Reader Success Story: “We Paid Off $23,000 of Debt in 16 Months”
Published on - April 29th, 2008 (by J.D. Roth) The best part about running this site is reading stories from readers who have managed to take control of their finances and kick debt to the curb. Some people share their success in the comments, but many people e-mail me privately to celebrate. For example, Jodi wrote on Friday to say that after more than a year of focused intensity, she and her husband are debt-free:
Before we were introduced to Dave Ramsey in December of ’06, we didn’t think that our financial situation was that bad. We had a little bit of credit card debt (from lack of an emergency fund), a car loan, and student loans. No big deal right? Until you add it up and realize that you have $23,000 of debt on a $39,000 yearly salary.
So we went crazy and paid it off… in 16 months.
How? We got on a budget, and then my husband took on (a lot of) extra work while I kept things going on the home front. I am amazed and shocked that we could do it so fast! It took a lot of sacrifice and doing without, but it was worth it to have our first Debt-Free Budget Talk for the month of May.
I want to encourage others to keep it up and kick debt out for good! Now on to the emergency fund!
That’s awesome news, Jodi. I paid off $35,000 in 38 months. Jodi paid off $23,000 in 16 months. Goals like these are achievable if you’re willing to make some sacrifices. Start with small moves and gradually increase your ambitions as you get the hang of saving and investing. Set goals, work hard, and kick ass!
This is the first of what I hope will be an ongoing series that profiles the financial victories of Get Rich Slowly readers.
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Wow! It’s stories like these that convince me that I really CAN do it. I already know that I can pay my credit card balances off (less than $3K now!) but my student loan debt seems like an unbeatable monster sometimes. Reading about others who have been successful helps keep me inspired and motivated. Thanks!
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wow…that is amazing.
I hope I could be debt free soon.
By any chance Jodi mentioned how she manage it in more details?
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Fantastic – good for you Jodi! It’s definitely inspiring to see folks get out of debt. I am sure it is truly empowering to them, they probably feel they can do anything! After years of saying I had “no debt”, I realized that my HELOC was, indeed, DEBT! I have cut the balance in half so far this year and plan to pay it off by Dec if possible. Then on to paying down the 1st mortgage, of which we cut from a 30 to a 20 year loan, and only have 16 years left. Let’s see if I can get it done in 13 and retire early!
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What a fabulous accomplishment!!! There is NOTHING like the feeling of being debt-free!
I paid of $18,000 in 18 months, and am enjoying my first debt-free month (other than my mortgage, at 5.25%). During this time, I also managed to accumulate $4,700 toward my goal of $5,000 for a minor emergency fund. Coupled with a paid off $35,000 Home Equity Line of Credit, I can face most any emergency at this point.
I also fund my retirement to the tune of 10.5% of my annual income, and will increase that contribution next month unless I decide to divert it to my mortgage and pay that off sooner. At my age (54) I’m not sure whether that is the best direction, so I’m doing some calculations and will make an informed decision. Input welcome!
Rock on!
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I just finished paying off my only debt, a $10,000 credit card from college, last week.
I did it in 8 months, on a very meager hourly wage (think one notch above burger flipper) at a web startup I commute 200 miles to each week (just think of the gas and hotel costs!) All while paying for an apartment with my fiancee.
Your blog has helped me a lot, not just with practical strategy, but with inspiration. You helped me keep my determination towards my goal.
I look forward to planning my next moves: emergency fund, savings, tackling my fiancee’s student loans, buying a new (used) car and saving for a down payment on a home with your sage advice.
I just wanted to say thanks for your great blog, you’re helping people.
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How in God’s name did you do that? I want to get out of debt on 30k a year
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Were you able to pay off this debt with the salary of 39k? That is awesome but would be interested in more details.
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These kind of success stories always seem to have a married couple with two incomes involved. Maybe there needs to be a finance blog dedicated to singles?
I suppose I’ve paid $7k in debt down in 18 months, but most of that is minimum payments on my car…
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Jarick: What you’re not seeing is that often enough with married couples, the majority of the debt either comes from one person, or from things a family finds more necessary than a single person does (like a house, or not having roommates, eating healthy, etc). I know both of these are true in my marriage; if I had not gotten married four years ago, I would probably be completely out of debt right now, since I graduated college with only about $20k debt and started making a good salary right away. Not so my husband – way more student loans (plus credit card and car debt), and a much smaller income to start. And then we bought a house…
Not that I would do it differently, but I do regret not making more of an effort to keep living like students during the first years of our marriage.
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Jodi,
Congrats on your new debt free life. It is examples like this that show while the journey is difficult, it’s well worth it.
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That is a great story. Whatever you think about Dave Ramsey’s advice, the man can certainly motivate.
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That’s a fantastic achievement, well done Jodi!
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Congrats Jodi!!
I am so excited to be in your position. I started to dig out of my $22000 hole in October of 2006. 18 months later I’m down to $6500, and on track to be 100% debt free by December (26 months). Not as ambitious as some, but it feels great all the same. I never thought paying bills could make me so happy!
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I love hearing these kind of personal success stories. Thanks for sharing with us – and inspiring us!
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Congrats. It gives me a little hope to hear these kinds of stories. My financial situation seems so impossible sometimes and I just don’t know where to start. Maybe someday I’ll figure it out and I can post my story.
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I love reading stories like this. I feel so motivated. Congrats Jodi!
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That is incredible! We are still working to become debt free ourselves, and enjoy reading these inspirational stories because it motivates to keep going in our quest for financial freedom! Keep them coming, J.D…I love the idea of making this a series post.
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that’s a wonderful story. we are all celebrating with Jodi!
we wiped out $18k in medical debt in 18 months. and during that time, we also kept paying our car payments at ~$9k/18mo. i will say that we had a sizable e/r fund which helped, but i felt awful wiping that out.
we did this on a ~$50k annual income, but since half of that was straight commission, the income was really variable depending on time of year and such. and since the medical problems affected the commission earner, there were some weeks where the 40 hour paycheck was $50.
it was not a pleasant 18 months, and the fallout has hit us hard (lost one income, gained one tuition bill) but having no non-subsidized debt is so freeing.
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HOW?
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I’ve noticed that in every case where someone got out of debt they first got on a written game plan – a budget.
Planning is just one of the keys to success, with money or anything else in life.
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The power of desire is incredible, go Jodi! I should be out of debt this time next year, including student loans, this story inspires me. YAY!
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Congrats! We are down to only Mortgage and student loan debt. Question: I am not looking to pay off student loan debt early. The rate is consolidated at 1.6% after rate reduction program. The loan total is around $50K, but I make more interest in my high yield savings account let alon. So I feel like they are the ones losing money on the loan not me. I’ll take my leftovers and invest in MFs. Just wanted to make sure others agree. Thanks
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We got on a budget and spent less than we earned. We also sacrificed on a lot things. For example, we only had $5 a month each for a “blow fund”. We watched television for free online instead of having cable. We made our own gifts for Christmas or kept it really simple. etc…
But what really did it was my husband taking on extra work. A LOT of extra work. He would come home from his regular full time job only to work more in the evenings and on weekends. While he did this, I took on the extra work of watching our two young children alone all day.
I am really blessed to have a husband who is willing to sacrifice so much for his family. And I am grateful that God provided such wonderful opportunities for my husband to make the extra cash.
The details…
- Our debt snowball was $560 per month and we added to that what we could from the leftovers of our monthly budget.
- We had a $3000 tax return from ’06.
- My husband made about $18,000 (pre-tax) in extra work during that time.
(If you notice that this is more than the $23,000, we also had a baby last year and you can imagine the medical bills. I am proud to say that we saved up for them before she was born!)
Thank you all for your congratulations. I hope more people can taste this freedom!
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somebody needs to teach us how to understand the tax system.
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I think this is great, and I’m trying to do the same with my situation, although I also admit it’s been in fits and starts. But I’m ‘back on the program’ again, and am thankful for it. Stimulus check is going to finally paying off one of my last two remaining credit cards.
One thing I would *love* to see here (and forgive me if this has happened already, because I’m new and maybe I’ve missed it), is if a family or single person or whatever is followed from beginning of their payoff mission to debt-free completion. A journal, if you will, that readers here could follow along with, and also could provide suggestions. Those of us still struggling with the how-tos of it all could gain some very valuable insight from those of you who’ve been successful so far.
Thanks for this blog…only wish I had found it sooner.
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Jodi – That’s so awesome! And WAY TO GO!!
I paid off $12k in 15 months. I started off making only 26K/year, which made paying the debts off really hard – especially because I had 11 credit cards all wanting payments from me. But as the snowball grew, one by one they were paid off. My income has since slowly grown to over $40k, most of it side businesses. I am waiting for the final paycheck to put the last lump sum into my card and BE DONE. It feels SO AWESOME! You two have done a good thing for yourselves, but as a Ramsey listener, I know you already know that
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Jarick – antishay.com is geared specifically toward young singles who are trying to take control of their finances and become debt free. My personal goal is to retire early. If you have questions, feel free to email…
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Congrats on the feat!
I think one of the greatest accomplishments is the future impact that this will have on your kids.
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Congratulations! This is quite impressive. You must feel reallllllly great-
It’s onward and upward now!
Lisa
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Jodi’s not alone. My wife and I are literally days away from paying off my $4k worth of student debt, and we’re on track to pay off our $8k auto loan by the end of the year, at which point we’ll be debt free. It wouldn’t be possible without JD and other bloggers like him. You guys are truly terrific.
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I have to admit that, while this story is very motivating, I am personally feeling a bit lost and overwhelmed right now.
I’m the wage earner in my relationship, making about $55k a year. My fiancée is still in college for another year. She doesn’t work at all at the moment, since we decided she’d get better grades if she wasn’t working (and it’s proven true; she’s getting a 4.0 this semester instead of the 2.5 she had last year).
Together, we have a lot of debt. Counting the jewelry store credit card I got and used to buy her engagement/wedding rings, we have four credit cards that are all close to maxed out (about $10,000 total in debt). Additionally, I owe about $25,000 in student loans and she will have about $12,000 in loans after all is said and done. That makes us $47,000 in debt.
On top of this, we’ll be getting married in about 14 months and need to save up for that. On Friday we’ll be opening a savings account together.
Because we didn’t want to live like students anymore, we are currently renting a house near campus. It costs us around $1300 a month including all utilities.
Due to us going to a convention in a nearby state, expensive entertainment choices on my part, and some unexpected problems, I’ve had to reduce our emergency fund from $1000 to only about $500, and I haven’t been able to put anything into savings or into that fund.
So. Everything seems to be monumentally aligned against us, and despite my relatively high income, I can’t see how to get out of this huge hole we’ve dug for ourselves. Add to that our penchant for buying things we don’t need, and we have a serious problem.
I have a copy of Dave Ramsey’s book, Financial Peace, but whenever we try and set up a budget it always falls through for some reason.
Please help! With your success, I’m hoping you know some trick or something that can save us.
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I paid off about $60k in student loans and a second mortgage last year. I could have paid off our $200k first mortgage. I instead tried making a better return in the stock market. Well, that money is all gone, thanks to the market tanking and trying harder to make back what I lost. Lost all rationalization. Paying off debt is much smarter than rationalizing something else with math.
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Congratulations Jody!
The trick that worked best for me in getting rid of debt is to over-deduct on payroll taxes. Yes, I know I gave Uncle Sam an interest-free loan, but I could never manage to make myself save an extra $200 a month or more. So I upped my deductions, get a lump sum in Feb of each year, and used that to pay off debt. Now that my debt is gone, I bank it or use it for a major planned expense.
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It’s always great news to hear of someone’s success. Big up to Jodi and her family.
@Todd: I don’t know what ‘rationalizing something else with math’ is supposed to mean really. Math is always correct; some people just aren’t good at it. As someone who clearly is a novice investor, you should have taken the advice of this blog and other PF blogs and gone with a set of low cost index funds. You would probably have increased your money instead of stating ‘that money is all gone’. Would you be up 500%, um no, but up a little nevertheless. Instead by not investing your money properly, you might have well gone to Vegas and gambled it away.
@jtimberman: We rarely agree fully, but your comment here was spot on. Planning is key but having a budget is critical!
@ Ben Overmyer: You’ve seen the folly of quickly upgrading your lifestyle because you ‘didn’t want to live like college students anymore’. It’s costing you a lot more than money I’ll bet…you’re feeling out of control and it is undoubtedly causing strive between you and the girl. Feeling overwhelmed and doing nothing is not the answer. As jtimberman wrote, you must first start a budget, a ‘real’ budget. One that accurately reflects your spending, not what you think you should be spending. Once that is in place follow Ramsey’s or Suze’s or Bach’s or whoever’s plan (which ever makes sense to you) and take it slow. You and the future misses should come together to decide how your finances must change in order to make your dreams become possibilities.
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Ben Overmyer, the first step is realizing you have a problem. The second is to rethink all your assumptions. Personally to me a while wedding band is necessary, an engagement ring is optional. Never buy on credit! My advice would have been skip or get something very modest for a ring. (Look at the rings your parents or grandparents wore for an idea). You can always gift a beautiful anniversary ring when you have the actual means for it.
Your fiance is a student and you were recently a student, what’s wrong with living like students? It’s much more fun to slum it when you are young than as a 60 year old.
Saving for a wedding. Maybe this isn’t possible for everyone, but my husband and I eloped and then had a party at our house. We spent $70 for the party about 13 years ago.
You are starting out your lives together. It is not some tv fantasy. Live within your means and have a more harmonious relationship.
ps- congratulations.
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Ben,
The answers that you seek are in what you wrote. You need to move to something half as expensive. Your fiance can get a part-time job. You can’t control your spending without a budget that you can live with. Nothing is going to make you do this stuff. It is a decision to follow through on what is more important. The statement about the budget falling throug for some reason is very telling on why you have ended up where you have. The solution isn’t complex or a trick, it is just a matter of using commen sense consistently. You clearly understand the problems but seem to be looking for an answer other than what you know is the only way.
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@BenOvermyer,
“Everything seems to be monumentally aligned against us, and despite my relatively high income, I can’t see how to get out of this huge hole we’ve dug for ourselves.”
You answered your own question Bro:
“Add to that our penchant for buying things we don’t need, and we have a serious problem.”
Like mentioned above, consider moving to a location that’s slightly further away but much cheaper to live. If you have to spend $50/month in bus passes to save $300 in monthly rent, seems like a good start.
Absorb as much info from here, and follow your own gut. You know you spend money on things you don’t need, so start small. If you want to buy a magazine, put it down close your eyes and think about your large debt. Then count to 10 then put it down and walk away and think of spending $7 for a magazine or paying down $7 worth of debt.
You can do it! Never think otherwise!
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Great job Jody!
TM – you should read the fiscal fitness journals in the forums. A lot of readers are documenting their debt paydown projects or savings goals. I documented our debt paydown project from 04/07 – 01/08 (we paid off $55,500 in debt in 12 and a half months).
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@BenOvermyer,
I know that overwhelming feeling. My gf has ridiculous amount of cc and student debt and she still has more to go. wedding? engagement ring? house? wtf???
though it’s difficult, the answer lies in ur realization that your spending habits point u straight into a direction of more debt. the only solution is for u to get more income that comes with a risk of even higher spending.
it’s very important that you and ur fiancee ease into a frugal lifestyle now as this financial problem will only grow (all thanks to interest rates ^^).
make a plan, stay positive, and stick with it. put the energy and urgency u put into ur work deadlines into dissolving ur debt.
hope to see your success story here many months from now
cheers!
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Quite impressive. Not spending money is a highly effective strategy.
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Our debt story started in April 2006 and will end (hopefully) sometime 2008!
In 2006 our second baby was due and we needed a safer and larger vehicle for our growing family. April 2006 we researched and got a used but precertified Honda Odyssey for 15K. We put 4K down and started on paying it off. In July 2007 had it down to 4700. Towards the finish line, right? No, we decided that month to use our HELOC to get 22 new energy efficient windows, for $12,400. Woof. I LOVE the actuallly being able to open and close sound-proofing energy-saving nondrafty windows.
I HATE being in debt, and that July we were in debt for 17K!
This April paid off the car. This May our HELOC loan is at 5800 balance, which means we’ve paid off 11K in 10 months. We’re not there yet but I can see the light at the end of the tunnel.
Get Rich Slowly (and also the Simple Dollar) have been great for emotional support in valuing overall fiscal health over immediate gratification.
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It’s inspiring to see all of the success stories. I’m 52 and used to be the poster-boy for bad financial decisions. Everyone in my immediate family has filed bankruptcy at least once, if that tells you anything! I was making 51K and deep in debt when a co-worker turned me on to Dave Ramsey. I picked up a sencond job, got a raise at my main job, and in 19 months paid of $27K in debt. Wow, what a relief!
I bought an affordable home, and still have 40K in student loans to pay off, so I have more work to do. But retirement is looming, and I’m not sure which way to go at this point. Anyway, I enjoy the site and all the stories, and I especially enjoy feeling prosperous when the news tells me every night how bad the economy is.
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Wow, Jodi, what a great story.
I’m not there yet, but I hear Dave Ramsey’s callers saying how much debt they paid off and how long it took to do it, and then I saw this post, so I got to wondering: when my wife & I are done paying off the 2006 VW Jetta TDI loan and her college loan, how much will we have paid off?
When we got married, we had $44k in debt. But we will have paid off much more debt than that, because we have financed 3 cars and taken on a 2nd mortgage since then: a 2001 Honda Civic loan of $15.7k, a 2003 VW Jetta 1.8T loan of 20.7k, and a 2006 VW Jetta TDI loan of $22.8k. The 2nd mortgage was initially $22k, but due to the current refinance process (where we will combine 1st and 2nd mortgages into one, thanks to increase in asset value and decrease in LTV) we will have paid off only about 10.5k of the 2nd mortgage before combining the two.
That’s a grand total of nearly $115,000 of non-mortgage debt. (For these purposes, I do not count the 2nd mortgage as mortgage debt.) That’s sick.
So far it has been 8.5 years, and I expect to have the TDI and college loan paid off within 2 years, so let’s just make a round 10 years. That’s a steady debt reduction plan of about $1,000 a month for 10 years. Wow. That’s really sick.
We obviously were never really gazelle intense. I’d like to think I am, but the truth is there are many areas where we could cut the budget that we didn’t. Just this week, though, we canceled cable – and so far we are loving it! We find that we have so much more free time now – we get lots more stuff done.
I can think of a lot more interesting things to do with $1k a month than to pay off debt, which is exactly why I do not want to incur non-mortgage debt again once I’m done with all of this, and I am making preparations so that I don’t have to incur any more debt.
And boy will I be excited when this is all over. I really can’t wait. Since we’ve been married, we have never been debt free, and we have always had a car payment. We still have a ways to go, but as long as we continue this trajectory we will get there.
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Great success stories. My wife and I just paid off our HELC. It felt great! $22k in 12 months. Luckily, we don’t have any credit card debt. All of our debt is tax deductible which helps a little. We’re hoping our cars will last long enough for us to wipe out a large chunk of student loan debt and build up a larger emergency fund.
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I’m a big believer in Dave Ramsey. I finally decided to try his plan out and was able to pay off $20K in around 18 months. It was the best feeling to send in that last check. It’s nice to be debt free and feeling rich, even though I’m not. I just don’t have that monkey on my back.
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I have never read Dave Ramsey’s plan, but I just finished school in April and have paid off nearly $10,000 in credit card debt in about 1 year. I will be debt free in 7 months, as I have just a student line of credit left to pay.
How did it do it on a student’s budget? Well, my dad always says “it’s not about the money you make, but the money you save.” That is really true. I am now working full time, but even when I didn’t have a regular salary, it was all about cutting expenses. The best way for me was to use cash FOR EVERY VARIABLE EXPENSE. The rest was automatically debited from my account.
Some advice from me:
1. Don’t cut from your personal entertainment budget. If you’re miserable, you’ll overspend. Put aside money for the things you like to do.
2. Use cash! When it’s gone, so is all your money. You’ll spend it slower if you can see it leaving your wallet.
3. Put the cash in categories (example, gas, groceries, entertainment, church donation). If you have some left, you can steal from the other fund, but make sure you have enough in each category.
4. Make your debt payments automatic! Pay them without seeing it.
5. Put away money for saving. It is not counterproductive! If you don’t, you’ll just put it on credit card and be back in debt. Save for you goals, and plan for them and you’ll be fine.
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I am on my way to paying off $100,000 of debt. Most of that is the mortgage, but It feels great to know I will be debt free in about 3 years! The older I get, the more I realize that NO DEBT is good debt. Kill it all then begin to accumulate real wealth. Say NO to the zero percent interest loans, they are like a snake in the grass. I have paid off $38,500 in 19 months.
Dollars Not Debt
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I PAID OFF 23000 dollars of debt in 9 months. My debt consisted of 9500 dollars in student loans, 2200 in outstanding balances to my school and roughly 11300 dollars of credit card debt. I live at home but it was HELL for 9 months. I remember at one point in time I had only $2.87 in my bank account. Imagine walking around with only $2.87! But I finally did it and now I am debt free! Next month I will be budgeting off of money that I can save and not money that goes to the bank! The trick is to live like crap, learn to love to live like crap, understand that when youre done you will be dependent on no one (no credit card, no bank, etc) and you will be FINANCIALLY INDEPENDENT!
AND TRUST ME, IF I CAN DO IT YOU CAN TOO!
Kind, Regards
Z
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I have 5 credit cards that equal up to 23000 in debt. I also have a car that has $2800 more to pay off. I have a home that is paid for, but It is in a bad neighborhood. I want to move. What do you think is the best thing for me to do. I make $55,000 a year. And I have 5800 cash in the bank.
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We are $23,000 in debt. There are 6 of us in our family so it’s hard for my husbans yearly salary of $73,500 to take care of us. I have been trying to get Disabilty since 2009, I am a stay at home mom of 4 young children:) I have taken Dave Ramsey’s financial advice and we are about to do a loan consolidation with Christian Credit Counselors. Is this a good idea?
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