How To Pay Off $35,000 In Consumer Debt In 3 Years

J.D. at Get Rich Slowly has made his final payment and is now free of consumer debt. He still has a mortgage, but has eliminated $35,000 of consumer debt that began with a $500-limit department store credit card.

Here’s a taste of how he did it:

Using the ideas I learned from personal finance books, I set out to eliminate my debt. I stumbled at first — I made plenty of mistakes. But eventually I developed a system that worked:

1. I set goals. I can’t stick to a budget to save my life, so I developed what I call a spending plan. Like a budget “lite”, this tool simply gives me a rough idea of my income and expenses so that I can determine where best to put my money. It’s like a roadmap to my money, and it has helped me reach my goals.
2. I read everything I could find. I continued to read personal finance books of all sorts. I learned that even the worst books generally contained a piece of advice I could use. I developed the ability to extract the stuff I could use from a book and to discard the rest. I subscribed to personal finance magazines. I read personal finance web sites.
3. I tracked every penny I spent. I never realized how easy it was for me to overspend simply because I didn’t keep track of my money. I’d kept rough records in Quicken before, but now I became precise. By paying close attention, I was able to spot weaknesses and correct them.

There’s lots more info at Get Rich Slowly. Congratulations, J.D.!

Have any Consumerists gotten themselves out of consumer debt? How did you do it? Share your strategy in the comments.

Free at Last! Saying Good-Bye to 20 Years of Debt [Get Rich Slowly]


Edit Your Comment

  1. Abusiveelusive says:

    Step 1: Don’t rack up $35K in consumer debt.
    Step 2: Be Responsible.

    I am in slight debt, but I do not feel in over my head. I am working my way out using the snowball method.

  2. Kounji says:

    I’ve been in debt for awhile. Its kind of inspiring to see people beating that much debt. It also helps if you have a fantastic income and are not in college.

  3. stopshopping says:

    Counterpoint: Getting rid of debt (depending, of course, on your personal cash flow) may not be the best financial move. Restructuring your debt to certain loan products at fixed rates may be the best hedge against a weakening dollar and a possible upcoming recession. Money is about to be really cheap again for borrowers, so long, low rate financing deals may make sense. Depends on your nerve and long term outlook. This guy’s approach to learning all that you can is the best idea.

  4. SadSam says:

    Great job J.D.!!

  5. theWolf says:

    Key to getting out of debt: make more money. I’m only being slightly facetious. I read JD’s tale earlier and one thing he doesn’t share is his income. The common thread through his story is that he clearly had/has a source of income that allows him to pay down debt while taking the other wise steps he outlines.

    I know of what I speak. Years ago I built up debt in a similar snowballing fashion while holding down a crummy job that paid next to nothing. I dug out of that primarily via an education and a different job that paid a lot more money and which allowed me to slowly dig out of the hole I’d gotten myself into. It took a few years and without changing my lifestyle I managed to pay my way out of it. I lived debt free for several years and was able to save for a house, which is the only debt I carry to this day.

  6. P41 says:

    Many many people get into debt not because they make too little but because they spend too much. A harsh but sound advice line ran about a week ago saying if you’re in debt then you shouldn’t have cable tv, eat out, etc. People just don’t want to hear they shouldn’t live beyond their means. A modest house is the only generally legitimate debt that doesn’t mean trouble.

  7. Fujikopez says:

    I married a man with a high-paying job!

  8. BigNutty says:

    Tracking your exact spending each day is what got me out of debt. Like mentioned above, you wouldn’t believe how much money you throw away on stupid purchases.

    Also, don’t spend money on luxuries like eating out, movies, nightclubs, and stuff like that. Use that time to stay at home, drive less, make interesting meals, and read a book or watch your DVD’s. This alone will get you out of debt fast.

  9. meadandale says:


    How to stay out of debt:

    1) Avoid marrying women like Fujikopez who want to spend YOUR income.


  10. sonichghog says:

    I got lots of debt. I have about 15k in CC debt and so does my wife.

    Of course most of it is the perminent 1.99% or 2.99% rate. We bought our cars that way. But Its slowly going down and I also save every month.

    So our CCs are cheaper than what we would of gotten from a bank for 2 car loans.

    CCs are not always evil.

  11. BeFrugalNotCheap says:

    It’s a mindset and learning from past mistakes. When I bought my recumbent stationary bike from Sears I applied for a credit card and freaked out when the guy said I was approved for a credit line of 8K. When I was nineteen I probably would have had Sears taking me to court within a month. I just bought the bike and paid it off a month later. The temptation is there however the self control is stronger now.

  12. Xerloq says:

    @imdgonz: I realize you’re being slightly facetious, but making more money isn’t the answer – you have to change behavior.

    I remember a personal finance class in college. Our professor had a successful financial planning company and taught on the side. He spoke of two clients, one who made $450K and the other $750K per year. Both were over their heads in debt and had come to him to “solve” their problems. The wife of the $750K guy had a $20,000/mo allowance!

    There was weeping and wailing an gnashing of teeth in both sessions. None of the parties involved would actually try to reduce their spending. The $20K allowance wife wouldn’t give up any of her ‘mad-money’ to pay down their debts. Both clients disregarded the advice our professor/financial planner gave and resolved “I have to make more money, that’s the only solution.” Both ended up declaring bankruptcy.

    Point: spending more than you earn isn’t a income problem, it’s a behavioral problem. You have to learn how to spend less than you earn, changing your spending behavior before you earn more money or you’ll end up earning $750K and declaring bankruptcy. It’s like trying to pour gasoline on a fire to put it out.

  13. nutrigm says:

    Nothing’s was working too well for me until I tried to sell more stuff online to raise more income. Even though the margin is quite tiny (I sell Zorrik DE blades) I learnt the hard way to always keep your options open and ‘create’ more than 1 channel of income.

  14. UsefulThings says:


    I’m not sure I follow your logic…

    Under what circumstance would keeping debt EVER be better than getting rid of it?

    The adage “rich people lend money, whereas poor people borrow money” comes to mind here.

  15. mistaketv says:

    I filed bankruptcy. That took care of $30,000 in consumer debt, a good chunk of my self-respect, and any potential career I may have had in politics, I assume. Nonetheless, I am thankful for the second chance. I learned my lesson, and I’m now a responsible user of credit.

  16. That70sHeidi says:

    I found it was easier to change your life style one step at a time. Cancel your subscription to one thing first, then when you realize you don’t really miss it, do a few more things. I think, like dieting, people try to make drastic changes across the board all at once and it seems more like poverty than reducing debt. Eliminate waste slowly!

  17. megaradjenni says:

    I adopted the debt-snowball method I read about on this site a few months ago and paid off my biggest debt this morning. The rest of my bills include a car lease I still have 20 months on and a few small credit cards that I will pay off with Christmas cash. Getting the fancy new car I wanted was not good for me, living within your means really is the key to not racking up debt.

  18. JeffM says:

    Snowball and setting and sticking to a budget… I don’t have any any consumer debt now but I’m only down to $80K of $120K for student loans and car loans, when it comes to eliminating debt I believe it is just a matter of income, time, and discipline… varying the amount of each one has a dramatic effect on the end result…

  19. iamme99 says:

    Interesting article here:

    Two out of three middle class families on shaky financial ground:

  20. ihateauditions says:

    Step 1) I got into $35k of debt.

    Step 2) An unexpected life change eliminated my ability to service that debt.

    Step 3) I now had $58k of debt, all of which was overlimit, past due, and at default-level interest rates.

    Step 4) I paid down each account to be below the limit in order of effective interest, where I counted the overlimit fees as interest.

    As such if I had $1,000 at 25% with a $35/month over-limit fee, that annualizes to $420 of fees plus $250 of interest, for a total effective interest rate of 67%.

    Once I had everything under the penalty guidelines again, it was a straight-up snowball.

    $13k to go. Not bad for 9 months of effort, though.

  21. RvLeshrac says:

    Of course, no one cites that *many, many* people wind up in debt not because they “live beyond their means,” but because they encounter “unexpected life changes,” as ihateauditions puts it.

    The problem is that there’s typically no way to soften the blow of an unexpected event like unannounced layoffs, extended illnesses, apartment fires, etc.

    Further, you have items such as rent increases in states and localities where rent is not regulated. The first apartment in which I lived announced that we were going to have a $200 increase in rent – after, of course, the cut-off date for moving out of the apartment with notice prior to the expiration of our lease. Fortunately, the only one of us (three guys) whose name was on the lease just didn’t care anymore (he moved to a neo-anarchistic commune up north. No, that isn’t a joke…), allowing us all to leave without shouldering two months of $1000+ rent, including the month-to-month and lease-breaking penalties.

    A rent increase like that, or being forced to move and endure the massive penalties, would break most middle-class families. A majority of businesses no longer provide ‘cost-of-living’ raises, and those that DO provide them never meet the *real* ‘cost-of-living’ increases. It is fine to cite the rate of inflation, but when rent rates increase at 2x, 3x, 4x, or even 5x the rate of inflation…

    I’m not saying that there are no ways to handle this, but not every family is the same, and not every job is the same. Some jobs will allow you to work additional overtime and/or holidays to earn more money, and there are times when you can pick up an additional part-time job… but that’s not always an option. If you have children, for example, and both parents already have full-time jobs, the child care costs needed for one of them (or both) to work additional hours often eliminates any benefits of doing so.

  22. daniinpa says:

    There are quite a few holier-than-thou comments in this thread. They’re uncalled for and unnecessary. Hopefully we’ll get more people who actually try to answer the question raised. People who have been there and are willing to share their strategies for making things better. I know I’d like more strategies.

    I’m on a less-than-middle-class income ($800 a month from Social Security) and I have about $3500 in debt. I accumulated this debt prior to becoming disabled. I didn’t have much savings as I was young and had only been working a year when I was struck. My credit is really bad, because I have a small credit history and it’s full of delinquencies. I’ve paid some of my debts off with gifts from family members, although I’m not sure it was worth it, as it didn’t help my credit any. I don’t know what to do about the remaining debts. I’m not late or delinquent on any of the ones left. I’m using the terrible strategy of paying only a little over the minimum payments, because I can’t afford more. Is there a better strategy? I don’t have a lot of discretionary income. I use library computers, don’t have a vehicle, don’t have cable or magazine subscriptions to cancel.

  23. XTC46 says:

    @UsefulThings: He is thinking that since the dollar is weakening, inflation will occur. When inflation occurs things cost more and typically the job market responds by paying more. So if you have a large amount of debt (say 50k) and inflation jumps 6 percent, that 50k actually drops 6 percent. The problem is, banks know this and charge interest for that reason. So unless you have a locked in low APR (which will never be lower than inflation) it may be good to wait it out. Its flawed logic, but logic none the less.

  24. XTC46 says:

    @daniinpa: paying off your debt was smart regardless of it helped you credit score. Debt only grows if you let it sit. 3500 is not much. 800 is at least some money and depending on where you live may be enough to survive. Find a room in a house, rent it, find a way to make money, and pay off your debt.

  25. Boberto says:

    Declared BK in 1997, wrote off over 50K in debt. I would have never been able to pay it off. If the same scenario occurred today, I would be forever indentured to the banks under current BK rules.

    The upside is that since then, I’ve bought a house, reestablished credit and live debt free (except mortgage).

    The perils of debt and overspending today are fraught with the prospect of modern day debtors prison. We may as well send these folks to Australia.

    Let’s face it, we simply spend more than we make. The message Americans get all day everyday is encouraging people to live like this.

    I learned the hard way. But at least I learned.

  26. anatak says:

    @daniinpa: If you’re looking for strategy, if you’re looking for direction, I have a recommendation. Call Dave Ramsey. I’ll catch crap for this, I know. But, I listen to his show quite frequently, and he gets calls like your scenario quite often, and can walk you through a plan to get your finances under control. If nothing else, just listen to his show for a couple weeks and you’ll glean some great info out of that.

    We’ve been following his plan for 3-4 years, have payed off $40k in debt, have an emergency fund, have a budget, have savings, and have a plan. He knows what he’s talking about and his plan just plain works. Best wishes.

  27. UsefulThings says:

    @anatak: I was just thinking the same thing!

    @daniinpa: That is good advice.

    Disclaimer: I have no affiliation with Dave Ramsey, except that I follow his advice, which is very simple and very good. Plus, it’s free, since he gives all the same advice on his radio show that he sells in his books.

  28. RocktheDebit says:

    @daniinpa: Probably the best strategy I can think of is to ask a relative to pay off the debt and then pay that relative back either at zero interest or an interest rate that’s significantly lower than what you’ve got on your credit cards. It’s the interest rates that really cause debt to snowball– has a good calculator for what your $3500 at X% interest will really cost you.