Lessons Learned From A Six-Figure Debt Payoff

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A Story of Six-figure Debt Payoff

Debt payoff typically isn't easy. Many times, the first step is to take a cold hard look at your financial situation which is more than most can tolerate. In the end, however, you will be glad that you did.  

Debt payoff is often a thankless endeavor because it mostly revolves around undoing a mistake. Being in debt means that the money was already spent. The bad decision was already made.

Contemporary American culture informs us that we all should strive for the "American Dream". Yet most of our understanding of the American dream is violated by the pervasive images of cars, clothes, and material possessions from films and TV shows. Folks, this is not reality.

America is about freedom. Freedom cannot possibly be pursued to its' fullest if you are under a mountain of debt and financial obligations. Debt keeps you in jobs you hate. Debt is one of the leading causes of stress. Debt breaks up families and creates marital divide. 

For Millennials, student loans are the spearhead of our credit crisis. Unaffordable rates for college tuition is readily subsidized by eager lenders preying on the young and innocent. Millennials were led to believe that the only way to "succeed" was by going to school. How well is that paying off for us?

We are left to watch those who have elected to go into trades and forego college beginning their lives with significantly higher levels of financial strength. They start families much earlier than college-goers. With a smart first time home purchase, they are able to avoid debt to an extent most academically-inclined students will never know. Those who avoid student loan debt have essentially given themselves many advantages that otherwise are unattainable for those who have received higher education.

Don't get me wrong, college education typically equates to higher salary and lifetime earnings (provided you find a job). But it is about what you trade in your 20's and 30's that is not easy to recover. If you spend most of your 20's and 30's paying off student loan debt-which is what most people are doing-you will have little energy and capital to allocate elsewhere. 

Student loans are a difficult situation that is wreaking havoc on Millennials, as well as younger generations. This crisis can be averted however, even if you already have accrued a significant amount of debt. I must admit, it will take tremendous discipline and consistency to get yourself out from under your student loans. 

Nearly $100,000 In Debt to Break-even

​The three biggest tips I followed for six-figure debt payoff: 

Be creative with housing:
The way I was able to avoid housing payments is I stayed with my parents for 2 of the 3 years in graduate school. In the third year of PT school, I moved into an apartment where I negotiated an agreement to trade labor/maintenance on the building itself as a rent payment. 

• Move back home. Get a roommate. Negotiate a bartering agreement. Airbnb. 

Limit transportation expenses:
The way I avoided toxic car debt was I drove a '96 Toyota Camry with 200,000 miles that I paid for in cash. Get a grip. Unless you have extreme concerns about safety ratings for a family of 5, swallow your pride and drive a cheap used car. Period.

• If you already have a new car or car payments, call the dealer immediately and see what you can get for it. Decide if the amount you get offered is worth cutting bait and getting out of that monthly payment to free up that extra 200, 300, or even $400 plus per month to hurl into that debt. 

Keep recurring costs low and aggressively use the savings for debt payoff:
I took a look at all my bills like cable/internet, utilities, and insurances. I called each of the companies or researched competitive quotes to cut recurring costs. Each dollar I saved went into aggressively paying the debt. 

• Note: Some have recommended bill negotiation services such as BillFixers to lower your recurring monthly bills. I have yet to personally try them but figured they are worth a mention here. 

Focus on earning more through increased skills (or increased hours):
I quickly stepped into a lucrative field, but also maintained a part-time job in the evenings during my three year debt payoff period. It felt arduous at times, but in the end, it was well worth it. I also took some time to learn some management lingo by reading business journals and was able to land a management job at a private outpatient practice which is quite rare for my field. 

The Truth Of Debt Payoff Strategies

If you have a significant amount of debt, especially student loan debt, I suggest you get serious about it and turn it into somewhat of a "game" because there will likely be a significant amount of strategy involved. You will need to get focused. Do the math. Find out where your money is going. Calculate your life energy and where it all goes.

If you want a very detailed, impossible to beat formula for how to calculate your real hourly wage, you need to read Your Money or Your Life immediately! This will help put your hours and dollars into perspective. 

MANY have had success eliminating debt by following Dave Ramsey's Total Money Makeover book (myself included). 

After reading this book I understood how to become focused on the objective. The only thing that mattered was freeing up as much money as possible so that it could all be used to aggressively pay down debt. Every extra dollar, whether it be cost cutting or selling shoes on Craigslist, needs to be contributed to getting this toxic debt out of your life once and for all.

Share your story in the comments below. What are your tips for aggressive debt payoff for our community?

Until next time...