Personal Finance

Lessons From Those Who Paid Down Big Debts

Dealing with a hefty debt? These types, acquired through interviews, may help. Read on to find out how you can battle your debt.

The best advice on how to navigate a major crisis often comes from those who have lived through the saga themselves. That’s why we solicited a series of interviews with people who had successfully paid down a crippling debt—typically in the five-figure range, and almost invariably from credit cards—to find out how they did it, and what they learned in the process.

While we’ve already published a number of those stories as individual Dealing With Debt testimonials, here we summarize the strategies and struggles that were most often mentioned by our debt warriors. Their shared experiences may provide insight and even inspiration if you, too, are wrestling with debt or know someone who is.

Planning and discipline are key

Our respondents universally described a path out of debt that required a high degree of planning, followed by execution that was unrelenting in its discipline. For example, Jody Schrandt, set targets for his credit cards, “one by one,” and “planned out the monthly payments in our budget to put together an 18-month plan to pay them off.”

Freelance writer Zina Zumok not only set a budget, and automatically paid her student loans every month, but has the self-restraint to devote any unexpected revenue to paying those down as well. “When I got a windfall, I added that to my student loans.”

Interestingly, no respondents reported acquiring financial products aimed at people who are digging out of debt, such as a balance-transfer card or a debt consolidation loan. And only one sought help from a professional credit counselor, and then only for a matter of months. Conchetta Jones, the founder of She’s All That! Woman, a personal development coaching company for women, instead took matters into her own hands. She requested copies of her credit report, then “reached out to every one of my creditors,” to negotiate not only payment plans but sometimes adjustments to the information they had reported to credit agencies.

Prepare for austerity

Almost all of our debt-reducers pared away frills, including expenditures such as entertainment subscriptions and eating out.

For Matthew Burr, an entrepreneur and author of “$74,000 in 24 Months: How I Killed My Student Loans (And You Can Too!)” paying his bills and then his debt payments after every monthly pay check meant “after the first few days I had no money again for the rest of the month. It sounds miserable and at times it was, but the sacrifice paid off in the end.”

One respondent even downgraded his home in service of debt. Blogger Zack McCullock and his wife traded the four walls of a residence for the frugal minimalism of a camper vehicle, in which they lived for some 10 months, dramatically reducing both housing costs and some of the creature comforts of a home.

For Bret Bonnet, who ran up debt to start his business, Quality Logo Products, in Chicago, even staying fully warm was a frill he had to forego. “I kept the thermostat at 60 degrees in the winter and 80 degrees in the summer and I put every penny/scrap I could towards paying off the debt. I became everyone’s favorite and friendly free loader until I could pay off the debt.”

The misery needn’t be unrelenting, though. In a tip that others might find inspiring, Gregg Korrol and his family, in an effort to avoid feeling “punished,” as he puts it, set aside a specific budget for “fun,” using it to occasionally hit a movie or enjoy a (modest) meal out.

Increase revenue, too, if possible

Less commonly, our respondents also increased the amount of money available to the household. Rather than splurging with the extra revenue, these to discharge the debt more quickly, rather than on splurging or even reducing their austere approach to the basics.

Several got a second job, which of course provides a stream of income that can continue even after the debt is retired. Entrepreneur Jeff Neal launched a website to sell crickets, of all things. To limit his initial investment, he even found a cricket farmer who would drop-ship to him, meaning he could avoid carrying inventory. After four months, the debt was repaid but the cricket business stayed, and continues to provide a supplementary income to Neal and his family.

Bret Bonnet, chose a less exotic, if perhaps more athletic, way to earn income: “I…got a second job as a bouncer at an area nightclub, just so I could make ends meet.” The case of another respondent, life coach Katrina McGhee, reminds that assets, if you have them, can also be leveraged in service of paying down your obligations. McGhee was able to take advantage of something that relatively few people with crippling student debt enjoy, namely equity in a home. She leveraged that asset to roll over a hefty chunk of her debt into a home equity line of credit, which cut the interest rate on the sum in half.

Expect your habits to change, for the good

After digging out of debt, one tangible benefit are lingering lessons to help you more easily handle future financial challenges.

A frequently mentioned one was paying off a little more on your debts than you absolutely need to do. That technique helped Deborah Sweeney, an attorney and the owner of, an online legal and business filing service, retire $80,000 in student loan debt, so then she used it in service of retiring her mortgage before the term was up.

The McCullocks, after their move to a mobile home, discovered that maybe they didn’t need as much stuff in their lives as they’d once thought. After returning to a traditional residence, they made a further dent in their debt by selling off some possessions they found they no longer needed.

For Gregg Karrol, who calls himself The Gifted Storyteller, the legacy of his debt experience included an aversion to paying interest except when absolutely necessary. Instead, he urges thinking about the better uses to which money being frittered away on credit-charges might better serve you, or those who are less fortunate than you.

Be ready for possible regrets

Sure, some of our respondents described their debt as a necessary, and ultimately worthwhile, evil--the result of unexpected and unavoidable life setback or a successful investment in their education or to start a business.

But a surprising proportion of those who have shared their stories of acquiring, and then clearing, significant debts in their life characterize the spending that led to the problem as foolish or careless. Many descriptions of crippling debt include regret, even shame, about the habits that caused the sum to accumulate.

Alexis Busetti is among that rueful group. A financial coach, Busetti describes much of her $75,000-plus debt as the result of “spending on things and experiences I could not afford.” Eating out as a student. Buying too-new cars.

Even when college costs are a key factor, some debtors rue that they spent heavily on an education that didn’t deliver the expected returns once they hit the job market. Busetti, for one, was critical of her college choice: “a very expensive private school.”

The most enduring lesson of all may be that debt can continue to color your life, and outlook, even long after it’s been repaid.

Paul Reynolds

Paul Reynolds is a former Editor at ValuePenguin. He previously worked as an editor at Consumer Reports and Purch.