How I Paid Off $50,000 of Debt in One Year

I was the ultimate consumer. I loved material things! I learned this from my parents who actually believed the best things in life are the most expensive. I’m not blaming. I’m just explaining. But, what I didn’t learn from them was how to pay for it all.

I bought everything and charged it all. At one point, my credit card balances were as high as $50,000! That, plus the $100,000 in student loans, had me drowning in debt so deep that I tried to console myself with even more spending. “What’s the point in trying?” I rationalized. “I might as well have a good time!”

I secretly hoped that things would magically work themselves out and told myself that, if worse comes to worst, I could always declare bankruptcy. It wasn’t until I decided to help my then boyfriend pay down his debts—which were puny compared to mine—that I realized how exciting and fulfilling it can be to pay down one’s debts. (In those days, it was easier for me to help others with their problems than to look squarely at my own.) After I successfully helped him pay off all his debts, I was ready to tackle my own. It was like trying to climb Mount Everest after hiking the Half Dome, but I had no choice. I finally did some research about bankruptcies and realized it was not a very good option for me.

Instead, I used the five-step method to set and achieve goals to eventually pay off $50,000 in one year. I did it in stages, by weaning myself off of the easiest things to cut out of my spending habits first and leaving the hardest for last. By gradually becoming more and more frugal, I managed to pay down a huge chunk of my debt in a surprisingly short time. Now, I know it’s not glamorous to be frugal. Believe me, I—who used to spend way too much for everything—can fully appreciate that. But, some people think it’s un-American to be frugal! Most Americans make fun of it. You’ll never hear anyone tell you you spend too much money. Yet, try to be frugal, and suddenly you’ll hear “tightwad,” “miser,” “cheapskate,” or “Scrooge.”

What’s going on here? It’s not stealing, for goodness sakes! Why such a strong reaction to self-restraint when it comes to spending money—especially money that you don’t have? One hilarious reader dismissed the advice in my “Millionaires v. Billionaires” article to be “frugal, frugal, frugal” with the single word: “Cheapo- illionaire!” I love that! It still cracks me up! I’d like to use it for the title of a book someday. Clearly, he equates frugal with cheap. Lucky for me, I don’t. I equate it with intelligence and, frankly, the only sane way to survive in this insanely overspending society. Anyway, I’m almost out of debt now. Here’s how I did it.

STEP-BY-STEP ELIMIATION OF EXCESS SPENDING HABITS

Your deadwood spending habits are probably a lot different from mine. The point is to start with the least painful thing to cut down on—or completely cut out of—your spending habits altogether and go from there. It may take you longer or less time than it took me to get rid of all of them. Be patient and kind to yourself as you go through these important changes. But, also, be firm, focused, and determined.

1. Manicures and Pedicures ($50/mo.): As an attorney, I thought I had to look the part as well as act the part. So, I tried to keep my fingernails and toenails picture perfect all the time. They weren’t long Florence Griffith-Joyner artworks—just short with French tips for my fingers and Million Dollar Red for my toes. Once in a while, I opted for Chanel’s Vamp on all ten extremities. Yeah, I really liked them. Sometimes, I still miss them. But, the surprising thing is no one else did when I stopped getting them done every week. No more pampered hands and feet unless I do it. But, I paid off $600 more of my debts that first year, and every year since, and look forward to saving it when I’m finally out of the hole!

2. Car Payments and Extra Insurance ($500/mo.): I borrowed money from a friend to pay off my car loan so I could, not only stop the monthly car payments, but also drop all the extra insurance the bank needed and kept only the minimum required by law. Now, you might be able to get such a loan from a friend. Or, you might not want to risk dropping your car insurance to the bare minimum. But, if you do, you can save a bundle. I saved $500 a month or $6,000 a year.

3. Roommate ($1,000/mo.): This item isn’t exactly quitting an excessive spending habit—but in a way it is! I used to live alone, which meant I had to pay all of the rent and utilities by myself. That was excessive when I had so much debt plus extra room to sublet. I dreaded the thought of sharing my living space with someone else because I love both my privacy and personal space; but, debt is debt—and it’s not going away by itself. So, I bit the bullet, got a roommate, and threw another $1,000 a month, or $12,000 a year, at my debts.

4. Shopping Sprees ($1,000/mo.): I’m ashamed to admit it, but I was a hardcore shopaholic. Of course, I rationalized my fixes like all addicts do—that it was for my professional career—or to treat myself for long hours at the office. But, also, like all addicts, the fixes always left me in worse shape than before—more addicted and more unhappy. Finally, I went cold turkey and forced myself to stay away from all malls, department stores, and even discount stores. I realized I could get by quite nicely by rotating just a few suits each week and pretty much the same casual clothes in the evenings and on the weekends. Suddenly, my drycleaning bills and laundry expenses went way down, too. And, getting dressed in the morning was a breeze! Also see “How to Organize Your Closet in 5 Simple Steps.”

But, what really cured me of shopaholism for good was trying to resell or consign most of my high-end designer clothes one weekend, after realizing I no longer needed such an extensive wardrobe that required such costly dry cleaning to maintain. To my shock, my mint condition designer clothes that I paid tens of thousands of dollars to acquire were not even worth a few hundred bucks for the whole lot! It hit me like a ton of bricks that clothes depreciate faster and more completely than automobiles. Note to self: Clothes are not investments!

5. Drycleaning ($200/mo.): When I saw how much money I saved from wearing less clothes that required drycleaning, I had to ask myself if I ever really needed to wear any clothes that needed drycleaning. Suits don’t need to be drycleaned but two to three times a season—and, that’s only if you wear them a lot! Now, I try to avoid wearing high-maintenance clothes whenever I can. If I buy another piece of clothing again—which I might not have to do till the next decade (seriously!)—it won’t be something I have to dryclean every time I wear it. Hence, I saved $200 a month on drycleaning and threw another $2,400 a year at my debts.

6. Car Washes ($20/mo.): I used to scoff when people said little costs add up quickly. To me, any expense less than $20 was never going to make much difference in my budgeting efforts, so I let them slide. Now, I know better. Washing it myself saves me $240 a year, which helps pay down my debts that much faster.

7. Haircuts ($240/yr.): I believe in paying for quality hair cuts and tipping accordingly. A trip to my stylist usually sets me back about $120. But, I switched to a style that grows out nicely without the need for any trimming for a whole year! It’s a longer cut with fewer layers that I can also style easily into a high ponytail. Another $240 a year suddenly available to pay down my debts!

8. Cell Phones ($100/mo.): I got Skype, which, if you don’t know what it is, you really should. If you and the person on the other line are both using it, it’s totally free! But, even if the other person does not have it and just you use it for the call, the cost to you is only $0.02 per minute! I heard they’re even coming out with cell phones. But, until they do, I still have to use my cell phone. Nevertheless, I was able to cut down drastically on my cell phone minutes for those emergency calls on the road. Another $1,200 a year freed up for my debts!

9. Cable TV ($120/mo.): I was a total Food Network buff and a diehard “Celebrity Apprentice” and “Biggest Loser” fan, so this one was almost as hard as stopping my shopping sprees. For a while, I limped by with DVD rentals and movie theaters to get my video plus audio entertainment fix. But, eventually, I got used to the lack of TV. I also learned that certain websites “air” entire episodes of “Celebrity Apprentice” and at least recaps episodes of “The Biggest Loser,” all for free.

10. Restaurants, Bars, and Take-Out ($1,500/mo.): Yikes! Even more devastating than my shopping spree habit was my love of fine dining and expensive drinks. At least with my clothes, I could enjoy them for longer than one sitting. I rationalized this bad habit, too, with excuses about needing to treat myself after long days at the office, yadda, yadda, yadda. This was a tricky one. I really had to do it gradually while learning how to prepare enough tasty yet healthy meals at home that wouldn’t leave me craving my favorite meals and drinks about town. But, it was well worth it! Now, I could devote another $18,000 a year to help make my debts disappear forever! And, I’ve become a pretty decent cook, to boot!

11. Movie Theaters and DVD Rentals ($100/mo.): The last bastion of my former, paid-for-fun lifestyle. Deciding to stop indulging in these was like saying “see you later” to an old friend. Growing up, movies were my special teachers that helped me learn so many things. But, I’m sure I’ll return to enjoying at least some of all of the above activities when all my debts are finally paid off—though, hopefully, never with the same reckless abandon again. At $100 a month, this sacrifice contributed another $1,200 a year to pay off my debts.

CONCLUSION

Tally all that up, and it adds up to more that $55,000 a year! If you adjust for the few extra hundred dollars a month I used for additional groceries to enjoy meals at home instead of at restaurants, then the $50,000 figure is right on the money.

Imagine the possibilities for all the cash you’d have if you used some of these frugal methods to pay down your debts, too! I’m not talking about any short-sighted, short-term shopping sprees, either. What did I do with my money after I paid down most of my debts? I quit my office job to pursue my dual passions of teaching and writing at home, starting with this website. Now, that’s worth all the sacrifice!

Be sure to get the latest articles as soon as they’re posted by signing up here!

[For “Why We Buy It Even If We Don’t Need It,” click here.]

[For “Test Your Spending Habits,” click here.]

[For “Money Lessons for Nice People,” click here.]

[For “The Courage to Be Rich,” click here.]

[For “Change Your Mindset to Change Your Life,” click here.]

[For “What Would You Do If You Couldn’t Fail?,” click here.]

[For “Do You Want to Fly Like Superman?,” click here.]

[For “How to Set and Achieve Goals in 5 Simple Steps,” click here.]

[For “100 Money Quotes,” click here.]

[For “200 Rich Quotes,” click here.]

[For “200 Poor Quotes,” click here.]

[For “100 Love and Marriage Quotes,” click here.]

[For “100 Interesting Quotes by Women,” click here.]

[For all posts about different QUOTES, click here.]

[For “100 Differences between Men and Women,” click here.]

[For “Who Needs Prenups?,” click here.]

[For “Greed v. Desire,” click here.]

[For “Millionaires v. Billionaires,” click here.]

[For “How to Be a Billionaire in 10 Steps,” click here.]

[For “Future Entrepreneurs Test,” click here.]

[For more “Easy Steps to Success with Money,” click here.]