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My Ditched Debt Story My Shiny Nickels

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How I Ditched Debt My Shiny Nickels

by Anna Helhoski Senior Writer | Consumer finance, economic news, trends, student loan credit Anna Helhoski is a senior journalist who covers economic news and developments in consumer finance at NerdWallet. She is also an expert regarding student loans. The company was founded by NerdWallet as of the year 2014. Her work was featured in The Associated Press, The New York Times, The Washington Post and USA Today. She has previously covered local news in The New York metro area for the Daily Voice and New York state politics for The Legislative Gazette. She has a bachelor’s degree in journalism from Purchase College, State University of New York.

April 4 April 4, 2017

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The series talks to those who have beaten debt using a combination of determination, budgeting, and wise financial decisions. Their stories may even encourage you to .

My Shiny Nickels blogger Laura Dobbins and her husband, Randy, on a trip to Paris and a trip that they could afford after they got out of debt.

In 2011, Sacramento, California-based IT manager Laura Dobbins, her husband and kids lived in a luxurious home that had all the luxury trappings of wealthbut their financials were a different story. They were in nearly $40,000 of debt and had billed an excessive amount on their credit card accounts that Dobbins couldn’t front an airline ticket for the business trip.

Dobbins recognized that they had to make some lifestyle changes. Dobbins and her husband, Randy started saving instead of spending money and paying off their debts. They also remodeled their home, and in less than 2 years had become debt-free. She has since shared money-saving advice and provides details on her debt-payoff methods on her website . Here’s the full story.

Was your debt total before you began your repayment process?

Laura Dobbins 2011: $39,685 overall with $17,000 of credit card debt, $15,000 in auto loan debt, and $8,000 in personal loan debt.

What is your total debt today?

In 2013, became debt-free. In 2013, still no debt.

How did you end up in debt?

Ironically, it started in the year that I received my first big promotion and a salary increment. It doesn’t seem logical from afar. You make more money, and you’re then in debt? While it might sound odd it’s “yes.” Then we had all of this money and even though we were in a perfectly sufficient home in a gorgeous middle-class neighborhood, we opted to use the extra money towards a bigger and better home in an upscale neighborhood. With that came the “need” for more furniture and a professionally-designed new backyard and an SUV just like the neighbors had, a gardener, and … well, you get the idea. Instead of being rich, we were financing the design of it. Each month. The downward spiral of debt had begun.

What was the trigger that led you to start getting out of the debt?

The realization that I couldn’t get the $400 flight ticket for a business trip that was coming up. For so long, we had paid down the credit card to a point to have credit available to cover any eventual expenses. The pattern finally stopped when my boss instructed me to fly from St. Louis to St Louis for work. I checked our credit card account to discover that we had $90 in available credit (and the balance was $52 on our bank account). We’d managed to hide our financial status from the world for a really long time, but now it was finally bubbling to the surface. It was scary.

What steps did you take to lessen your debt? What resources or services did you utilize?

We knew the first thing we had to do was break the cycle of having debt “rescue” our. Before we paid off all debts, we set aside the equivalent of a $1000 emergency fund.

We were aware that to pay down the debt we accumulated in the shortest amount of time, we would need to free up more money. This wasn’t a moment to relax and give a mere $50 to our monthly debt. It was a “hair’s-on-fire and we needed to call the firemen” situation, so we had to make a major move. Literally. We sold our huge home in the suburbs, and then moved to a small 1,000 square foot house in a working-class area. The change alone helped us save over $2,500 a month. (I’ll run the numbers for you: That’s a saving of nearly $30,000 annually.)

We also ate out less often and found more economical ways to enjoy ourselves as a family. With that extra money each month we paid down the debt using what’s known as the “snowball strategy.” We began with the smallest credit card balance of $1,500 to gain a quick mental victory immediately and followed by paying the rest of our debts from the smallest to most expensive. After we paid each one off, the money which was originally used for paying those monthly bills was applied to the next one on the list. This “snowball” of cash which was going to debt each month was growing like crazy.

What has changed in your life for the better since you stopped paying your debts?

We’re happy. Truly, wonderfully, down-in-your-soul happy. When all debts were paid and home expenses were low we could invest in things that mattered the most. The huge home in the suburbs did not provide us with joy and we enjoyed traveling around the world did. We save a lot of money, yet be able to spend money where it counts.

A several years ago, my husband was adamant about his stressful management position. With the money we had saved up we purchased our first business , which was one of my husband’s lifelong dreams. The business was sold to him, is now his own boss and loves it.

Being debt-free gives you more than an euphoria of freedom It opens doors you’ve never imagined.

How do you approach your own debt and start making payments to pay off your debt

The method Dobbins suggests is ideal for those who want to use small wins to motivate them to pay off larger debts. However, the method where you prioritize paying off debts with high interest like credit cards or payday loans before lower-interest ones such as student, mortgage and auto loans, can assist you in paying off your debts faster and save on interest. This will show you how long it will be to eliminate one debt at a.

For a better way to manage your debts You should think about debt consolidation which combines multiple debts into a single one with a lower interest rate. Two options for consolidating debt are a and a . Use a to estimate your interest rate.

Anna Helhoski is a staff writer for NerdWallet Personal Finance website. Email: . Twitter: .

The author’s bio: Anna Helhoski is a writer, and NerdWallet’s expert in the field of student loans. Her writings have appeared in The Associated Press, The New York Times, The Washington Post and USA Today.

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