This 30-year old receptionist and single mother of 3 climbed out of a $50,000 debt hole in 5 years using these 10 steps.

Broke and $50k in debt, Noemi Wikstrom, who had become a single mother at 19 living in Puerto Rico with no child support and working for minimum wage as a secretary, sent her three kids to live with relatives. She enlisted in the Air Force but was still behind. Desperate, she turned to payday loans, which only made matters worse. Finally, she got real and started on her path to a debt-free life.

1. BUDGET AND SAVE

“I saved $100 and put it into a savings account. Then, I put 10 percent of my income into this account, no matter what. I didn’t even miss the money. It was like paying a bill, but I was paying myself.”

2. CUT SPENDING

“I stopped buying new clothes and found ways to trim grocery bills, like buying ground meat over steak and ramen noodles over pizza. I also moved in with a friend for a year, which cut my monthly rent from $875 to $100.”

3. TRACK DAILY EXPENSES

“I carry a notebook and write down everything I spend money on.”

4. SET GOALS

“I wanted to be free of all my revolving debt in five years and have a healthy savings account so I could pay for food and gas, and support my children.”

5. TAKE A SECOND JOB

“After my day job, I worked at a photo shop for $5.25 an hour. I was able to pay an extra $6,000 toward my debt.”

6. PAY OFF HIGH INTEREST LOANS SYSTEMATICALLY

“First, I took care of my three payday loans. Then, I moved down my list of creditors from $10,000 past due on an auto loan to $7,000 in medical bills.”

7. PAY BILLS AUTOMATICALLY ONLINE

“No more late payment fees! Paying bills online helped keep me in the rhythm of budgeting.”

8. FIND OUT YOUR CREDIT SCORE

“When I couldn’t get a car loan or a new credit card, I checked my score and it was 491. Today, it’s around 648 — not perfect by any means but a big improvement.”

9. FIX CREDIT REPORT ERRORS

“To continue improving my score, I regularly check my credit report. I’ve found errors in the past, and it was a tedious process to get them corrected. I had to write letters to the credit bureaus and send proof that I was right.”

10. DO PERIODIC CHECKUPS

“I take USAA’s free financial assessment every six months.”

Have you ever had to get out of a big pile of debt? What strategies did you use? Share your thoughts in the comments.

Climbing Out of Debt [USAA] (PDF)

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