Paying Off $123,000 in Debt in Less Than 5 Years

by Dual Income No Kids on October 21, 2009 · 0 comments

CNN.com had a video today about a family with $123,000 worth of debt and how they managed to wipe it out in about four and a half years. The video can be found here. This family had just let their spending get out of control, and found themselves staring at six figures worth of debt and decided to do the best they could to pay it off. And they were successful.

How did they do it? A couple points stuck out to me:

* First and foremost, they took responsibility for the situation they had put themselves in and they were determined to correct it. They talked about giving it their best shot and going for it. The husband mentioned the shame he felt in letting his debt get to that point. That shame and embarrassment motivated him to do what it took to get the job done.

* They cut down on their budget. It can be easy to dismiss cutting out the little things, such as name-brand food and entertainment expenses because their unit price is often low, so mentally, the impact of eliminating them feels small. But they can certainly add up. This family was able to save a lot of money each month by savings a little bit of money in a lot of different places.

* They worked with an accredited credit counseling service. They had 11 credit cards at one point in time. Managing those accounts is in and of itself a lot of work, so they turned to an organization that would help them manage their debt. If you’re in over your head, it’s not a bad idea to seek advice from professionals. Just be wary of shady businesses.

* The husband got a second job. Working full time (as a chemist, no less) is tough enough as it is. But to then take on an additional part time job? The husband spoke of being so tired that he didn’t know if he was going to be able to make it, but he knew he had to give it his best shot. He did what he had to do to achieve his family’s goal.

Obviously they made huge sacrifices, and I have no doubt that it was a very stressful time for the whole family (especially with three kids) but they were able to achieve their goals. And in the process, it seems like they grew closer as a family (the wife talked about family dinners and how much they enjoy eating as a family now). I thought this was a very inspiring story. It’s nice to hear of people facing incredible challenges and making it through successfully.

-Michael
Twitter: @michael_dink

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