How I Paid off $100,000 of Debt (And How I Plan to Pay off the Remaining $50k)

I started 2019 with about $142,000 in debt. (Whew, every time I write that sentence, I still feel shocked at just how big that number is.) The debt was a combination of student loans, credit cards, an auto loan, and some debt in collections. I had been burying my head in the sand and pretending that the debt didn’t exist, but after a long, hard conversation with my boyfriend about our future, I knew I had to get it under control. 

 

Original debt breakdown by category:

  • Credit Card / Collections Debt: $29,726.65
  • Car Loan: $12,381.66 (original loan of $9,000, plus accrued interest since purchase)
  • Student Loans: $98,099.52 (original balance of $80,000 for two degrees, plus interest)

TOTAL: $142,138.33

 

When I finally came to terms with this debt and acknowledged that I had to get it under control, the first thing I did was read everything I could about debt payoff.

I knew two things: I didn’t want to use a debt consolidation company, and I didn’t want to do any balance transfers, etc. I found Dave Ramsey, the FIRE Community, and Alyssa Nicole Budgets / Aja Dang / Graham Stephan on YouTube. Dave Ramsey teaches the “seven baby steps” to get out of debt, the FIRE community focuses on financial independence and an early retirement, and the YouTubers are all focused on paying off debt, living frugally, and embracing financial minimalism. These three resources combined became my foundation. 

 

To pay off this debt, I had to take some hard and fast action.

I first decided that in 2019 I was going to do a no-spend year. I was going to cut back on all non-mandatory expenses and give myself a small allotment for “fun” money that would cover any “unnecessary” variable expenses, plus a little extra.

To give myself a kickstart and a little bit of motivation, I liquidated my cash savings, except for a $1,000 emergency fund. This was to dip my toes in the water and see if I was ready to get started. (I’m a classic Scrooge and hate seeing my savings account be low. I needed to know I could emotionally tolerate it being low until I was out of debt.) 

To find other ways to fund this debt payoff, I took any and all stock grants, tax refunds, bonus paychecks, etc. and applied all of them to my debt as soon as they hit my checking account. I also put my negotiation skills to work. I had a credit card that was in collections, and I was able to negotiate to pay 74.5 percent of the outstanding balance and they would consider the card paid in full. I repeated this for all collections accounts and was able to negotiate most of them. Finally, due to moving back to Chicago in March and no longer needing a car, I sold my car and got rid of a big chunk of debt by ‘offloading’ an asset. 

 

But where did all that money come from?

The question I get asked most often is “where did all the money come from and are you still saving for retirement?” When I sat down and was looking at my budget in December of 2018, I knew I was going to be in a full-on season of hustle to attack my debt the way I wanted to in 2019.

 

 

I consciously made a few choices

 

The choice to not invest money back into my side hustle business during this season of hustle.

Once I pay my recurring business expenses, my team, and save for taxes, 100 percent of my net profit goes to my debt. Period. Normally I would take 30 percent to pay myself and invest the remaining 70 percent back into my business — through either business savings or improvements. I’m not doing either of those right now, which means my business is largely in a “maintenance” mode in terms of self-improvement.

 

The choice to cut my “sinking funds.” 

Sinking funds are this idea of proactively putting away money for things you know you’ll need to buy in the future. For me, it was car maintenance, travel, toiletries, etc. I’ve cut all contributions to these and have been budgeting very carefully in 2019 to only spend the money that is absolutely necessary to stretch these funds further.

 

Choosing a co-living space in Chicago.

I moved back to Chicago at the end of March. While I could have chosen to get a studio or one-bedroom apartment by myself and living more comfortably, in order to better attack my debt, I chose a co-living space. I am currently living in a 5-bedroom, 2-bath apartment shared with four-plus other people. This cut my living expenses by two-thirds versus a traditional solo apartment.

 

As for the retirement question, yes, I am still saving for retirement.

Twelve percent of my paycheck goes straight to my 401k, an additional $100/month goes into a brokerage account, and I contribute to a separate Roth IRA when I can. I truly believe in the power of compound investing, and I wasn’t ready to give that up just to pay off debt faster. 

 

As I wrap up this year, I have paid off $100,000 of that original debt, but I have also added to it by about $8,000 in new student loans for my doctorate degree, for a total of $149,994.71 in original debt with about $50,000 remaining. All that being said, if I paid off $100,000 in ten months using this method, I can certainly pay off the remaining $50,000 (including new debt) by the end of 2020. 

If you are looking to do the same, I recognize that debt payoff has many factors — income versus amount of debt being a big one. I would encourage you to not necessarily mirror my work step by step, but instead, leverage the resources I shared and create a custom solution that works for you.

Leveraging side hustle work, testing a no-buy year, and checking your emergency savings tolerance are all great first steps for kickstarting debt payoff. 

 

  • very useful post! I think if I have 150k debts I couldn’t pay it even in 3 lives!
    Miki x

    https://littletasteofbeauty.blogspot.com

  • That’s HUGE–congrats! I’m planning to buy my first house early next year, so I’ve been working on paying off my debts this year as well. $15,000 down, $2,200 to go.

  • Rachel Price

    This is amazing! So inspirational. Quick Q – how were you able to sell your car if you were still paying it off? xoxo

    • Great question Rachel. Thankfully I wasn’t underwater on my car. So I called the bank where my loan is at and asked what the payoff was. Then I started looking for places to sell my car. I was able to sell my car at a net gain on the payoff price so it wiped out the loan. Instead of writing me a check for the full amount, the buyer wrote two checks – one to me and one to my loan originator / bank.

  • That’s an amazing achievement, congratulations! Hopefully by the end of next year you’ll be blissfully debt free!

  • a no-buy year sounds like a good idea for increasing savings also! a very inspiring post x

    http://www.ellacharlottejones.co.uk

  • Kenya F

    This is awesome! Congrats! I just started to tackle my debt and hoping I’m done by this time next year or sooner. My first step was moving back with my mom. That instantly saved money from crazy NYC rent. My next step is getting a job paying much more. After a recent layoff I took a position paying less which is killing me. Do you mind sharing how much you make a year?

  • Maura Keeley

    This is very impressive! Great article!

  • Kassy

    Finishing up my Master’s degree this spring with around that much in debt as well–definitely taking notes from this super helpful article. Thank you for sharing!