How I Paid Off $115K of Debt

After years of keeping his credit cards locked in a fire safe, Peter got an unpleasant surprise: a collection of statements totaling more than $55,000. Peter alleges his wife had broken into the safe and gone on a shopping spree at high-end department stores. To say the least, he wasn’t happy about it, but they remained married for a few years, eventually divorcing in 2012.

“Then she cheated on me, hired an attorney, and I ended up being stuck paying 60k to her in alimony, and ended up with the 55k all stuck in my name,” he claimed to Reddit recently. He proceeded to describe how he paid off that $115,000 in just 2 years.

How He Tackled Six-Figure Debt in 2 Years

The newly divorced Peter couldn’t stand owing that sum. It bothered him enough to quickly come up with a plan to get rid of it as fast as possible.

“I don’t like bad things hanging over my head,” he told Credit.com. “It’s kind of a silly backstory. Back when I was a kid, if my mom would serve broccoli, and that was the only thing on the plate I didn’t like, I would eat it first. It’s an approach I carried with me.”

He gathered his bank statements and figured out what he needed to do in order to pay the $115,000 in a year and a half. That timeline expanded to 2 years after his company experienced a decline in sales and he had to give himself a sizable pay cut (he started a medical device sales company in 2006).

“By the time I came up with the plan, it was really just a matter of being disciplined,” he said. He sold everything he could on Craigslist and eBay. He called every credit card company and asked for a break on interest rates, which all but one card issuer granted. He canceled everything he could live without, including cable, home Internet and his cellphone. He never ate out and never went shopping — not even at thrift stores. His fridge went without beer. The only need he mentioned in his Reddit post? Soap.

He also said he didn’t have too much trouble maintaining a social life where he lived in Kansas City.

“There’s plenty of things you can do for free,” Peter said. “Going over to friends’ houses, going to church events — 30 years ago nobody had Internet, nobody had cellphones, and they were just fine.”

As far as modern connectivity went, he still had Internet access at his office and public libraries if he needed it, and he figured he could run over and bang on the neighbor’s door if he had an emergency.

“It was probably more extreme than most people would want to be,” he said.

How Others Can Learn From His Plan

For those curious about his ex-wife’s alleged spending escapades: Peter said she didn’t buy much, so he didn’t notice the extra items. What she bought, however, was incredibly expensive, Peter says. There was a $20,000 diamond bracelet and a $7,000 designer purse among her purchases.

Peter, 34 and now remarried, eliminated the $115,000 (a $10,000 credit card payment) on July 20, and he celebrated by buying himself a new car. He drives thousands of miles a week for work, and he rode his car to 250,000 miles while he was repaying the debt. He now keeps his credit cards in a safe deposit box.

He knows he had an easier time with his debt than others may have — he had no one to provide for but himself, and he had a great salary (about $80,000) to work with. Regardless, had things been different, he would have been happy with making as much progress as possible, he said.

“I got a lot of private messages on Reddit saying ‘You’re rich, you make $80,000 a year so your story is stupid,” Peter said. “If I was making $20,000 a year and I paid off $1,000 a year, I would feel good about it. … If you’re married with kids and have a lot of responsibilities, it may not be possible to cut everything out like that, but if you’re a single person in your 20s or 30s with a lot of debt, there are always options.”

Cutting out expenses was huge to his plan’s success, but so was his communication with the credit card companies. With the exception of one credit card, he was able to lower his rates with every other card for several months, so he attacked them one by one to pay them off by the time they would have raised his rates again. The card that didn’t budge on his rate was paid off first. The hard thing wasn’t getting the company to accommodate his plan — it was sticking to his payment schedule so that plan actually worked.

Having a large credit card balance, particularly if your debt takes up a high percentage of your available credit, can hurt your credit standing because debt utilization is the second most important factor in your credit scores. (Paying on time is the most important.) If you want to see how your debt is affecting your credit, Credit.com’s free tools let you see two of your credit scores along with a breakdown of what factors are affecting your scores. When you understand how your credit behaviors affect your credit standing, it’s easier to come up with a targeted plan to get out of debt, and to build your credit over time.