Monday, March 21, 2011

How to Erase $70,000 in Debt

How did you rack up $70,000 in debt? I had two student loans totaling $26,180 after graduating from the Rochester Institute of Technology, and my husband, Matthew, and I took out a $24,560 home-equity loan to cover a portion of the down payment on our house. The loan had a variable interest rate, so it was as bad as credit card debt. We also had a $19,300 car loan.

Why did you decide to pay it off? Paying off the debt was the first step toward reaching my goal of working from home part-time and starting a family. Having a reason to pay it off that was bigger than myself made it a lot easier to make the sacrifices. Once we were ready to take the leap, we wanted to do it as fast as possible because getting out of debt isn't fun.

How did you do it? We traded in the new Honda Civic that we had bought two months before for a used Jeep Cherokee, and we sold our other car. We canceled our cable and got a cheaper cell-phone plan, and we budgeted only for necessities and $25 a month each for spending money. We found better deals on homeowners and auto insurance.


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