldn't be able to save for our future.

This forum really inspires me to stay on track!

I'm glad you have started making changes in your life. What is you and your husband's plan as far as saving for retirement, when will you both retire? I'm just interested because it scares me quite a bit hearing that you are both in your 50's and only have $100,000 towards retirement.

[rebeccae55]

Originally Posted by anonymous_saver

I'm glad you have started making changes in your life. What is you and your husband's plan as far as saving for retirement, when will you both retire? I'm just interested because it scares me quite a bit hearing that you are both in your 50's and only have $100,000 towards retirement.

Well, quite honestly it scares me, too. My husband is not so concerned, why I don't really know.

Currently, for the past couple of years, we have both fully funded IRAs, including eligible catch-up contributions. Then I contribute 12% of my income to my 401K and receive a $ for $ match of up to 5%. My company also has year-end profit sharing that has been 3 to 3.5% of my income for the last 4 years.

The increase to 12% has been gradual as we have worked to get out of debt and build an emergency fund. Now that those are done, one thing this forum has inspired me to do is to save future raises. I am hoping to receive a raise of at least 4% in September so counting the match, profit-sharing, and my own contribution, I expect to have 24 to 25% of my income going into my 401K.

If I'm not mistaken, next year I can contribute $6,000 to my Roth, which is right at 10% of my income, bringing my total retirement savings to about 35% of income.

My husband's preference for his retirement savings beyond his IRA is to pay off our house. While I want a paid off house in retirement, I'm trying to encourage him to save more. Once we actually retire, we plan to move to a less expensive area, pay cash for a house, and put our equity to work.

I also am always open to changing jobs. There's a lot more to life than money...like working in a fulfilling career. I really enjoy my work now and feel like I am helping others through it. However, there are competing companies that might be willing to pay me more and I am open to going, if it's the right place for me. I will save more if I make more.

At the rate we are going, we will work for a number of years, God willing. A major goal is to leave our savings alone for as long as possible.

Sometimes I feel really discouraged and scared about the future, and all the things we should have done when the money was flowing in and all the stupid decisions we've made. I remind myself that we have made progress. I remind myself that slow and steady wins the race. I give thanks for our blessings and trust with all my heart that God will provide our necessities.

[Ima saver]

I didn't do a lot of major investing until I hit my late 40's. So, I am proof that it can be done. Ira's were not around when I was younger and we have never worked for anyone that offered a 401 plan. We will have to rely strickly on the money we have saved to live in retirement.

[disneysteve]

Originally Posted by rebeccae55

If I'm not mistaken, next year I can contribute $6,000 to my Roth, which is right at 10% of my income, bringing my total retirement savings to about 35% of income.

You're correct about the $6,000 amount.

Readiing your posts, I think you show how it is possible to overcome past errors or bad habits. Even though you are in your 50's, putting away 35% of income will give you a nice nest egg in 10-15 years. Maybe not as much as if you had started investing in your 20's, but still a respectable amount. It is never too late to start saving.