How I Paid Off $14,000 in 14 Months and Became Debt Free

As of May 29, 2012 I made my last debt payment and officially became debt free!!! I share a lot of my progress here on this blog with all the ups-and-downs along the way. But there’s still more to the story.

In March 2011 I finally faced the harsh reality that I was over $14,000 in debt, had no savings and my financial life was out of order but I didn’t know how to fix it.

I had just gone through a divorce, so my personal and financial life were in shambles. I asked myself “How did I make this much money and always be so broke?”

how i became debt free

While I enjoyed my job (working as an accountant no less), I still felt like a hamster on a wheel; like I was just treading water. So I made the decision to become debt free, make a game plan and turn my life around.

My Total Debts

  • Credit Card #1: $1,833.17
  • Credit Card #2: $909.12
  • Car Loan: $11,342 (original cost was $16,575 but I put money down)

Total: $14,084.29

Total Debts

My Income

  • Full-time job: $37,072
  • Bonuses/side jobs: $5,000

Averaged $3,496 per month or about $42,000 per year (click here for details)

How to Create a “Get Out of Debt” Plan

The first thing I did was sign up to ReadyForZero and tally up the total amount of my debts. Their free debt plan makes it super simple to create a plan, chart your progress, and even make payments directly through their site.

Since ReadyForZero also brings in the total amount of your interest payments for each debt (so you know which one to attack first) I started paying down the credit card debt first. Not only did it have the highest interest rate and it’s unsecured debt which makes it a riskier debt to have than my car loan. Plus they were smaller balances and it was easier to start small and work my way up.

My initial reasoning for being debt free was to finally  be rid of the banks and credit card companies always having their hands in my pockets. I have a rebel streak in me and got sick of people telling me what to do with my money.

But after the year went on, I found other inspiring reasons to live a debt free lifestyle. One of the driving forces was to create a life of freedom, to travel more and even build my own freelance business on the side so I could work virtually anywhere.

That’s the motivation behind this blog. I really enjoy being a personal finance freelance writer, and this blog has given me a platform to be accountable to all my career and financial goals.

Step 1: Create a difficult but attainable timeline.

I made double payments on my auto loan, and tossed any extra money towards it throughout the year. I even worked at H&R Block for a couple tax seasons at nights and on weekends to make extra money.

But then, in November 2011 I got even more serious (some call it gazelle intense) and created a new debt goal. My mantra for the new year was “Make 2012 Epic” and I desperately wanted to become debt free.

After inputting my loan and payment information into the ReadyForZero system, it gave me a payoff date: December 21, 2012.

At first that date seemed very reasonable. I planned to make double payments, and put any extra side income or savings towards the loan balance. However, I gained momentum as I saw my debt decrease and I revised my initial goal to July 2012 – which took some serious motivation and sacrifice to hit.

Step 2: Make the necessary sacrifices.

As you can see, by looking at the numbers, I paid off $14,000 in 14 months with gross income of about $42,000 per year. Which means I was only living on two-thirds of my income. It was rough in the beginning — let me tell you.

But once I viewed the budget as a spending plan and had more control of where my money went, I learned to love living below my means. Here’s some of the things I gave up to make it happen:

  • Cable TV
  • Gym membership
  • Tanning/salon visits
  • Vacations and traveling
  • Dining out at restaurants
  • Going to the movies

I’m not a big shopper so going to the mall isn’t something I had a hard time giving up. But the most difficult for me was the TV and going out to movies. I love watching shows and relaxing in front of the television.

But I realized those activities were a big hindrance to my time and production, and kept me from reaching the debt free lifestyle I wanted to achieve.

Step 3: Maximize earning potential.

To go along with my New Year’s anti-resolution, I spent a lot of my time marketing myself and my skills, so I could raise my income more. I cut back on my expenses as much as I could, and now it was time to maximize my earning potential.

Like most people, I didn’t think I had enough time to work another job. But what I discovered is, if it’s your priority – you make the time. And since getting out of debt was my priority, everything else came second.

My social life and sometimes even sleep took a backseat to reaching the ultimate goal. My dedication paid off and I added over $500 per month of income with freelance writing.

Step 4: Stay motivated and celebrate small wins

The journey to getting out of debt was a long one. You may think $14,000 isn’t a lot, but when you’re looking up at that mountain of debt, just try to tell me how small it is — because it feels enormous.

I also had to make this journey alone, with no partner or spouse to help me through the bad times. Honestly there were a few days I wanted to quit, but the blogging community and readers helped me through it. I can’t thank you enough!

One of the most important things I did, was celebrate the small wins. Even if it was just finding the courage to keep going, I rewarded myself in a small way. Some of you might be more intense than I was and be able to pay off your debt faster (more power to you!), but there were times when I needed to be human and take a break.

The point is, I knew with my determination and discipline I’d accomplish my goal. And if it took a few extra days or weeks to keep my sanity, then I felt that slowing down was qualified.

How I Paid Off $14,000 in 14 Months

There are many other strategies I implemented while becoming debt-free and tons of awesome financial tools I used along the way (which I might expound on later). But when you put all the elaborate plans and gadgets away, the biggest tool in your financial arsenal is YOU!

There’s no secret formula or magic sauce. Your decision to get out of debt and your application to that process, is the only thing that will determine your success or failure.

That’s what I finally learned — after years of living with debt and trying to take control of my money — I was both my biggest obstacle and greatest motivator.

Are you ready to get out of debt? Pick my brain and see what your next step is towards becoming debt free!

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About the author: Carrie Smith is the financial artist and owner of Careful Cents, a site that helps creative freelancers discover the art of making a living. In May 2013 she quit her full-time accounting job to pursue entrepreneurship and blogging. Since then she’s been featured in sites like The Huffington Post, Glamour Magazine, and Kiplinger Finance. In her spare time she enjoys painting, sketching, and making food with her chef husband. You can connect with her in real time on Twitter or Instagram: @carefulcents.

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