Halfway To Paying Off $70,000 In Debt

A debt blogger is midway through paying off $70,000 in credit card debt using the “debt snowball” method. Great stuff!

She posted a report showing her month by month progress with a breakdown of how much she and her husband owe and the percentage paid off. What’s interesting and good to see is that they are slowing down the debt snowball, taking some time to build up an emergency fund of $7,500. Smart move. Sometimes you throw all you’ve got into paying off your debts, which is great, but if you don’t also build up a little reserve fund while you’re at it you could find yourself suddenly financially sideswiped by unforeseen events.

October 29 – Baby Step 2 Update [Six Figures And Broke]


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  1. obits3 says:

    Another good example of cash flow versus net worth.

    • Loias supports harsher punishments against corporations says:

      You put it better than I did.

      She could pay off my house for me in 2 years without flinching.

      • obits3 says:

        Thanks. I know someone who thought that it would be the responsible thing to use some extra money (about $5,000) to pay tuition and fees for a semester and as a result take out less student loans. There was one problem…

        They lost thier job and the loans they has defaulted. Default creates a lot more problems. Should have kept the money and taken the extra interest expense… =(

    • mister_roboto says:

      $10K air conditioner?! My car was $12K new! With as much as they’re paying, they can pay my student loan debt (6 years with gradschool)- TWICE (I’m on the 20 year plan with 15 years to go because of financial deferments).

      Sorry- but the “six figures and broke” name just pisses me off. I’m “little 5 figures and getting by.”

      • dangerp says:

        House air conditioning, not car. Not sure from your post if you got that distinction.

        Do you know how much air conditioners cost? I don’t know if they elaborated on their particular style of air conditioner, but we just had to install a new air conditioner/heater package unit for our house (no existing a/c or furnace). Most of the quotes ranged from 11k to 14k. We were lucky to find a contractor that did it for 7.5k (although he has already been out a couple times to fix his mistakes – no additional cost though).

        There are rebates that help that a bit, but it’s still very costly. Unfortunately, not six figures here…

  2. Loias supports harsher punishments against corporations says:

    To be fair, most people don’t have enough income to drop it this fast, nor do most of us have “small non-retirement mutual fund account[s]” to cash in and get commission from. She’s actually paying off per month more than me and my g/f make per month, gross, combined.

    • mister_roboto says:

      I am about $600 left in my $20K (over the life) credit card debt- it took me 10 years to pay this off.

      Those people will have paid more in credit card payments in one year than I have made in 1+ year BEFORE deductions.

      If I had the income they did, I probably wouldn’t have had any balance at all. Mine is all from being unemployed and graduate school- no freaking $10K air conditioner.

      • thor79 says:

        Yeah I didn’t even realize the fact that they will easily pay off more than I make in a year…before taxes.

    • danmac says:

      This is exactly what I was thinking…things aren’t quite as upbeat in the “Five Figures and Broke” household.

    • thor79 says:

      Exactly…when you make that much you have a lot more room to budget.
      Me? I’m barely able to pay my bills…including $40k in student loans. I’m paying those off by paying the scheduled payment every month…so in 10 years I’ll have them paid off. If only I could find a better paying job I would put more money towards it. I made the mistake of taking the first job offered out of school and I’ve been regretting ever since. They got me for bottom dollar and it hasn’t moved since. If I don’t get a raise I’ll have to get out of this job to be able to afford the rent increase I expect in March.

    • frank64 says:

      But the amount of debt one has should have a relationship to the income. Meaning you could use the same process, just with lower numbers.

      • aloria says:

        Exactly. Nobody would be bitching if this were “five figures and $15,000 in debt.”

        • DeepHurting says:

          If that were the case you would have commenters all over this place spewing “ZOMG POOR PEOPLE DONT BUY STUFF YOU CANT AFFORD”.

          Apparently, when you could easily not spend money on things you can’t afford due to good earnings, it’s not a MORAL OUTRAGE!

      • Chaosium says:

        “But the amount of debt one has should have a relationship to the income. Meaning you could use the same process, just with lower numbers.”

        Partially, but not exactly. Food, clothes, and living arrangements don’t all equally get more expensive as your income increases. The more you make, the more discretionary income you have to work with.

  3. iggy21 says:

    Dave Ramsey anyone?

  4. Big Mama Pain says:

    $10k air conditioner? In February??

    • Mom says:

      You’d rather they paid $12k for it in June?

      Obviously they have the income. And live someplace hot. They’re still way ahead of where they were at the beginning of the year, so I can’t criticize.

      • pecan 3.14159265 says:

        Yes, people forget that in some parts of the country, it stays consistently warm. Occasionally, it stays consistently hot.

        • UCLAri: Allergy Sufferer says:

          Oh, that involves thinking outside of one’s shoes. That’s hard.

          It’s so much easier being judgmental. And fun!

  5. El Matarife says:

    I don’t get how you could rack up $75,000 in credit card debt. I can’t even wrap my mind around it.

    • obits3 says:

      From what I see, it is usually about 50% overspending and 50% fees and interest from the person ignoring the problem…

    • Loias supports harsher punishments against corporations says:

      If you look at how much they are paying it off a month, it’s obvious.

      More income = more spending.

      I think that everyone should grow up with a capped income. People who start with humble beginnings know the true value of things and tend not to squander.

      • SlayerGhede says:

        Humble beginnings often means an unexpected windfall backfires and you declare bankruptcy. Lotto, inheritance, settlements… you have any idea how few of those poor bastards keep their cash? Instead of going “I can live the rest of my life on this money” they think “I can finally buy a new car! And go to college! and eat better food… and go on vacation…” and all the little things you’ve always wanted nickel and dime your money away.

        It’s not beginnings that determine how you stay out of debt, it’s personal finance. Only difference is the trust fund babies can afford accountants to do the work for them.

      • aloria says:

        If that were true then we wouldn’t see so many people winning the lottery and ending up bankrupt several years later. Even if you start out at poor or average pay and gradually get richer, your spending habits start to bloat to match your disposable income. Most people don’t continue to like like paupers if their fortune changes, and unfortunately that sometimes leads to people going overboard.

      • pecan 3.14159265 says:

        You’re making a lot of assumptions. We didn’t grow up in “humble beginnings” and we’re definitely living within our means. We save a lot of money, have very little debt (just the car), and we’re paying off every credit card at the end of the month. People who grow up being educated about proper money handling will be financially responsible – and that has nothing to do with whether you came from “humble beginnings.”

      • lordargent says:

        I grew up poor, and now run my personal finances like a corporation, I splurge every once in a while, but only on certain things (vacations, camera gear, computers).

        I pay more in fed/state income taxes now, than what I earned ~6 years ago, but I basically live the same. I eat the same food, I drive the same car, hell, I have jeans from 10 years ago that still fit and are appropriate to wear in public ($25 Levi’s 501’s), OTOH, I am currently contemplating the purchase of a $2500 lens for my camera … because the $500 version of that lens isn’t good enough for me anymore … priorities!.

        But I can’t figure out why people are willing to pay $100+ for pre-damaged jeans, that’s too expensive for my tastes?

    • TasteyCat says:

      I don’t get how somebody could pay down debt this fast… yet let it get this high in the first place. They were a job loss away from bankruptcy and wasting a ton of money on interest but for some reason apparently didn’t care.

    • Sammich says:

      Typically two options:

      -Really, really poor financial management (or depending on HH income – complete lack thereof)
      -Major unexpected crisis. IE: Serious illness

    • keepntabs says:

      It is easy to get into extensive credit card, and it doesn’t have to be because of wild spending. In my situation, I blame the fact that I didn’t save aggressively enough while I was employed, so I didn’t have sufficient funds to last me through an extended period of unemployment. Although I didn’t have a lot of credit card debt before being unemployed, my poor planning exasperated my level of debt. Hopefully, I have learned from this, and have prepared myself to be able to weather another tough storm, if needed.

      After the Dotcom bust/September 11 catastrophe I was unemployed for over 2 years. During that time I used credit cards to pay for my return to school (I didn’t qualify for student loans, and my credit card had a lower interest rate than private loans), and to pay for home repairs and medical bills. I had well over $50,000 in credit card debt when I finished school (kept looking for a job while in school, but couldn’t find one). When I did get a job again, it paid me pretty well, so I was able to make large payments on my credit cards. I was able to pay off the debt in about 1.5 years, and then started saving like mad. Now, the only debt that I have is my mortgage (I’ve bought only used cars for several years, and pay cash for them).

  6. Kate says:

    It’s a hard blog to read, tiny little posts that don’t explain anything about what she is cutting and what exactly debt snowballing is.

    I’m glad she’s getting out of debt, but I’m supremely bored with her writing.

  7. mga911 says:
    • mac-phisto says:

      lol. the consumerist effect strikes again!

      maybe someone should start warning people before they’re featured here so they have some time to buy extra bandwidth or something.

  8. aloria says:

    Building up some kind of emergency fund, even if it’s only half a month of living expenses, is pretty important and usually overlooked, IMO. I’ve been pretty aggressive in paying off my debts to the point of putting very little in savings for emergencies. In keeping with Murphy’s Law, I got sandbagged by an unexpected housing repair this month, and wouldn’t you know, there’s the debt again.

    That’s not to say that getting the debt paid down shouldn’t be up top on your priorities, but if you incur some huge emergency or heaven forbid lose your job, you are going to be in a MUCH worse situation if you don’t have a little money saved somewhere to get you through.

    • rekoil says:

      I’m of two minds on this. One one hand, having an emergency fund to the side gives you the security of being able to handle an unexpected expense without putting yourself back into debt. On the other hand, as long as your credit lines remain open, you can always re-borrow money if needed, and until you do, that’s that much less debt you’re paying interest on.

      The main danger of option #2 is if your available credit shrinks unexpectedly (as happened to me when my HELOC was frozen a couple years back).

  9. ohiomensch says:

    I really don’t consider these kind of accomplishments very inspiring. They make 6 figures. If you can’t live on that there is something wrong with you. What would really impress me is the stories of the average joe who makes 35-40K a year paying off 20k in debt over the course of 2 or three years. Now that is impressive to me.

    The thing about debt that really scares me is, if you look at your credit card statements where there is a box that says how long it takes if you pay only the minimum versus paying another amount to pay it off in 3 years (somewhere between 20 and 50 extra a month), that monthly amount is minimal compared to how much interest they make if you don’t pay it. I was shocked at how little more I would have had to pay to get out from under my debts.

    It would be nice to be able to pay off everything at the end of the month but I learned that lesson way too late.

    • frank64 says:

      I have been unemployed for a while with 16K of debt and have a job offer for 48K starting in January. I plan on paying off 1K a month towards my debt and have it paid off in 16 months. I am going to do it by not spending more than I do on unemployment. I do have about a 4K cushion right now. Any raises/overtime will also go towards the debt, but by the time I get a raise I would expect my debt to be mostly paid. It all depends on how the job works out.

    • Firethorn says:

      I was shocked at how little more I would have had to pay to get out from under my debts.

      Look at the difference between a 15 year mortgage and a 30 year one. Especially if they drop the interest by half a percent as well.
      30 year 4.25% = $983.88/month
      15 year 3.75% = $1454.44
      Difference: $470.56, or not even half the 30 year payment more to cut your loan period in half.

      • NeverLetMeDown says:

        Remember, it’s after-tax that matters. The delta between real, after-tax payments is higher.

      • howie_in_az says:

        I was surprised at this too, but went a slightly different route: our mortgage is for 20 years (I was 5 years into a 30year fixed, so the bank shaved off 5 years). We can optionally pay an additional $150 per month to reduce this down to a ~16 year loan, but a 15 year loan would have been another $225 per month.

        The best part is that we’ll be used to paying our mortgage every month so after 16 years that mortgage money will go right into savings. Hello Ferrari!

    • aloria says:

      Everyone is dismissing this advice because they make “six figures,” but a $70,000 debt a sizable amount. At a $150k/yr salary, that’s still 47% of their annual income, not including interest. Someone with a $40k/yr salary paying down an $17,000 debt would likely be similar, yet I doubt as many people would be saying “oh, they’re only able to do that because they’re rich.”

      • bsh0544 says:

        But living expenses don’t increase to keep pace with your salary. Someone making $40k is going to need to spend a higher percentage of annual income on food/gas/groceries/rent/utilities, compared to someone making $150k. Hence, the person making $150k would have an easier time paying off a debt that amounts to 50% of annual income.

        • LunaMakesThings says:

          For many people, living expenses DO increase with salary. Bigger house, nicer cars, nicer clothes, perhaps private school for the kids, cleaning service, lawn care service . . .

          When you make a good living, you start thinking you can justify buying these things even on credit, because after all “We can afford it!” and then go just a bit past what you can afford, then a bit past that . . . and before you know it you owe an obscene amount.

          We’ve gotten so used to living with debt that it’s considered normal, so even people who make a really good salary and could pay cash up front for a really good life, even those people go in debt because, after all, that is just what is done.

          • claytons says:

            The big difference is choice. The lower-end earners don’t have one.

            • LunaMakesThings says:

              Do they have the choice to not have a cellphone, not get manicures, high-maintenance hair styles, not play the lottery, not eat out, not have more and more kids, not take pay-day loans, not buy brand new cars? I know some smart people with low incomes who make some really dumb choices. I have lived in poor neighborhoods most of my life and I have seen what poor people spend their money on.

              I also know some middle-income people who somehow thought it was necessary to buy houses they now can’t afford, expensive college educations that have not resulted in high-income jobs, brand-new cars, etc.

              And I don’t personally know many high-income people, but I imagine plenty of them live like they’re even higher-income than they are.

              It is human nature to want more, no matter what you have. It is Amercan culture to be taught that if you have more stuff, you will be happier. And our recent easy-credit trend made “having more” possible for many more people of all income levels. And now the incomes are down or gone, and the bills are due, and more and more people are discovering that having more stuff and more debt is a trap.

          • pecan 3.14159265 says:

            We don’t make anywhere near $150k but when we did see a pay increase from work, we started looking at all the things we could do with the money. We put more into savings, can go on a vacation, and bought “permanent” furniture (donated the hand me downs and Ikea stuff). Everyone thinks about the things they could have no matter how much they make.

          • bsh0544 says:

            Living expenses may increase to some extent, if the going rates for food or housing or utilities or what have you are higher in the area of the higher paying job. My point is that those necessary expenses probably don’t increase at the same rate as the salary. Most of what you mentioned is fluff. It isn’t a required living expense. Nobody requires private school for their kids, or a fancy car, or lawn care service, or whatever else. Yes, they can spend money on it, but it’s fluff. They don’t have to, and if they’re trying to save as much money as possible to pay off debt, they won’t. The lower-income ($40k from my previous post) person doesn’t have as much fat in their budget to trim.

            • LunaMakesThings says:

              Yes, necessary expenses stay the same, but people’s perceptions of what is necessary change. There are people all over the world who survive day to day in mud huts with no electricity and no running water, and we think we’re poor even when we have electricity, indoor running water, garbage removal service, a car, a phone, tv, college educations, hairstylists, manicures, sometimes even cable, X-Box, Netflix, etc. And we complain about not having enough money for the “necessities” without living in debt.

              The point is, your idea of what is “necessary” varies greatly based on your income and culture. Only when you decide to stop living in debt, start living below your means, no matter what your peer group is doing, do you realize what is actually “necessary” and what you can really live without.

          • Saltpork says:

            Which is foolish.
            I don’t have a fancy house or cars. I have never spent more than 5000 bucks for a vehicle.
            I make a decent living for the area, but I stay within my means. My only debt is student loans and I pay those down throughout the year.
            I work and go to school full time. My home is a 1000 sq ft house that I rent.

            When all is said and done, providing that I don’t have a major financial incident that puts me beyond my 6 month buffer in savings(which has taken me over 3 years to build), I will come out of this with a diploma only owing about 5k.

            I keep my credit card balances at zero because all I put on them is gas and groceries. Gas on one, groceries on the other. Stuff I was buying before I got the cards.
            It’s easier to keep track of how much money I spend on these necessities this way as well.

            It’s not just about how much money you have, but how you deal with the money(or lack thereof). The nicest thing in my house is my computer and I paid for it outright.
            Same with the vehicles in my driveway and every other purchase.

            Going into debt for baubles is foolish. Mortgage, car, etc I can understand.

          • 12345678nine says:

            Yes, but this doesn’t change the fact that even though it is near half their income, they could still move into a less expensive place, or sell their more expensive car. Just because you have a higher salary, that does not mean you HAVE to have all those more expensive things. Your wardrobe needs may increase, aaaaand that’s about it.

    • jayelle says:

      “What would really impress me is the stories of the average joe who makes 35-40K a year paying off 20k in debt over the course of 2 or three years. Now that is impressive to me.”

      We didn’t quite do that, but we paid off $25K on a $70K salary in 2 years, and we had our second child partway into year 1. To do it, we sold our modest 1400 square foot house and moved into a tiny two-bedroom apartment, joined a debt-management program, and devoted one-third of our net monthly income to debt reduction. (We were paying one and a half times as much towards our debts than we were paying in rent.)

      It was wicked hard, and we ended up buying our current house with $10K remaining in consumer debt because having 2 kids under 5 (both of whom happen to have special needs) in 1,000 square feet was driving me out of my skull. But with the vast majority of our debt take care of, we’re able to live comfortably and keep chipping away at our remaining debt/building an emergency fund. We plan to be debt-free (including our one remaining car payment) by January 2012, with the exception of my grad school loans and our mortgage.

  10. ericfate says:

    My rule of thumb has always been to keep enough in the bank to pay three months worth of rent/gas/groceries if everything suddenly goes to hell, along with enough for a down payment of a used automobile.

    Everything past that point goes to old bills. Every time an old account is paid in full, I get to reward myself with the purchase of something that is purely for luxury or entertainment value, so long as that purchase does not exceed 10% of whatever the debt was that I initially cleared away to close the account.

  11. dolemite says:

    Well…bravo I guess. $7,500 doesn’t seem like much of an emergency fund when your house obviously costs like 800k (judging by the $10,000 ac unit, since those run about 5k for a normal sized house).

    • daave says:

      they live in the south. I live in florida and a decent unit for my place is $7.5k. thats for a 1700ft2 home. The more you spend on an AC unit, the higher SEER it is, which means lower monthly costs. Sure you could put a $4k unit in a house in florida, but it will run longer and less efficiently..costing you more money monthly.

      on their site, they mention that their brother in law did the install..im sure they got a good deal.

  12. fluffernutter09 says:

    “A debt blogger called is midway through paying off $70,000 in credit card debt using the “debt snowball” method. “

    A debt blogger called what?

  13. Jayrandom says:

    Just imagine how closer to finished she’d be if she paid down the highest interest debt first…

    • rdm says:

      No kidding.. the debt snowball is just a mental game to play with yourself. (Speaking from someone who paid off a lot of CC debt in the order of higher interest rate first)

      • exit322 says:

        Oh, it absolutely is. However, getting this problem solved is AT LEAST half a mental thing, and it makes you keep going a lot quicker if you start paying entire cards off first, rather than just lowering a number that’s still going to be reasonably large.

        Neither method is bad; clearly, one is better, but it’s a mental game more than anything else.

      • s73v3r says:

        The purpose of the snowball is to get you to pay off the debt, and to keep you from getting discouraged. Every time you pay off a bill, you feel better, like you’ve accomplished something. That encouragement goes a long way. As opposed to paying off the highest one first, which may take much longer, you might get discouraged over how long its taking, or they could fuck with your rates, and then you’d give up.

  14. energynotsaved says:

    Congrats to anyone who digs out of debt. It is an accomplishment. It also inspires others to get focused and get to digging.

  15. phobos512 says:

    Holy moses if I were making that kind of money I’d be driving a Ferrari and paying off the debt a little slower. The amount their debt has decreased per month is more than I bring home. Where’s the “about me” page on that blog to see what these people do for a living?

  16. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    $35K in debt eliminated in 10 months – please, please tell me where I can get a job with take home pay like that! My annual GROSS pay is just around that figure!

  17. Hermia says:

    Snowballing works. I’m on track to be debt-free in about 8 months (barring any acts of God, etc) and I’ve used techniques I’ve learned on this site for the most part. I’m shocked at just how well it works.

  18. Scuba Steve says:

    Ah “Husband’s Commission was bigger than expected”. Kinda explains how the debt got out of hand, and how its getting paid down so fast.

  19. buzz86us says:

    I really don’t see how someone being of sound mind can spend more that they have. There have been months where I admit I went a little overboard but I always make sure I have the money to back myself up. Its really sad that some people look at stores like all you can eat buffets, don’t look at prices and make senseless purchases of crap they don’t need.

  20. Design3r says:

    We’re following Dave Ramsey’s plan as well as they are (the baby step 2 gave it away.) But they are not following his steps. Step 1 is $1000 in an emergency fund, which they had, Step 2 is the debt snowball until it completely paid off. Step 3 is building your emergency fund to 3-6 months of expenses. They need to be using that $6500 to pay off debt and keep the snowball going.

    • Verdant Pine Trees says:

      No, with the kind of expenses they’ve been keeping up, $6500 is probably equal to a one or two month emergency need; those with smaller incomes may do fine with a $1000 emergency fund.

      Or you can read some of the earlier commenters who mention how they got zapped after paying off a lot of debt, because they did not have enough emergency money saved.

  21. yessongs says:

    Must be nice to have a job…

  22. cmdr.sass says:

    Not very impressive when you are two young professionals making six figures. Come back when you have three kids and one income.

  23. Greyfox2401 says:

    I got blitzed by unforseen circumstances about 8 months ago I had a “seizure” (the doctor is pretty sure it’s a seizure). My insurance company only had a 3000 dollar limit and neither hospital or the insurance company drew red flags that I’d have to pay for an MRI out of pocket not to mention a 900 dollar ambulance ride 2 EEGs, a cat scan, and blood work all to be “pretty sure”.

    • Verdant Pine Trees says:

      May I make a suggestion?

      Write the hospital via certified mail and return receipt, and ask for a full, detailed bill itemizing all expenses. (This way they can’t get away with charging you for services not rendered, or a $20 box of tissues). You can confirm that writing “Services” is not acceptable, they have to specify what those services were. They may even discover, horrors!, that they made a mistake on the initial bill. Actually, this kind of fraud is very common.

      After you figure out whether they overcharged you for anything (and if necesary, threaten to report any fraud to watchdogs who overlook hospital fraud), then write them to negotiate down the amount owed.

  24. Verdant Pine Trees says:

    Oh brother, Dave Ramsey. I suppose it’s good if you can’t control yourself at all, but not savvy in the long term.

  25. amcfarla says:

    I paid of nearly 30k in debt in 10 months making a little over 70k using Dave Ramsey’s baby steps, you just have to learn to live on nothing and focus only on paying your debt off(when your broke friends are making fun of you, you know you are on the right track).

  26. daave says:

    Rather than be positive and encourage the OP.. most people make sly comments about “Well if i made THAT money” and other nonsense. People stop judging.. no one is perfect and we have to make mistakes before we can live from their teaching.

    My wife is finally employed after 3 years of law school. so we just broke the 100k mark. when you add up all of the expenses, deduct for taxes, student loans, insurance for 2, etc.. 100k isnt THAT much money IF you arent tight on your buget. Its easy to spend an extra few hundred dollars here and there on TV, restaurants, bars, and entertainment.

    So rather than be ignorant and piss on their success, congratulate them on making a windfall in a year and using their money towards freedom. /rant

  27. HippieLawChick says:

    The “Debt Snowball” method that they are using is foolish and wastes money. The method basically says to pay the smallest debt off first. Wrong. You should make the highest payment on your credit card with the highest interest rate, and pay minimums on the rest so that you aren’t wasting your money on interest charges.

    This method is just lame.

  28. bishophicks says:

    I can’t imagine that level of credit card debt. Our combined income is over 100k and my wife and I have a combined (all cards) credit limit of 40k, which I think is ridiculously high. The biggest purchase I ever charged was 9k in dental work, which I only did for the cash back award (the money was in the bank and AMEX was paid immediately). Most months our CC bills total 1000-1500. I can’t imagine being billed that much in interest alone, which is what this couple must have been paying.