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HomeBlog Debt ReliefFour Stories Of People Who Tamed the Debt Monster
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Four Stories Of People Who Tamed the Debt Monster

December 12, 2013 by National Debt Relief

Debt monsterIt can be said that a little debt never hurt anyone. And that there’s even such a thing as “good” debt. But big debt generally means big problems. The stress of dealing with debt can cause both emotional and physical problems, including headaches, insomnia, ulcers, high blood pressure and heart problems. What can you do if you’re struggling with big debt? Here are the stories of four people and how they tamed the debt monster.

$140,000 in debt

Our first story is of a couple that was faced with a mountain of $140,000 in debt. Yet, they were able to eradicate it in less than three years. How did they do this? They would be the first to admit it took hard work, dedication, good fortune and perseverance. While they were required to make numerous sacrifices they didn’t starve themselves or make their lives miserable. Where did all this debt come from? It came from student loans.

The good and bad news is that the husband lost his job. However, he received severance pay and when he got a new job was able to use the money to begin paying down the couple’s debt. They then used the money in his savings account along with his new paycheck to pay off $15,386 in debt.

Their next step was to develop a budget where they could live on his salary alone and use all of her monthly paychecks to pay down their debt. In addition, they minimized their monthly expenses as much as possible and used all unexpected income to make additional payments. They cashed out his investments and then used their emergency fund to do a final payoff.

$150,000 – mostly in business debt

Our second story is of a couple that became $150,000 in debt mostly because they lost two businesses. It took them five years to pay off this debt but they were able to do it using a combination of tactics. First, the wife became a mad coupon clipper. Her favorite websites were Southern Savers and Money Saving Mom. The stores she chose were CVS, Target, and Harris Teeter.

Second, they stopped going into debt. They cut up their credit cards so there was no way they could create any more debt. There were some instances such as unexpected medical expenses where they did have to pay them off over time. Plus, they had a bigger tax bill one year and had to pay it off over the following 12 months. But the important thing is that they saw their debt slowly and steadily going down. They had learned the important lesson that you cannot pay off debt while you are continuing to go into debt.

happy familyThird, they followed the advice of Dave Ramsey and snowballed their debts. This meant first paying down the debt that had the smallest balance while continuing to pay the minimum amounts on their other debts. The minute they paid off the debt with the smallest balance, they went to work on the next one and threw all of their extra money at it. They did stay flexible with some of their spending. For example, they sent their kids to a three-day-a-week private school and even bought season passes to a nearby amusement park. Beyond this, their only vacations consisted of staying at a beach condo owned by a family member or by going on vacation with other members of their family.

Another tactic this couple used was to have two separate banks. They had one for everyday spending and a second for savings and sinking funds. Before when they had just one account they found it was more difficult to save money, as the “extra” money they had earmarked for paying off debt would somehow shrink. Now, they put enough to cover their living expenses in an account at their main bank and the rest into their secondary account at a different bank. This helped them save more money each month.

They say the most important lesson they learned is that if the couple agrees to pay off debt it may take longer but it is better than trying to pay it off faster where one of the two is a bureaucratic tyrant.

Paying off $18,500 in debt

This story may not seem as dramatic as the two previous ones but debt is much like art in that it’s all in the eye of the beholder. We’re sure that the $18,500 that this couple had in debt was just as scary to them as was the $150,000 that couple #2 had in debt. The wife admitted that they were this much in debt mostly because of her. So how did she fix things?

Her first step was to create a spreadsheet to review all of her debts. She then created a list of her monthly fixed expenses and developed a spending plan. Her next step was to create a “debt snowball.” This meant ordering her debts from the one with the smallest balance to the largest and then scheduling payments to the smallest debt until she had paid if off while continuing to make the minimum payments on her other debts. She would then move on to the debt with the next smallest balance and concentrate on paying it off.  Think that debt snowballing might work for you. Watch this Dave Ramsey video to learn more about this strategy for becoming debt free.

This woman  initially believed that it would take her 18 months to pay off everything. But she got lucky and received a sizable bonus and was able put $1000 in savings and used the rest to retire her last debt.

Two important things this woman learned about paying off debt is that you should allow yourself a certain amount of money for fun out of each paycheck to help stay happy and motivated. She paid off all of her bills as soon as she received a paycheck including her debt and then viewed whatever she had left in her account as “fun” money. This is what kept her from overspending. Second, she learned that if she had a small setback such as a vet bill or car repair bill to not that eat into her debt snowball or to get her down.

Over $14,000 in debt and no savings

Our fourth story is of a woman who became debt-free after owing more than $14,000 in debt and with no savings. She felt her financial life was totally out of order and didn’t know how to fix it.
In this case, the woman had a full-time job that paid $37,072 a year plus bonuses and side jobs that totaled $5000. This came out to be an average of $3496 a month or about $42,000 a year.

The way she chose to get rid of this debt was to first pay off her credit card debts because they had the highest interest rate and were unsecured debts, which made them riskier. In addition, they had the smallest balances, which made it easier for her to start small and then work her way up. In addition, she created a four-step program for becoming debt-free. Her first step was to create a tough but attainable timeline. In her case it was to become debt free by December 2012.

Her second step was to learn where her money was going and where she could make the necessary sacrifices. This amounted to living on about two thirds of her income, which was definitely rough in the beginning. She viewed her budget as a spending plan that gave her more control over where her money went. She actually learned to love living below her means. What did she have to give up? She had to give up her cable TV, vacations and traveling, dining out at restaurants, movies, a gym membership, and visits to tanning salons. As tough as this was, she soon learned that those activities had delayed her time and production and kept her from reaching the debt-free position she wanted to achieve.

Step three for this woman was to create more income. She spent a good deal of time marketing herself and her skills to increase her income. She had already cut back on her expenses as much as she felt she could so now was the time to maximize her earnings. She did this by freelance writing in her spare time, which added more than $500 per month to her income.

Finally, her step four was learning how to stay motivated and to celebrate even her small wins. To become debt-free is not a sprint. It’s more of a marathon. But as she learned, if you celebrate the small “wins” this can help keep you going. She also learned that while there are also awesome financial tools available, the biggest and most important tool in her financial arsenal was herself – her determination and discipline.

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National Debt Relief is one of the largest and best-rated debt settlement companies in the country. In addition to providing excellent, 5-star services to our clients, we also focus on educating consumers across America on how to best manage their money. Our posts cover topics around personal finance, saving tips, and much more. We’ve served thousands of clients, settled over $1 billion in consumer debt, and our services have been featured on sites like NerdWallet, Mashable, HuffPost, and Glamour.

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Moderate National Debt Relief Caller: Charlotte Transcribed WE 1/24/2021 Charlotte: Before I begin, I have to let you know that our call may be recorded. Can you tell me, how did you first hear about our National Debt Relief? JOAN: Oh, I don't know. I don't remember. I don't know how I heard about it. Charlotte: What made you decide to work with them? JOAN: Well, obviously, I needed to consolidate my debt. Charlotte: Tell me about the service program that they provided you with. JOAN: Well, I'm not done. But for me, it’s costly. What I did not like about it was that they add on. They say it's going to be X amount of dollars. But then what they do is they say, “Oh, well, we found another creditor that you need to…” So that'll be at a different part of the month and I don't like staggered bills. If I'm gonna pay a bill, whether it's to the phone company, the insurance company, whatever it might be, I want to pay that bill once a month. That's the only drawback. Charlotte: So let me get this. Normally, they are collecting the bills upfront. And then they work to get them paid off at a different rate. So everything wasn't collected all at once, if that's what I'm hearing correctly. JOAN: No, no, no. Every month, money is taken out of your account. And they pay X amount of dollars. Like let's say you owe $5,000 with Citibank, $500 in Credit One, whatever. They work out a deal with them and then they say, “Well, you have to pay $350 a month.” And they'll pay $20 a month towards -- they give you like around about how long it's going to take. Two years, two and a half years. And then they work it out that way. Charlotte: Now, what did you think about your negotiator? JOAN: I don't know. I just called up. It's a completely different department. So when you call up to sign up, it's very different. I don't remember that. It's just that they collected all the information. It was easy for me. I didn't have to go through and find whatever bills I wanted to put in the debt relief. They did that. Charlotte: So say you have questions or concerns. How did you get your questions or concerns addressed? JOAN: I would just ask and they answered it. They're very helpful like that. They'll answer any questions you have. And if they don’t know, they will find out. Charlotte: So was there not a particular person that you spoke with? JOAN: No, you don’t have one person that you deal with that just handles your account. Once you do – they’re like headhunters. Until you sign up, you're going to have that one person and even other people calling. Once your name is out there, they're going to keep calling you. So, once you sign up, then it's whoever answers the phone. It’s customer service. Charlotte: How comfortable did you feel working with National Debt Relief through this process? JOAN: I felt very comfortable, very safe. I was not worried about anything. Charlotte: Is there anything about this process that you would have liked to seen handled differently? JOAN: Yes. The way the payments come out. I'd rather have them one instead of … Charlotte: Everywhere. JOAN: Right. Well, not everywhere. For the most part, the bulk of them were. But then if there's one here, one there, they don't just extend it to another payment. And then the payments change, like the payment amount. You could pay $20 for six months, and then all of a sudden, it's $80 for the next three months, so you really don't know. Charlotte: So if you have to rate this experience on a scale of one to five, five is you’d recommend to friends, one you're pretty dissatisfied… JOAN: No. I would definitely recommend it to a friend. Charlotte: How would you say working with National Debt Relief has impact your life? JOAN: Well, it did help until I hit a speed bump. I'm in the middle of a divorce and my husband closed our checking account, of course. But so far, as a matter of fact, that's why I thought you were calling. I have to postpone the next month, so hopefully, they'll be able to postpone it, because I've been postponing it for a few months. Charlotte: Would it be okay if I posted your comments as a review on our public website for National Debt Relief? Because you did give us some really good feedback. JOAN: Yes, but not using my name. Charlotte: Okay, I will make it anonymous for you. I will also send over a link so that you can have it as a record for yourself at jdola20@yahoo.com. JOAN: Yes, but do not put that public. Charlotte: Oh, no, no, no. That doesn't go public. Definitely. How would you say working with National Debt Relief has impact your life. JOAN: Well, really, it would have helped if I could have stayed on the program. Charlotte: We’re recorded.

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