15 Tips From People Who Paid Off an Incredible Amount of Debt

Despite the booming economy and healthy labor market, most Americans just can't shake their debt. According to the New York Fed, U.S. household indebtedness exceeded $13 trillion in the first quarter of 2018. So, if a heavy debt load is a feature of your family's finances, you're certainly not alone.

In an effort to inspire you into financial fitness, here are inspirational tips from families and individuals who paid off or significantly reduced their debt burdens. (In some cases, the amount of debt paid off stretched well into the six figures.)

h Also check out our series on how to get rid of large credit card debts.

After finishing grad school, I found myself heavily indebted and without stable income, so my first order of business was to find a way to make my debt more manageable. A first — and very simple — step anyone can take is to simply attempt to negotiate lower interest rates on your debt. This works best if you haven't yet fallen behind on payments, since you'll have the upper hand with creditors, but even if your debt is past-due, it's worth explaining your situation and asking for a reduction in your interest rates. Even a half-point shaved off here or there adds up if your debt is significant, and it requires so little effort to accomplish, that it's really on you if you haven't tried this yet.

I made the terrible mistake once of seeking medical treatment while uninsured, and oh boy, did it cost me. Faced with what appeared to be insurmountable medical bills and a relatively meager income, I did the only thing I could: I called the medical providers and asked for help. I explained that I wanted to pay my bills, but simply couldn't afford to do so in full at the moment. Little did I know that many major hospitals or healthcare organizations offer financial assistance for patients — assistance that can include forgiving all or some of your debt (the latter occurred in my case). Partial debt forgiveness can even be extended to some middle-class households on a sliding scale based on family size, income, and debt level.

So, next time you're on the phone haggling over medical debt, it's worth asking about debt forgiveness possibilities. Even if your debt can't be forgiven, other medical providers often offer discounts of 10-30 percent for self-pay patients.

When I finished school, I had a gnarly mix of both federal and private student loans with a minimum payment so high I didn't know if I'd be able to make full payments. That doesn't have to be the case for you. Federal loans, in particular, offer so many income-sensitive repayment plans that calibrate your payments to your earnings (in most cases, if you earn nothing or very little, your payment will also be zero). Programs like IBR, PAYE, and PSLF also offer eventual forgiveness for any remaining debt after several years of qualifying on-time payments. The good news is that most borrowers qualify for at least one such plan, so there's no excuse for ever defaulting on federal debt. Private loans, too, offer forbearance, deferment, and a number of consolidation options that can make repayment easier.

Long story short: I've paid-off my private debt and put the remaining federal debt on an income-sensitive program that has made my once devastating loan burden much more manageable.

If you're reading this article, chances are you have to live within a budget. That means learning to prioritize your spending (which is much more important if you have heavy debt). If you're paying off debt, you can't have it all. But that doesn't mean every day has to be an exercise in extreme deprivation, either.

Select one or two areas of your budget in which you feel comfortable with much less, and cut there first. For me, a big home wasn't a priority, so I learned to live in smallish (and very affordable) apartments, allowing me to put the savings toward debt. Perhaps in your case, you wouldn't miss eating out often or buying the latest technology. The point is to determine what you can live without, and make the deepest cuts in those areas first, working backwards until you hit budget areas that are definite priorities and where cuts should be minimized.

This year, I flew six relatives in from overseas to attend my son's baptism, all using airline miles accrued from credit card sign-up bonuses. I paid their train fare to nearby tourist cities using Amtrak points collected on my business travel. And I got 5 percent cash back on all the celebratory meals I purchased using a tiered rewards credit card. On a daily basis, I also buy used gift cards for shopping and dining, use loyalty cards at nearly every store I frequent, and double-dip rewards and coupons where possible.

This all sounds like a hassle, but it really isn't; you can store all your loyalty cards on your phone using a virtual card holder, and avoid carrying them in your wallet. Keep just two or three credit cards on rotation to win a mix of miles, points, and cash back. On average, users can save a few hundred dollars per card yearly using cash-back rewards; airline miles or hotel points cards often offer enough sign-up rewards for a couple of round-trip tickets or hotel nights. The savings can all go toward debt reduction.

After you completely repair your credit, you may qualify for even higher rewards. For example, Capital One’s Getmyoffers send out mailers to people with excellent credit. Of course, you should never apply for new cards until you have fixed your finances.

If you're going to work overtime, do it for good cause: your pocketbook. If debt is a burden, find ways to make yourself worth more at work. Get new skills or training, tackle tough projects, or volunteer to train or mentor others. Whichever path you choose, make sure you can document your contributions and point to how they improve your company's bottom line. Then, armed with your shiny new skills or accomplishments, graciously request a raise in-line with your worth (and company practices).

If you get the raise, congrats! You now have that many more dollars to put toward debt. Don't spend it. Spending it just defeats the purpose of working harder. You need to put it almost entirely toward your debt.

The Greutman family knows a thing or two about debt. Having amassed over $48,000 in consumer debt, they then got creative and resourceful, paying it off in just about two-and-a-half years. They downsized their home, cut cable subscriptions, and nixed date nights, but they still needed to do more. Then, Lauren Greutman started looking for creative ways to supplement their household income. She took online surveys that paid $10-$20 each and, over the course of a year, put that income aside for that year's Christmas gifts. "I saved about $400 and we didn't have to go into more debt for the holiday," she says. Her couponing and savings blogs, IAmThatLady, eventually started generating significant income, which the family used for their kids' education and for debt repayment. Paying off $48,000 in 2.5 years was no easy feat, but for the Greutmans, it meant finally savoring financial freedom.

For even more inspiration, consider the story of Cherie and Brian Lowe, who jointly paid off over $127,000 in about four years. The couple decided to shift the way they thought about money, focusing on being debt-free as the ultimate use of their funds. "So much of paying off debt has very little to do with money and math and more to do with personal behavior and your outlook on life," she says. "Live from a mindset of scarcity and you'll never be satisfied, no matter how much money you have. Live from a place of wonder in the wealth you've already been blessed with and you'll be much happier and more successful in paying off debt." The couple lived an extremely simple life focused on their family and well-being, rather than purchases, and it paid off handsomely.

Cherie and Brian Lowe ran their home like a business. Cherie streamlined expenses by qualifying purchases with this question: "Will this choice help us save as much as possible?" If not, they didn't choose it. Brian also took on extra work and avoided eating out for six months straight (not even a cup of coffee!). Additionally, the couple focused on the snowball method of debt repayment advocated by Dave Ramsey, in which you pay off your smallest debt first, and use the confidence and cash-flow gained from that experience to tackle increasingly large debts, until you're in the clear.

"When we began our journey, we thought it would take 15 years, seven and a half if we really hustled," she says. Instead, the Lowes' willingness to sacrifice even the smallest of expenses allowed them to accomplish their goal in under four years. "Success builds momentum, which fuels everything you do," she says.

Gifts, shopping, and eating out are the types of ongoing expenses that can wreak havoc on a budget — and debt repayment — because they're relatively small (and pleasurable) expenses many are unwilling to forego. The Lowes quickly realized, however, that if they really wanted to repay debt aggressively, they'd have to limit these small pleasures, too. So they made temporary sacrifices to save money. "We didn't eat meat for about six months so we could continue to use every penny to fuel our efforts." The two didn't exchange gifts for Christmas, anniversaries, or Valentine's Day (although they did buy gifts for their kids). The end result? "Paying off debt unified our relationship in ways I could never even describe," says Cherie. "We're on the same page with our goals, saving 15 percent of all of our income for retirement, quickly building college funds for our daughters (ages 11 and 6), and saving for fun things like vacations, a more elaborate Christmas, and a new car."

Consider the inspirational story of Zina Kumok, who, as a recent college grad, paid off $28,000 in three years — on a salary of only about $30k! Paying off debt with such a modest income requires a great deal of tenacity and resourcefulness, so Kumok decided to use all the resources at her disposal. After getting engaged, Kumok and her fiance moved in together. They also took on a close friend as a boarder. "My rent went down significantly," she says. "Now I split utilities and rent with two other people. That really made a huge difference. Now half my take-home pay goes toward my loans."

Like most students today, Kumok didn't give her loans much thought while she was in school. "It wasn't until I graduated and had my first job," she says. "I was making $28,000 per year. It was depressing to think that for the next 10 years I would have this payment that was a large chunk of my income."

Like many Californians, the Sparacinos found home affordability to be a significant issue, so they found a foreclosed property in a good neighborhood, and focused on turning fixer-upper into a dream home. The couple managed to pay off a $245,000 mortgage quickly, using tools such as mortgage refinancing to lower their interest rate and galvanize speedy repayment. The Sparacinos refinanced their mortgage twice to take advantage of a lower interest rate but, says Christine, "We never took additional money out. That's one of the keys." The Sparacinos also:

• Paid extra toward their mortgage every month, even when money was tight. They started with an additional $100 per month and bumped the extra amount to $200-$300 once their kids graduated from college.
• Did most home renovations and repairs themselves, saving on costly contractor expenses.
• Found a good, trustworthy accountant who helped them keep their financial goals in perspective and on track.

If you're ready for some serious debt repayment inspiration, consider the story of Joe Mihalic, who repaid $90k of student loans in just seven months! (Yes, I said months, not years.) A recent Harvard MBA grad with a cushy job, he felt pressured by his peers to spend and enjoy his ample salary, rather than tackle his debt quickly, so Joe decided to turn-off the peer pressure — literally. Joe shut off his social media profiles in a bid to shed the social pressure and focus on his goals."Some people treat Facebook like a product catalog. They use it mainly to post about stuff they own or stuff they want to buy. These people are overly concerned with consuming to keep up with the Joneses. Don't fall into that trap. Try not to focus on those status updates on Facebook."

"Instead, you should use Facebook to share experiences," he says. "For example, one of my favorite hobbies is rowing, and I love posting a picture or a status about a great practice on the water. I like sharing the fact that I had a great experience exercising with friends in the beautiful outdoors, and that I did something that made me happy. Sharing my happiness about this simple experience feels much better than posting a picture of an expensive gadget or a luxury vacation."

While we may not all have a Harvard MBA salary like Joe, we do all have the power to limit the influence of peer pressure and lifestyle creep by managing our social media platforms accordingly.

Finding support from like-minded people can be a critical component of your debt repayment journey; just as social media peers can influence spending decisions, so can real-life friends and acquaintances. Focus on spending time with people whose money values mirror your own, or at minimum, those who are supportive of your choices. By doing so, you might even attract better matches or improve upon existing relationships.

Says Joe, "My debt payment experience improved my dating life. I used to take dates to expensive restaurants — it was kind of a crutch. But now I focus more on frugal shared experiences, like hiking, swimming, getting some bagels, or just hanging out. I no longer rely on expensive restaurants to impress dates. This change has forced me to be more vulnerable and open, making me a better date. As a result I'm meeting great people who share my values."

Like many others who have succeeded in their debt repayment journey, Joe Mihalic re-oriented the way he thought about money, and in doing so, stumbled across a newfound appreciation for the simple things in life. "Happiness is something we choose. If you think about it, most Americans have it pretty darn good. We're a prosperous nation. It's easy to compare yourself to other people around you and think other people have it better than you based on what they have, and that you don't deserve happiness until you are driving this car or going on this luxury vacation. But at the end of the day, if you have your health, and your basic living needs are met, what is so bad about life? Why can't we choose to be happy?"

This article by Janet Alvarez was originally published by Wise Bread.