How I Paid off my Debt


Hi Everyone :)
After I announced that I've paid off my debt yesterday, a few people wanted to know how I did it (plus, thanks for all the sweet comments everyone).
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I've had a large & increasing debt since I was 21ish and had recently reached $12,000 and could've kept going... money management isn't a strength of mine (my parents have often said it burns a whole in my pocket). As a self-employed person supporting myself completely, I was getting sick of wasting my money on credit card minimums that didn't even reduce my totals and feeling the weight of debt on my shoulders.
gaga_dollar
Here's what worked for me...

1. My first step for me was to stop spending so the debt quit growing! No more instinct shopping, only planned & needed purchases.
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2. Quit depending on others to bail you out. My parents have such a good heart and helped me pay off credit cards two times so that I could pay them [my parents] back without interest. It seemed like a good plan and they were so generous, but it didn't teach me to quit spending. The 'pressure' of the debt was relieved without feeling the reward of paying it off and the cycle continued (b/c I reused the paid-off credit card in desperate times, it was so dumb). It's kinda like enabling an addiction... doesn't solve the problem.
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2. In January, I got obsessed with paying off my debt like it was a game... all I wanted to do was see those numbers go down!
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3. Set yourself a reward. My reward was that once I had no minimums to pay, I could afford to hire an employee and use the budget for credit-card-minimums as her wage... and that free'd me from the overwhelming schedule I was swinging. The reward was so worth it!
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4. Make a list and prioritize! I wrote down all my debts and the priority of each. I paid of my debt to my Dad first, then the priority of all others was based on highest interest first (not highest or lowest amounts). Breaking the total down into steps/portions makes it feel so much less daunting and totally attainable :)

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5. Then work hard. Think of ways to earn extra income, sell stuff you don't need/use and dedicate a few months to lots of work with all extra earnings going directly to your debt, one at a time in order of priority! All money on top of minimums makes a way bigger impact and your interest payments will go down each month allowing you to add even more to the real debt!
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6. Celebrate each debt/portion paid off with something that costs no money... for me, crossing it off the list and seeing the next statement come in at $0.00 was enough reward but it's different for everybody.

7. Pay all your regular bills monthly. If you're bad with money, you've probably discovered that utilities and most contracts aside from car and mortgage will let you go a month or two late and charge very little late-interest. I'm ashamed to admit that one of my worst habits was not keeping up with them each month and I was always playing catchup.... which is THE WORST! It's so much harder to make a dent in your debt when all you can focus on is the catch-up game. To keep myself organized and on track, I made myself a monthly chart for the year with all my monthly bills along the left in order of payment required. As I make payment I check it off (check marks are my ultimate reward) & I have REALLY enjoyed being on time every month and organized :)
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8. Once you've paid it off, close the credit card accounts except for one major credit card and always use cash that you actually have. Keep your one major credit card and reduce the credit limit to $1000 or less. After working that hard to pay them off, you're much less likely to want to use it again, but to be safe... make it COMPLETELY un-accessible. Bring your one credit card as extra security when you travel or to order necessary supplies online if you have a small business (paying the amount off immediately with each purchase). Note: It is bad for your credit score to close multiple credit card accounts all at once. Close them 3-5 months apart, but cut the cards up in the mean time.
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9. Dance!!

10. Save money so you never have to use credit cards again, be ready :)

XOXO, You can totally do this!! Come back and tell us when you get there!
Love Leigh-Ann :)
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Next Post: The big monthly Giveaway :)

64 comments:

  1. congratulations! what a huge relief! i know the feeling, and it feels GREAT! thanks for sharing, its hard to find someone who hasn't had financial woes at one point in life! xo

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  2. Wow congrats! The only debt I have as of right now is from my school that I stopped going to lol.
    Then again I'm still only 18. Thanks for the tips though, I'll keep them in mind for when I do get my first credit card! :)

    http://velvetbirds.blogspot.com

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  3. congrats! that is SO awesome!

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  4. i'd love to be your assistant, Leigh-Ann!

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  5. Leigh-Ann, thank you so much for posting this!!
    Xx.

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  6. I'm really proud of you LA, I always knew you could do it. You are an independant woman (throw you hands up at me)"destinys child"...love amanda

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  7. That's so awesome!! Congratulations!!

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  8. LA, I loved watching your video yesterday and now for you to go out of your way to give a step by step of how others can reach your success...you are just so inspirational in so many ways. I just want to hug you :)

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  9. Those are such great tips, thank you so much for sharing! I have no debt at the moment, but I have found myself completely penniless, having spent my entire savings (which was not large, but still), so I think I might use some of these to build it up again! : )

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  10. That's soooo amazing! I've been putting off my student loans for a while & need to get to it for sure! That's probably the biggest debt I'll ever have...hopefully! Congrats!!! I hope I can accomplish this soon!
    xoxo

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  11. so proud of you...hope i can do it too someday!

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  12. Congrats LA! I wondered how you'd done it when I saw your video... We're still paying for our apartment so getting out of debt seems impossible right now, but I find these tips really helpful! Thanks for posting them! :)

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  13. I'm so proud of you LA!! What an inspiration & blessing to all of us!
    <3 Kris

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  14. awesome!! I LOVE paying off debt, or rather DID :)
    We started off with WAYYYYYYYYYY more than that, and after two 1/2 REALLY TIGHT/HARD years, we totally did it. We just paid off our car (7 year loan in 1 1/2 years!) this past month. WOOHOO!

    However, we have NO credit cards nor will we ever again. We have an "emergency savings" of $1000 that covers anythign that a credit card normally would. It is probably different for you being a business owner, but a mortgage/ car loan is enough to have good credit score...you DONT NEED credit cards for that...!
    So happy for you, it's such a good feeling to not be a slave to debt anymore, huh?!
    Sarah M

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  15. Great post. I am currently about 1200$ in debt myself and considering I'm only 20- this scares me. Although I've gone through three years of school and don't have any student loans, the fact that I owe that money to my credit card company is scary. My income definitely does not match up to my current earning ability. I'm definitely going to try to make a much-needed spending/saving/paying off plan for myself.
    Thanks!
    Brittany

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  16. Congrats on being debt-free! I saw the video you posted yesterday, but my work computer doesn't have speakers so I had to read the comments to figure out what the message was! Lol!

    I recently paid off one credit card and am so happy to have one less thing to pay off every month! Thanks for the tip on closing cards. I thought it was bad for your credit, but I wasn't sure but yeah, I'm going to close the card since I wont be closing another for a while!

    I keep a monthly journal of when my bills are due, how much they are, and if they are paid or not. I'm hoping to get a few more off the list soon! Your post makes it definitely seem realistic that I could get free from debt, too!

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  17. thanks for sharing this!! I had a similar new years resolution only i focused on both of my credit cards!! I cut them both up and so far im getting there which is pretty good seeing as im not getting any income from being sick. Government hasnt paid up yet!

    Im printing this. its my new mantra. xoxo

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  18. Oh, Leigh-Ann!!! Congratulations!! I am so excited for you! I went through the same cycle for a while, and I'm slowly watching mine go down. You gave some great great tips, too. Again, I'm so happy for you, girly girl!

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  19. You are so amazing Leigh-Ann, thanks for sharing in your success and helping others achieve the same goals as you have, you rock!
    xoxo~Meg

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  20. this is a GREAT post!!! i love you & your sweet attitude :)

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  21. Hooray! It's always nice when you set a goal for yourself and are able to achieve it..especially one that relieves you of so much stress.

    I really appreciate your willingness to share this. I've been stressing out a lot lately over how to pay down debt from my divorce. Your post gives me a lot of encouragement and direction. THANK YOU!

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  22. Thanks for this post LA! You make me grin ear-to-ear with your excitement and HUGE achievement! I'm so PROUD of you!!

    Luckily, the ONLY debt I have is Student Loans, but I still want to start pinching pennies and living a bit more frugally :) You've inspired me babe, so thank you!!

    xoxo
    O.

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  23. PS. I think you should save up for a treat -- buy yourself a nice little piece of jewelery (like something lovely from Tiffany's)! As a way of commemorating the occasion as well as something to hand down to your future daughter/son or even grandchildren -- so show them how awesome their grammie is/was -- and to remind them the importance of saving!! :)

    Love ya,
    O.

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  24. congrats! i am on my way to being debt free and i can't wait!

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  25. thanks so much for sharing this LA. I'm on my way to being debt free as well. I don't have that much debt. About $2500 but I still feel the pressure of it only because I know it's there. Also I can back you on the catch-up game. It feels good to pay bills monthly and still have some leftover as opposed to paying the late charge. Once I'm done I sure hope that I can do #9 for a good hour.... ;D

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  26. I need to whip myself into shape..I am very good at spending...and can save when I want to-for fun things like vacations..but I need to tackle my debt that has piled up...this gives me inspiration :-)

    Come visit my bloggie..I am doing a random thoughts thingie :-)

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  27. Congrats LA! That is such great news! It must feel REAL good! =)

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  28. thanks for the great advice! just a few days ago i payed of almost all of one of the worst cc's ever... a department store. i feel SO good, even though i still have a lot to pay off (on other cards), just paying off the one made me feel like it's possible:) and i'm now realizing how to shop only when i NEED something. i seriously used to go to the craft store and spend $50 just because i was bored! i keep telling myself that it will feel so good to put all of that saved up cash towards a credit card. it's actually my goal for the next 2 weeks {not shopping for crafty stuff and saving up the money for the cc!!!} your post gave me even more motivation to keep going though, so thanks:)

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  29. Congratulations! Those are some great tips that I'll use.... when I'm older. Haha. c:

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  30. AWESOME! Congrats! :) That's totally the best feeling ever.

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  31. Congrats! I dont really have debt, but I do live paycheck to paycheck. It would be nice to have some money saved up for vacations and stuff. I will follow your advice on selling un-needed stuff, I'm a hoarder by nature!
    Thank you for the great advice! Do you mind if I print it out to keep on my fridge door?

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  32. all of your posts are amazing, but this one really did it for me! Thanks for sharing your tips. I have MANY dollars worth of school loan debt that I have been paying low fees on for YEARS and since it comes out monthly it's hard to focus. Until ugly letters come and they say "where's my dolla?!" This system is going to make it so much easier! thanks!

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  33. This is an AWESOME How-To-Be-Debt-Free List! This rivals any advice I've come across (including Oprah!).

    Paying off debt is such a huge relief! I recently had to do some serious changes in order to get rid of the debt my (failed) retail business venture accrued (it was a successful failure, though, because I learned so much!). It's a difficult road, and I'm not quite at the end of it yet, but I can sure see the light at the end of the tunnel now!

    Another good tip is to use a budgeted cash amount on either a weekly or biweekly basis & Only Spend That Amount. This doesn't include your monthly rent, utilities, taxes, insurance or other Big Monthly Bills. It's for the day-to-day living stuff (and little extras you may be able to afford). What I'm still learning is that I can't eat out as often as I'd like!

    Living a cash-only (or mostly-cash) existence has a certain freedom to it.

    I like that when you get to LA's Step 9, you can Dance!!

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  34. Thank you so much for writing this. I needed a little extra push to get started paying off my debt. I can't do much as a student teacher, but at least I can make a pretty chart and at least try. I know what I'm doing tomorrow...

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  35. good for you...it's a great feeling isn't it?

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  36. Thank you, great tips and i needed the encouragement!!! Congratulations!

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  37. getting out from under debt has been a bit of a game for me too. it started with my dad telling me to put my first quarter of school on my credit cards, that he'd pay me back ASAP...which never happened. once I had those paid off i had a bad habit of buying with the intention of paying off the charge as soon as it posted to the card. It was a movie here, a cd there, a tank of gas for a friend, or merchandise from work (IKEA). Once I paid off the cards and got past the desire to spend money i didn't have, i needed to move, and to do so and keep my second job, i needed a car. i just paid off my car at the beginning of this month (three months early!) and was able to buy my long awaited DSLR (and i'll have that paid off next month! It's such an amazing feeling to reduce bills and be responsible with money! Wahoo!

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  38. This is such a great post! I have such bad debt and I have decided 2010 is the year to clear it! I set myself a goal from jan 1st to not buy any clothes for three months ( if you know me that is BIG deal! ) it is almost April 1st and I havnt bought anything new! I have also created a spreadsheet to record all my spending which has really helped me see where all my money is going!

    Good to know i'm not the only one! xoxo

    www.tigerlillyquinn.blogspot.com

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  39. thank you for sharing!
    so inspiring!

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  40. oh, you were 21 then, do you mind me asking how old you are now? :)

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  41. Great post Leigh ann! My dad who works in the financial biz recently gave me a book called "Rich by Thirty" - sounds really cheesy but it's actually amazing and a super easy read - the girl who wrote it is in her 20s and came from a family who had a lot of money troubles so she became obsessed with how money worked - anyways she's been on oprah to talk about financial planning for young people and i'd highly recommend this book for anyone who wants to learn how to save or pay off debts effectively - she made a really great point that our generation is different than our parents in that we know that we don't need money to be happy but money is an important thing to live the life you want - and with access to credit cards and getting yourself into debt its easy to not have $ to do what you want when opportunities arise... anyways thats my rant but i highly recommend this book! ive shared it with 3 friends already!

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  42. CONGRATULATIONS!!! Paying off $12k in debt is no easy task, so MAJOR props to you for doing it! Thanks so much for sharing your tips with us. :)

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  43. Congratulations, LA!!! Now getting off student loans will be a challenge...

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  44. That's great advice LA! Thanks so much for sharing.

    Gillian - I think I'll check out the book. Sounds very interesting!

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  45. this is a great post, i'm only nineteen and in quite a few thousand pounds worth of debt that i'm currently trying to pay off!

    xo.

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  46. Congrat's LA! And thanks for the tips, poor money management is definately my biggest flaw!

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  47. Good for you, Ms. IndieBiz Teacher!!

    I'm so proud of you and am totally green with envy. My income from my indie biz is going straight to our one credit card. Thank God, we only have one! I'm highly motivated to succeed in my business, in order to get rid of this debt. Then my husband & I will be in a better position to help our son with some college expenses.

    Congratulations on your success!!!

    Cathy

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  48. I'll never have a credit card, i think they're evil :( but like you said, unfortunately a lot of websites only accept credit cards which can make buying supplies tricky :/

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  49. Dave Ramsey has a really great no-debt plan called the Total Money Makeover. My husband and I have used this program and it's amazing.

    With his plan, you don't need a credit card. He teaches you to save up an emergency fun, pay off your debt (very similar to how you did it, Leigh-Ann), and then save about 6 months of expenses in cash.

    I speak from experience on this -- it's amazing.

    I also have my own business and never once have I put ANYTHING on credit. Just me and my debit card, here. I encourage all of you to not use a credit card, ever.

    If we can be diligent in saving, as Leigh-Ann has so successfully done, then we don't need a credit card. Credit is bad. There is never a positive thing about it.

    Dave Ramsey insists the only credit you have out there is a mortgage, but that you work hard to pay it off in 10-15 years to avoid all that interest.

    Credit card (and all debt) is a prison.

    Cash is freedom.

    xo :]

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  50. Way to go!!! I hate that people are so weird about talking about debt, so you feel like you're the only one, when really if we had more support and people to spur us on, it would be a lot easier to say "no I can't eat out because I need to put this money towards debt" so thanks for posting about this. thats a huge step!! I'm hoping to have my student loans paid off by tax time next year. It's really inspiring to see other people work hard, sacrifice, and to have a little reassurance that its worth it in the end. :-)

    ~K

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  51. Wow, you are a great inspiration!

    My husband and I have gotten out of credit card debt and now we are working on those student loans...

    My husband MADE me read The Wealthy Barber. It made finances like a game for me. I don't want to spend-- I want to save first, then pay myself for spending. Spending is so much better when I've saved for something I really want!

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  52. I'm a big fan of step 9.

    I've paid off two of my credit cards in the past 5 months, without even realizing it. So I was sooo happy when I went to look at the due date and realized I had no more payments to make!

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  53. Congratulations LA!! This is SO my goal for this year and it's really encouraging to know it's possible!! Thank you for sharing :-)

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  54. thanks so much for sharing your story. :) you are such a generous soul, and your blog really reflects that. thank you again and looking forward to future posts! :)

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  55. That is sooooo awsome!! My hubbs & I have recently come to grips with our own debt & are working toward paying it all off. I love that I finally feel in control of our money!

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  56. I've been SO totally inspired by this since you posted it!!! ***and NOW im gonna do it too!

    XOooo!!!

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  57. Congratulations! I never had to pay off a debt but dont have no big savings either, so i keep your tips on my mind :)

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  58. I just came across this looking at your blog and old posts for the first time, and it made me so happy! My dad just finished teaching a class on finances, and I've grown up with teaching from him and being told and shown how he and my mom use money and plan and steward it well. So I'm really blessed with this (but am still one of the worst in our family at actually doing it) and have never been in a position of debt.
    But I think it's so sad that debt is never talked about, and even more sad that saving is never mentioned or praised! I so appreciated that you talked about it. It's kind of a generation of debt and bad stewardship, and if it were addressed more (or shared more) maybe that would improve!
    Congratulations!

    love;
    Cait

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  59. Hi! I'm a lurker de-lurking to make a very odd proposal.

    My friend Colleen Holloway is an Account Executive at Mars Hill Group/BCG (local ad agency). She just put a call-out on fb seeking a professional woman who is currently in our recently got out of $10k+ of credit card debt to use as a model case for their client, The Manitoba Securities Commission. I thought about how proud you were to share your newfound freedom and how interested your readers were, and I'm wondering if you'd be interested in getting in contact with them.

    My e-mail is annynews [a] gmail.com.

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  60. Leigh-Ann...long, long, long time reader...first time commenter! This post has inspired me since you first posted it last year. I've thought about it (and the Gaga money....)for the past year and have finally been taking little steps over the past couple of months to get things cleaned up. I've finally come up with a game plan for cleaning up my credit cards, the student loan and the last bit of my car!

    Thank you! <3
    Dan

    http://www.danmitchellstyle.blogspot.com

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