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Debt Payoff Story: How Jodi Paid Off $67,000

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One of the great things about blogging is the chance to meet wonderful people and connect with them on a personal level. We have that today with Jodi.  She commented on my article about how I paid off $20,000 in student loan debt and I loved her debt payoff story.  She was kind enough to share her story in depth with me and she’s allowing me to share it with all of you.

debt payoffI truly believe her experience to be inspirational and a testament to owning your own financial situation. Jodi took charge of her finances, did the hard, but necessary work of paying them off, and she’s staring at $67,000 debt payoff that is down to its last payment as I share this.  A true inspiration.  Please read Jodi’s story below.

First, some background about Jodi.​

I am 36 years old and live in New York City, where I have lived since college graduation in 2002.

In 2008, I earned a second degree to become a certified court reporter, which has been my full-time profession since.

How did you get into debt?

​I borrowed a total of $50,000 in student loans for both degrees. While finishing up my court reporting degree, I was working part time and going to school only at night.

At a certain point, after one of my very long and exhausting days, I reasoned out that I would finish school a lot faster (and therefore, be able to get a job in my intended field much quicker) if I began going to school full time instead. So, I decided to leave my job and focus solely on expediting my degree.

Looking back, I think this was one of the best decisions for me. It enabled me to get a job just ahead of the economy crash of 2008.

But, it also meant I had to live off of my credit cards for a few months while finishing up school without an income. Scary!  And it sure did add up on the plastic.

How did being in debt make you feel?

I have always been practical -- not a big shopper, nor a frequent vacationer -- so debt has never been something I was comfortable with. My reasoning, though, was that accruing debt when I did was a means to an end in my life​ that would one day pay off.

With that said, it was not something I truly cracked down on until the last three years or so, when I moved into my own apartment. Prior, I had been living with my best friend for many years and sharing expenses.

Ironically, although my new situation was going to cost me significantly more in rent and bills, I used it as an opportunity to truly examine my finances in order to see how I could make them stretch farther for me. As a result, I became much more strict/smart with money management.  I had to!

What did the debt prevent you from doing?

​I didn't want to give up my social life entirely, especially as a single woman living in NYC, because I knew that I wouldn't be happy if I didn't allow myself a little bit of wiggle room. But, I began to be a lot more selective in events I chose to attend if they were going to cost money.

I had to get used to the idea of simply saying "no." If I didn't really, really want to go, then I didn't.  Instead, I tried to focus on the positive feeling that I'd get from knowing that I'd spent $0 by not attending some ​of those more borderline events that I likely would've have been front and center at before.

You really have to get over the fear of "missing out" when you become serious about debt payoff!

Take us to the moment you decided enough was enough. You decided you would climb out of the debt whole.  What was that like?

​This moment, for me, was that three-year mark where I moved into my own apartment.  It was the right time for me to live solo, and I was truly excited about it, but I knew I'd also have to make some changes and sacrifices in order to get by.

So, I started to envision the freeing feeling that would inevitably come on future paydays when I could actually KEEP some of my money without feeling like there was somewhere more responsible for it to go!

From then, I began paying as much money as I could every month towards that debt, allowing my excitement at the thought of one day being finished to motivate me.

What debt payoff method(s) did you use (i.e. debt snowball)? How did they work out?

One of the first things I did was to start researching online in order to learn from others, which included reading personal stories and blogs (like yours!) This has helped me to truly see the light at the end of the tunnel by seeing others come out on the other side.

​I also did use Dave Ramsey's Snowball Method before even knowing who he was or that that's what it was called. It just seemed so logical to me!  I used this method in choosing to pay off my student loan debt for good before tackling my credit cards.

Yes, the student loan debt was "good" debt that carried lower interest rates than my credit cards. But, it was also a debt that was locking up $300 monthly payments from me.

So, since that total debt was far smaller than my credit card debt by this time, I decided to attack it full force as my priority. I figured out which of the loans had the highest interest rate and paid that off first, then the second, and so on.

Getting that "Congratulations!" email was like winning the lottery!

In the meantime, I had found a great 21-month 0% credit card offer, so I transferred my remaining credit card debt to that card. I learned that a credit card that offers a deal like this can be a very positive tool in debt management if you use it responsibly.  I vowed to never make a purchase on this card and to only pay it down -- which I stuck to.  It was reassuring to know that I had nearly two years where my payments would ALL go to the principle and not to interest.

Did you cut any expenses to have more money to apply to your debt payoff?

I also cut cable and made my own antenna using a YouTube instructional video so that I could get the basic HD channels and news free. And I switched to a cheaper phone carrier that actually offered a better plan.  These changes alone saved me about $120/month.

I then started following the "$5 Savings Plan," where you set aside any $5 bill that comes your way. Doing so requires you to be a cash user and not a card swiper, but I thought that using cash would likely make me more mindful in my spending anyway -- which it certainly did.

Putting aside all of my $5 bills wasn't "saving" me any money or making me any extra, but yet I found it very useful as a way to segment my money. This way, I could draw on it in those last few days before payday when things were tight, and it allowed me to avoid using credit at a time I might have been forced to before.  I simply found it to be a fun way to create short-term savings for myself.

All of these strategies have led to the point where my next payment will be my very LAST payment towards my debt. I couldn't be more excited!

Now that your debt payoff is over, what are your future plans?

​Despite being "only" 36, I am now turning my focus to how I can have a comfortable retirement, which I think is so important to start thinking about. The younger the better.  I am fortunate enough to have a pension through my job, and now that my money isn't going to be tied up in debt, I also opened up a supplementary retirement account that will now get 5% of my paycheck as well.

Additionally, I did my research on the best savings accounts out there today and settled on the Barclays Dream Account, which offers 1.05% APY, plus incentive bonuses every six months if you continually deposit money and also keep it there. I plan to set up automatic deposits to that account so that I can finally start SAVING.  Hallelujah!

Also, a vacation to celebrate my freedom from debt is in the works very soon -- once I can officially pay for it all up front.

What’s your advice for others trying to start their own debt payoff?

My advice to others like me, especially if you are paying down your debt solo (many people don't realize how huge of a difference two incomes makes!) is: Get uncomfortable with your debt, and begin to imagine a time where your money can go to only the things that YOU want it to go to.

From there, take affirmative steps to make it happen, even if they seem small at first. Be conscious and be persistent and they will add up.  It's 100% worth it!

What are your thoughts on Jodi’s story? Do you have your own debt payoff story?  Please share it below.  Get the chance to be featured on Run The Money!

  • I love reading when people drop the shackles of debt from their lives. Debt is a double edged sword. If used correctly it can be a great wealth builder (mortgage, student debt, etc) but when used incorrectly (credit card debt) it’s definitely a huge downer. Sounds like Jodi has learned some amazing principles and I’m sure she will reach FIRE in no time at all 🙂
    Mustard Seed Money recently posted…Spending Wisely on MemoriesMy Profile

  • Great stuff Jodi!

    Nothing better than actually having done it to shut up the naysayers that always seem to pop up in stories like this and early retirement.

    “It can’t be done” is the mantra of the defeatist.
    MrDoublingDollars recently posted…1st Quarter 2017 Net Worth Update! [+$16,671]My Profile

  • Excellent work Jodi. I enjoy reading others stories and this one is no different. Congrats on the hard work and good luck on continued success.

    FIbythecommonguy recently posted…Taking Lunch to WorkMy Profile

  • […] of budgeting, saving, and having that emergency fund.  And also doing whatever you can do to pay off debt and relieve yourself of that financial […]

  • Charles Martel says:

    My wife and I will be debt free by Christmas. I’m planning to get it done by late Oct. in time for my wife’s birthday. We took a more circuitous route to debt freedom because I wanted to be cash rich after the 2008 crash. We paid off a $30k student loan and $49k second since 2008 while saving nearly $200k plus $40k in employer retirement plans. That left $46k on our mortgage which is now down to $22k.

    For the first half of our 30 year marriage my wife paid the bills. Before marrying I insisted on two rules: 1. No bouncing checks for any reason. 2. No bill collector will ever knock on our door. About 15 years in, she bounced six checks over three months or so. When I asked when the last time was that she reconciled the checkbook with the monthly statement and she responded, “I don’t know” it was time for me to take over.

    I got things back on track and paid bills for about 3 years getting more and more angry that we were still broke after paying the bills each payday. One day I had an epiphany. I decided that since we were the poor saps who had to leave our comfy beds everyday to go places we’d rather not go, do things we’d rather not be doing with people we’d rather not be, we deserved to be rewarded for that. Beginning that day I vowed to keep 10% of our pre-tax income, come hell or high water. The rest of the budget would just have to accommodate that change.

    Over the next two years I hammered away the bills with every spare penny until the 2008 crash. After that we saved 40% of every paycheck in cash, cut expenses and discretionary spending and put every spare penny left towards debt. Along the way a funny thing happened to both of us in that we became far more content with watching our savings grow than buying largely useless stuff we really didn’t need. We fell off the “consumption for the sake of consumption” train that most people are riding.

    That really felt good. It also felt good to be able to pay cash for a needed new roof, failed appliances and a couple of cars during that time. We were also fortunate to avoid credit card debt for most of our marriage. I think our highest ever balance was about $6k and we stopped carrying a balance 20 years ago. It sure didn’t take the banks long to cancel our cards when we weren’t carrying a balance. Silly us, we thought that paying your debt off every month was the responsible thing to do.

    Three thousand plus dollars now goes to the remaining mortgage every month. I could pay it off Monday if I wanted but the decision to be cash rich in this post 2008 economy was to put myself into a position to take advantage of opportunities that can pop up in recessionary economic times. Just such an opportunity finally came about this year and I’m now working with the SBA to develop a business plan which has the potential to triple our income while keeping our current jobs.

    It’s been said that gold is the money of Kings, silver is the money of Gentlemen and debt the money of slaves. For us that was true in the sense that we tended to play things safe, sticking with safe jobs instead of finding work we enjoyed. Having more savings than debt gave us the confidence to make some career changes that increased our income and benefits and our jobs are so much nicer and more fun. That debt slave mentality just fell away.

    For me the trick was to turn savings and debt payoff into a mental game where I always came up with new ways to save more or reduce debt quicker. It became a point of pride to always improve upon last months effort. Playing with online debt repayment calculators that displayed an amortization schedule became cheap entertainment. I expected more resistance from my wife but once she saw savings pile up and debt melting away she was fully on board.

    We are in our early fifties so now we need to kick retirement planning and savings into high gear. We’re spending the rest of this year educating ourselves on that endeavor so the moment the mortgage goes away we will be off and running. It’s time to put the former debt payments to work building wealth for ourselves. Our only regret is that we didn’t do it sooner.

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