How I Paid Off $75,000 in Debt

by Grayson Bell

When I graduated from college, I thought I was ready to grab life by the horns. I had a marketing degree, a job in medical device design, and a business I started on the side — as well as some cool toys and awesome friends. It couldn’t have been any better. Or so I thought.

A College Kid, Some Credit Cards, and A Dream

I wasn’t just another debt-drunk college grad with student loans. I graduated with no student loans due to working and the gracious help of my parents. My crutches were credit cards and cars. I lived to impress and I aimed high.

In college, I started an ecommerce business, funded entirely on credit. I built the company over four years, with the final year doing more than $1 million in sales — I’m still happy about that number. Unfortunately, the business took a toll on my personal life and health. It was literally killing me slowly; I suffered from insomnia, ate terrible food, gained a lot of weight, and started having complications from diabetes. So, back in 2008, I shut it down and began my life as a debtor.

Starting with A Negative Net Worth

All in all, I was two years out of college with $75,000 in consumer debt. This included more than $50,000 in credit cards and $25,000 in auto/Jet Ski loans. (Don’t ask.) My minimum monthly payments equaled my mortgage payment. Yes, I even bought a house right after college with my fiancée. I was living the American Dream.

Unfortunately, I was none the wiser to the overall scale of my problems. There was so much money leaving my wallet every month just to pay the minimums, and I never paid more than the minimum due. I thought it was cool to be able to purchase stuff and pay as little as $20 per month: $20 became $200, which became $500, then $1,000. Those little payments just bundled up and attacked my bank account.

My Debt Epiphany

To be honest, I broke down one dreary Saturday afternoon. I sat with my wife trying to figure out an answer; I wanted an easy way out. This was going to take years to pay off, big sacrifices would have to be made — but I needed to get control of my spending, my credit-reliant mindset, and my debt.

I signed up for Mint.com to help me track my spending and budget accordingly. It took the entire day to input my financial accounts — I had a ton of debt. The process was long, but that final picture made me sick. I was in trouble and now I knew to what extent.

With little knowledge in the realm of debt repayment, I took my journey online to figure out my next steps. Luckily for me, there are many people who have paid off debt or are in the process of becoming debt-free. It was reassuring to see so many in similar situations — I no longer felt like I had done something wrong.

My Debt Repayment Plan

Four years and two months — that’s how long it took to pay off more than $75,000. The journey was long with many stumbling blocks. I wanted to give up so many times, but my wife encouraged me to finish. She was my rock and I couldn’t have done it without her.

I’m sure you’re wondering how I did it, right? Was there some miracle or crazy method? Well, I didn’t freeze my credit cards, nor did I go dumpster diving to save on groceries. I took a methodical approach — a mathematical one.

I had seven credit cards, all with varying interest rates ranging from 7.99 percent to 19.99 percent. Most of my balances were on high-interest cards. I chose the Debt Avalanche method: focusing on paying down the credit cards starting with the highest interest rate first, regardless of balance. Over time, this method can reduce your debt and the amount you pay in interest. In my case, it saved me nearly $5,000.

While I used the avalanche, there’s nothing wrong using the Debt Snowball approach: This plan, popularized by Dave Ramsey, focuses on paying debts starting with the lowest balance. It’s more about the small, quick wins to keep you motivated and on track.

To keep me on the plan, I created payment milestones where I could celebrate hitting each one. Those markers were key in helping me stay on course and motivated.

Save While Paying Off Debt

Instead of just saving money up front for emergencies, I changed my plan to continue saving on a regular basis. This may sound strange to some, but I needed to learn how to save again. Any extra income was put toward debt and saving. Initially, 95 percent of that allocated money went to debt and 5 percent to savings. As the debt went down, those numbers increased and decreased respectively. At the end, I was saving 60 percent and had only 40 percent of my debt/savings fund going toward debt.

Side Hustle for Extra Income

While I had a job, I needed to focus on finding other ways to earn more. I tested websites, found gigs on Craigslist, helped people move, mystery shopped, repaired broken items, and more. If it paid, then I tried it. These earnings added to the money we were actively trying to save on our monthly bills. We cut cable, reduced high-priced cell phone bills, slashed our grocery bills, and stopped going out to eat. Our entertainment budget was practically zero.

Debt Freedom

I paid off my last credit card in July 2012. Since that day, I’ve started to save, invest, and grow my wealth. I even started another business, which enabled me to quit my full-time job and focus on what I enjoy.

Grayson Bell is a project manager, freelance writer, and the founder of DebtRoundup.com.

This story was first published on the Society of Grownups blog.