How I Ditched Debt: Extra Payments Became Her Obsession

In this series, NerdWallet interviews people who have triumphed over debt using a combination of commitment, budgeting and smart financial choices. Their stories may even inspire you to pay off your debt. Responses have been edited for length and clarity.

Jackie Beck racked up debt in many of the usual ways. She used credit cards to cover emergencies. She took a student loan for graduate school. Her husband, Miles, financed a car, and together they got a mortgage and a home improvement loan.

At first, only the credit cards bothered her. Like other people she knew, Beck didn’t consider car loans, student loans and mortgages to be in the same category of “real” debt as credit cards. Then she lost her job. As she struggled to pay for food and housing, she became increasingly uncomfortable with debt in any form. She grew determined to pay off all of it.

Beck became obsessed with paying extra toward her debt. Even small payments felt enormously empowering. The satisfaction of shortening her time to payoff built her momentum. Today, the couple live debt-free, and Beck blogs about their experiences at JackieBeck.com.

What was your debt when you started your repayment journey and what is it now?

Miles and I owed more than $147,000: my $10,000 student loan, his $15,500 car loan, our $95,000 mortgage, a $10,000 home improvement loan — and credit cards for both of us.

Today our debt is zero, and it’s been that way since 2012.

How did you end up in debt?

Basically, I got into debt by being normal. Early on, I thought I needed to build credit, so I got a department store credit card. I got a regular credit card, thinking that was the way to pay for emergencies. I borrowed money for graduate school so I could focus on studying without having to work.

Miles and I got a mortgage because, of course, that’s how you buy a house. When we remodeled our bathroom, we had the money to pay for it, but we still got a 0% home improvement loan so we could keep our savings in an interest-earning account.

When did you get serious about paying off your debt?

I had tried and failed many times to get out of debt. I spent years living on $200 a month from child support payments while dipping into savings I’d frantically built up prior to becoming unemployed. I couldn’t send a dime to my student loan and had to put it in forbearance. I was too busy worrying about having money to pay for food and my half of the house.

A big realization for me came nine years after getting that student loan: I still owed half of what I’d borrowed — nearly $10,000. When I finally got a job earning $2,100 a month, I felt rich and got serious about paying back my student loan. At that point, I was truly, emotionally ready to get out of debt.

What steps did you take to reduce your debt?

I was fired up. I became consumed with paying off my student loan. I earned extra money — through online surveys, freelance writing and odd jobs from Craigslist — so I could make small additional payments. I figured out how much faster I’d be done each time I sent in even a tiny payment.

That compulsive focus helped me pay off $5,359 of my student loan in five months. At that point, I decided to pay off the remaining amount with money I’d saved for emergencies. Using that emergency fund for debt made me pretty nervous, but I took the plunge so I would never have that debt again.

Did you make any other changes?

I cut my expenses by asking for discounts everywhere, even at places you normally wouldn’t ask, like grocery and department stores. If they suggested I apply for a credit card to get a discount, I’d say no and ask if there was another way. Sometimes they would find a coupon. When I had to replace my cell phone, I asked for a discount. They said no but then gave me some accessories for free.

My obsession over debt inspired me to create a debt payoff app and sell it, which also gave me extra money.

What was your biggest challenge paying off debt?

After I started working again, I wanted to have an emergency fund to keep us from needing to use debt again. It was hard because I wasn’t used to having money in the bank, and I was always tempted to use it.

To fix that, we made a short list of exactly what we would consider an emergency: job loss and medical emergencies not covered by insurance. That’s all. It was scary, but if it wasn’t on the list, we could not use emergency money for it.

How did you stay motivated?

Each debt we paid off added to our momentum. When I paid off my student loan, Miles saw how great I felt about it. He decided to join in by making extra payments on his car loan and quickly paid it off.

It was also the realization that debt comes with an icky feeling of uncertainty. At first, we thought it was the interest that bothered us. But with our home improvement loan, even though it was zero interest, it was still stressful. That realization made us decide to use our savings to pay off the home improvement loan.

We also took breaks from paying off debt to do some fun things, as well as build up our emergency savings, before tackling the mortgage. Again we made frequent small payments toward the mortgage — some months we made eight payments, in varying amounts. We finished paying it off in 2012.

How has your life changed for the better since you got out of debt?

Our lives have changed completely. Living with no debt is much less stressful. Everything feels cheaper when you pay with money you already have. Compared with using debt and having to pay interest, it feels like everything you buy is on sale. If the price is $100, you pay $100. But if you use debt, that $10 pizza could end up costing $40 by the time you pay it off.

Once we paid off the mortgage and were completely debt free, we spent the next year saving for things we wanted. With this savings, my husband got a car, and I took a trip to Antarctica, a dream of mine since I was a young child. I also saved for a trip to Easter Island.

How to tackle your own debt

Beck paid off debt by obsessively making extra payments. A few simple steps can get you started:

• First, commit to paying off debt and find the motivation to keep you going. For Beck, the motivation was seeing how even small payments got her closer to living debt-free.

• Build an emergency fund. Saving is crucial to paying off debt, because an emergency fund will give you breathing room and stop you from turning to credit cards for unexpected expenses. Five hundred dollars in the bank is enough to cover many small emergencies.

• Consider visiting a nonprofit credit counseling agency for a free initial consultation. Even if you don’t sign up for a debt management program, you may benefit from having a professional take stock of your financial situation.