How I Paid Off $15,000 in Debt Since 2011 – Reader Melissa’s Story

This is a guest post by Melissa who lives in the Dallas area with her boyfriend and their cats.  She teaches 7th grade and loves the joys and challenges that come with working with 12 year olds all day.  She clips coupons, snowflakes, and picks up forgotten change she sees on the ground.  She loves cookies and cake and has a serious sweet tooth.  While she aspires to be a runner, sometimes getting up at 4:30 in the morning disrupts my sleep too much.

Victoria’s Secret – $190.07

HSBC – Visa – $206.18

QVC – $397.36

HSN – $167.98

Credit One – $353.97

Discover – $483.84

Cap One Platinum – $484.01

Cap One Roses – $1,153.20

This list also does not include things like car payments, student loan payments, rent, groceries, etc.  Now you probably get a picture.  I was in a financial mess!  This was how my financial outlook looked at the beginning of 2011.  You might think, that’s not that much, but you have to keep in mind that practically all of these credit cards were maxed out.

I am a 7^th grade teacher full-time, and I also had a part-time retail job.  On paper, my income from my retail job could go towards paying off the debt listed above.  However, because I couldn’t or maybe didn’t budget, there was ALWAYS more month than  money.

I receive my school paycheck the last day of the month, and by the first week of the next month, it would pretty much be gone.  I then had to rely on my second income for food and gas and pray that there were no emergencies that month.  I also had to figure if I had $15 available on the Discover card, then I could use that to get gas one week.  I paid the minimum on each of the cards listed above, and couldn’t figure out where all of my money was going.

Yes, I made some really poor decisions during this time.

Honestly, there are things that I wish I could go back and change.  For example, I had to get another car because my current car was falling apart.  I still owed way too much on the 1^st car.  Somehow I managed to get financing for a 2^nd car (at a 14% interest rate), and instead of trading in the other car, I kept it.  So now I had two car payments plus everything else.  I still kick myself for not getting rid of the 1^st car, but I didn’t really know what to do.

Life Changes

My life went through a change in November 2010.  I met my wonderful boyfriend, who, ironically, is in the banking/investing business.  Here was this guy who knew how to manage his money while I didn’t have any money at all to manage.

Our relationship immediately took off, and one day I told him that I had about $50,000 worth of total debt.  I didn’t go into specifics, but I felt like I needed to tell him before our relationship went any further.  I am so blessed in that he said that was a number that we could work on and not to worry about it.

WE could work on it!  I never felt like I had that type of support before, even when I was married.

I moved in with him in September of 2011, and paid him a little towards household expenses every month.  This cut my household expenses from $1000/month to $650/month.

Gaining Traction on Debt

He also encouraged me to take a look at my 2^nd job.  He understood that I needed it in order to pay off my debt, but he thought maybe there were better options out there.  So, I applied for and was hired as a testing tutor.  The income from my 2^nd job doubled!  I went from making $8.75/hour to $20/hour!  Whenever that check from the 2^nd job was deposited into my checking account, I immediately sent it off to pay for whatever credit card was first in line.  I used the debt snowflake method and debt snowballs and threw whatever extra money I had at my debt.

Amazingly, credit cards and that dumb car decision started melting away.  I actually could see the light at the end of the tunnel.  I paid off that 1^st car in August 2012, and I just paid off my last credit card in December.

I still have my car payment on the 2^nd car and my student loans to pay off.  And I still have that 14% interest rate on my car.  I still have my 2^nd job, and I still live with my boyfriend.

I don’t have an emergency fund like I should, and that is going to be one of my goals for 2013.  I still follow the debt snowflake method and am constantly looking for ways to send in extra money for my car payment.  My next step is getting my car paid off, and I hope to have that accomplished within the next 2 years.  I would really like to have it paid off in 18 months.

I have paid off over $15,000 in debt since 2011.  I use the envelope system for groceries and gas.  Honestly, I spent way too much money over Christmas, but I didn’t use any credit cards to pay for any of it!

I am very anxious to be completely debt free, but I realize that it doesn’t happen overnight.   My ultimate goal is to be completely debt free by the time I am 40.  I have 5 years to accomplish this, and for once, I think I can actually do it!

If you have recently paid down your debt and would like to be featured on Mom’s Plans, please contact me!  I would love to share your story.

Photo courtesy of Tax Credits via flickr.com/creativecommons

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