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How I Paid Off $14,000 and Became Debt Free

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As of May 29, 2012 I am officially debt free! I shared a lot of my progress on my blog as well as all the ups and downs along the way. But there's still more to the story.

In March 2011, I finally faced the harsh reality that I was over $14,000 in debt, had no savings and my financial life was out of order but I didn't know how to fix it.

While I enjoyed my job (working as an accountant no less), I still felt like a hamster on a wheel; like I was just treading water. So I made the decision to become debt free, make a game plan and turn my life around.

My Debts

Credit Card #1: $1,833.17
Credit Card #2: $909.12
Car Loan: $11,342 (original cost was $16,575 but I put money down)

Total: $14,084.29

My Income

Full-time job: $37,072
Bonuses/side jobs: $5,000

Averaged $3,496 per month or about $42,000 per year (click here for details)

My Get Out of Debt Plan

I attacked the credit card debt first, because they had the highest interest rate and its unsecured debt which makes it riskier. Plus they were smaller balances and it was easier to start small and work my way up.

My initial reasoning for being debt free was to stop paying all my money to banks and credit card companies. I have a rebel streak in me and got sick of people telling me what to do with my money.

But after the year went on, I found other inspiring reasons to live a debt free lifestyle. One of the driving forces was to create a solid freelance gig on the side and be able to travel while working virtually anywhere.

That's the motivation behind my blog. I really enjoy being a personal finance freelance writer, and my blog has given me a platform to be accountable to all my career and financial goals.

Step 1: Creating a difficult but attainable timeline
I made double payments on my auto loan, and tossed any extra money towards it throughout the year. I even worked at H&R Block for a couple tax seasons at nights and on weekends to make extra money.

But then in November 2011 I got even more serious (some call it gazelle intense) and created a new debt goal. My mantra for the new year was "Make 2012 Epic" and I desperately wanted to become debt free.

So I began using ReadyForZero and after inputting my loan and payment information, it gave me a payoff date: December 21, 2012.

At first that date seemed very reasonable. I planned to make double payments, and put any extra side income or savings towards the loan balance. However, I gained momentum as I saw my debt decrease and I revised my initial goal to July 2012 -- which took some serious motivation and sacrifice to hit.

Step 2: Making the necessary sacrifices
As you can see, by looking at the numbers, I paid off $14,000 in 14 months with a take-home pay of about $42,000 per year. Which means I was only living on two-thirds of my income. It was rough in the beginning -- let me tell you.

But once I viewed the budget as a spending plan and had more control of where my money went, I learned to love living below my means. Here's some of the things I gave up to make it happen:

Cable TV
Gym membership
Tanning/salon visits
Vacations and traveling
Dining out at restaurants
Going to the movies

I'm not a big shopper so going to the mall isn't something I had a hard time giving up. But the most difficult for me was the TV and going out to movies. I love watching shows and relaxing in front of the television.

But I realized those activities were a big hindrance to my time and production, and kept me from reaching the debt free lifestyle I wanted to achieve.

Step 3: Finding time and creating more income
To go along with my New Year's anti-resolution, I spent a lot of my time marketing myself and my skills, so I could raise my income more. I cut back on my expenses as much as I could, and now it was time to maximize my earning potential.

Like most people, I didn't think I had enough time to work another job. But what I discovered is, if it's your priority -- you make the time. And since getting out of debt was my priority, everything else came second.

My social life, and sometimes even sleep, took a backseat to reaching the ultimate goal. My dedication paid off and I added over $500 per month of income with freelance writing.

Step 4: Staying motivated and celebrating small wins
The journey to getting out of debt was a long one. You may think $14,000 isn't a lot, but when you're looking up at that mountain of debt, just try to tell me how small it is -- because it feels enormous.

I also had to make this journey alone, with no partner or spouse to help me through the bad times. Honestly there were a few days I wanted to quit, but the blogging community and readers helped me through it. I can't thank you enough!

One of the most important things I did was celebrate the small wins. Even if it was just finding the courage to keep going, I rewarded myself in a small way. Some of you might be more intense than I was and be able to pay off your debt faster (more power to you!), but there were times when I needed to be human and take a break.

The point is, I knew with my determination and discipline I'd accomplish my goal. And if it took a few extra days or weeks to keep my sanity, then I felt that slowing down was qualified.

To sum it up: There are many other strategies I implemented while becoming debt-free and tons of awesome financial tools I used along the way (which I might expound on later, maybe in an upcoming e-book). But when you put all the elaborate plans and gadgets away, the biggest tool in your financial arsenal is YOU!

There's no secret formula or magic sauce. Your decision to get out of debt and your application to that process is the only thing that will determine your success or failure.

That's what I finally learned -- after years of living with debt and trying to take control of my money -- I was both my biggest obstacle and greatest motivator.