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Getting Rid Of Of All Your Debt In Under Three Years

Updated on September 3, 2018

Debt Management Vs. Debt Elimination

There's a big difference between managing your debt and eliminating your debt. Managing your debt is paying your bills on time and not missing one payment... even if you are up to your eyeballs in credit card debt. Debt elimination is exactly what it sounds like... getting rid of your debt completely. If you're interested in eliminating your debt, keep reading because you may find this page very helpful in your debt elimination process.

So what if you had $27,000 in debt? For the average person trying to get rid of all this debt will feel helpless. In the next section, you'll learn how to empower yourself when it comes the whole process.

Breaking That Huge Debt Down Into Smaller Chunks

Unless you have a loan or credit card that comes out to $27,000, you will usually find that your debt is not that overwhelming when you break it down. So for the sake of example, you're gonna have five credit cards, a personal loan, and a car note. So the debt is going to look like this:

Credit Card #1- $300 balance, $25 minimum payment

Credit Card #2- $500 balance, $25 minimum payment

Credit Card #3- $700 balance, $25 minimum payment

Credit Card #4- $3,000 balance, $90 minimum payment

Credit Card #5- $5,000 balance, $150 minimum payment

Personal Loan- $7,500 Loan, $280 monthly payment

Car Note- $10,000 Loan, $222 monthly payment

For the sake of example, you have enough money to pay all your debt minimum monthly payments and your living expenses without much struggle. In the next section, you're gonna learn some actions needed to take to start the debt elimination process.

You're Gonna Need More Money

In order to eliminate your debts, you're gonna need more than the minimum monthly payment to pay off your debts. There are a few options you have that can give you more money. They are:

1. Sell something or provide a service for a fee.

2. Get a part-time job.

If you can start a yard sale or sell something online, you can get a few bucks to pay off some of the debt you have. So if you have old electronic devices or things you don't use anymore, you can sell it online and make enough money to pay off your debts.

Being that a lot of us are not use to or feel comfortable selling anything, your best bet is getting a part-time job. Here are a few tips when getting a part-time job.

  • Make sure your primary job is not so stressful that it drains you of your energy. Working another job may add more stress that you don't need.
  • Work hours you feel comfortable working. If you're working 40 hours a week, trying to tack on another 40 may be overwhelming. Your part-time job should be no more than 6 hours a day. If that's too much, tell your boss at your part-time job that you would like to work only 4 hours a day.
  • Your part-time job should not be stressful at all. Find a job that has the lowest stress level you want to handle. You may be working this job for a few years so it shouldn't make you want to pull your hair out.
  • Use the money from your part-time job to only pay off your debts. Don't feel tempted to go on a weekly shopping spree with this money. You will never eliminate your debt if you take this approach. When you pay off a debt, it's okay to reward yourself. This is good motivation.

You don't need to make too much for this to work. Believe it or not, but all you need is an extra $100 a week. In the next section, you're gonna attack the debt with ferocity and take no prisoners while you're at it.

Debt Snowball--A Walk-Through

The debt snowball is not a new technique, but it is very powerful. Just like a snowball that's pushed down a hill collects snow to increase in size and build momentum to knock whatever is in front of it down, the debt snowball follows the same principle. Here's what it looks like:

Debt #1--Take the money from your part-time job plus the minimum payment for Debt #1 to make bigger monthly payments until Debt #1 is paid off.

Debt #2--Once Debt #1 is paid off, take the money from your part-part time job plus the minimum payment from Debt #1 and Debt #2 to make bigger monthly payments until Debt #2 is paid off.

You continue this process, using the money from your part-time job, plus the minimum monthly payment from the previous debts and the current debt to pay each debt off until you are debt-free.

You're about to see this process in action and you'll see how only an extra $100 a week (or $400 a month) can pay off $27,000 debts in less than three years.

Paying Off Credit Card #1--The Quickest Payment

Before you learn how easy this is going to be, let's put all the debts in front of you. The debt you will be focusing on will be in bold letters. Here's a list of your debt with the one you're going to focus on in bold lettering:


Credit Card #1- $300 balance, $25 minimum payment

Credit Card #2- $500 balance, $25 minimum payment

Credit Card #3- $700 balance, $25 minimum payment

Credit Card #4- $3,000 balance, $90 minimum payment

Credit Card #5- $5,000 balance, $150 minimum payment

Personal Loan- $7,500 Loan, $280 monthly payment

Car Note- $10,000 Loan, $222 monthly payment

For the sake of example, you're going to have a part-time job that only pays you $100 a week or $400 a month. You're gonna take the extra income and put it towards your debt, along with the monthly minimum payment. Being that the extra income exceeds the credit card payment, you'll have money left over that you can put towards your next debt, which is Credit Card #2. Here's how it will look:

Month #1

Extra income: $400

Credit Card #1-- $300 balance, $25 minimum payment

Pay off Credit card #1, put extra $125 ($100 left from extra income and $25 minimum monthly payment for Credit Card #1) towards Credit Card #2 next month.

Paying Off Credit Card #2--Another Easy Payment

Paying off the second credit card is gonna be another easy payment. Being that you have money left over from the first month, paying off your second credit card is gonna be just as easy. As the debt amounts get bigger, the longer it's gonna take to pay off each debt, but if you keep paying it in large chunks each month, you'll see the debt get eliminated as quickly as possible.

Credit Card #1- $300 paid in full, $0 balance

Credit Card #2- $500 balance, $25 minimum payment

Credit Card #3- $700 balance, $25 minimum payment

Credit Card #4- $3,000 balance, $90 minimum payment

Credit Card #5- $5,000 balance, $150 minimum payment

Personal Loan- $7,500 Loan, $280 monthly payment

Car Note- $10,000 Loan, $222 monthly payment

Month #2

Extra Income: $400 + $125

Credit Card #2-- $500 balance, $25 minimum monthly payment

Once again the extra income you have exceeds the credit card balance so you have another credit card paid off in one month. The next debt you pay will take a little longer to pay off, but it will still be easy to pay off as the first two.

Paying Off Credit Card #3

You're on a roll! Feel good about your progress. Credit Card #3 will be your first credit card debt that's going to take longer than one month to pay off. Don't worry though... you'll still pay this card off with ease if you stick to the program.

Credit Card #1- $300 paid in full, $0 balance

Credit Card #2- $500 paid in full, $0 balance

Credit Card #3- $700 balance, $25 minimum payment

Credit Card #4- $3,000 balance, $90 minimum payment

Credit Card #5- $5,000 balance, $150 minimum payment

Personal Loan- $7,500 Loan, $280 monthly payment

Car Note- $10,000 Loan, $222 monthly payment

Month #3

Extra Income: $400 + $25 (minimum payment for Credit Card #1) + $25 (minimum payment for Credit Card #2) + $25 (minimum payment for Credit card #3) + $25 (extra money leftover from previous month) = $500

Month #4

Extra Income: $400 but only $200 used to pay off card

You'll have $200 plus the minimum payment for Credit Card #1-3 (or $75) that will roll over into credit card payment... Credit Card #4. So you'll have $275 that will roll over for the next credit card.

Paying Off Credit Card #4

Eliminating debt takes a lot of patience but as you have seen already, you're paying these credit cards off with ease. The fourth credit card will take longer to pay off, but if you stay focused, you'll see the debt melt like all the others despite how much more you have to pay off than the others.


Credit Card #1- $300 paid in full, $0 balance

Credit Card #2- $500 paid in full, $0 balance

Credit Card #3- $700 paid in full, $0 balance

Credit Card #4- $3,000 balance, $90 minimum payment

Credit Card #5- $5,000 balance, $150 minimum payment

Personal Loan- $7,500 Loan, $280 monthly payment

Car Note- $10,000 Loan, $222 monthly payment

Month #5

Extra Income: $400 + $275 (money left over from previous month) + $25 (minimum payment from credit card #1) + $25 (minimum payment from credit card #2) + $25 (minimum payment from credit card #3) + $90 (minimum payment from credit card #4) = $840

Month #6 - Month #9

Extra Income: $400 + 25 (minimum payment from credit card #1) + $25 (minimum payment from credit card #2) + $25 (minimum payment from credit card #3) + $90 (minimum payment from credit card #4) = $565 (x4)

$840 + 565 + 565 + 565 +565 = $3,100

You'll have an extra $100 that will roll over into the next month for the next credit card payment... Credit card #5. If you want, you can take that extra $100 and get yourself something nice. You just made the first big debt payment. Rewarding yourself keeps you motivated.

Paying Off Credit Card #5

The debt elimination process is easy as long as you can keep your sanity working all these hours. This is why it's extremely important that your part-time job feels almost like you're not working at all. If you keep the part-time job hours at a minimum but still have $400 a month to pay your debts, you'll be able to keep working and make the extra money each month.


Credit Card #1- $300 paid in full, $0 balance

Credit Card #2- $500 paid in full, $0 balance

Credit Card #3- $700 paid in full, $0 balance

Credit Card #4- $3,000 paid in full, $0 balance

Credit Card #5- $5,000 balance, $150 minimum payment

Personal Loan- $7,500 Loan, $280 monthly payment

Car Note- $10,000 Loan, $222 monthly payment

Month #10 - Month #16

Extra Income: $400 + $25 (minimum payment from credit card #1) + $25 (minimum payment from credit card #2) + $25 (minimum payment credit card #3) + $90 (minimum payment from credit card #4) + $150 (minimum payment from credit card #5) = $715 (X7)

$715 X 7 months = $5,005

Congratulations! You've paid off all your credit card debt in 16 months. Now all you have left are your personal loan and car note. You're doing really good so keep going. On to your first non-credit card debt!



Paying Off Your First Non-Credit Card Debt

You're about to pay off your first non-credit card debt. When paying installment loans, the majority of your payments are going towards interest. When you start making huge payment chunks, you'll notice that a huge chunk of your payments are actually paying down the principal. This is one of the many reasons why debt elimination is so important.


Credit Card #1- $300 paid in full, $0 balance

Credit Card #2- $500 paid in full, $0 balance

Credit Card #3- $700 paid in full, $0 balance

Credit Card #4- $3,000 paid in full, $0 balance

Credit Card #5- $5,000 paid in full, $0 balance

Personal Loan- $7,500 Loan, $280 monthly payment

Car Note- $10,000 Loan, $222 monthly payment

Month #17- Month #24

Extra Income: $400 + $25 + $25 + 25 + $90 + $150 + $280 = $995 (X 8)

$995 X 8 Months = $7,960

Being that you hit another milestone, treat yourself with the money leftover. The money left over ($460) will buy you something really nice. Enjoy yourself! You just paid off your first loan. One down, one to go!


Paying Off Your Final Debt... The Car Note

You are down to your final debt. It's only been 24 months and you're doing extremely well. You're attacking the debt without mercy and treating yourself once you reach a milestone. You can't stop now, you're down to your last debt and it's the biggest of them all. Having a car that's paid off feels amazing because you know that the car is yours for sure.


Credit Card #1- $300 paid in full, $0 balance

Credit Card #2- $500 paid in full, $0 balance

Credit Card #3- $700 paid in full, $0 balance

Credit Card #4- $3,000 paid in full, $0 balance

Credit Card #5- $5,000 paid in full, $0 balance

Personal Loan- $7,500 paid in full, $0 balance

Car Note- $10,000 Loan, $222 monthly payment


Month #25 - Month #33

Extra Income: $400 + $25 + $25 + $25 + $90 + $150 + $280 + $222 = $1,217 (X 9)

$1,217 X 9 months = $10,953

Congratulations! You are now debt-free in less than three years. Take the left over money ($953) and treat yourself like never before. After working for all those hours, you should definitely take a vacation. Now that you are debt-free, you'll notice how much extra money you'll have each month. Even if you quit your part-time job, you'll still be able to enjoy the money you have from your primary job.

I hope this article was helpful.

Good Luck!

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    • confidencemagnet profile imageAUTHOR

      Reem Jones 

      3 years ago from Franklin, PA

      I watched his Baby Steps to financial freedom. I agree with some things he says, but I don't think you should pay for everything with cash. I lean more towards Robert Kiyosaki's Rich Dad Principles. But if you know how and when to use debt, you'll be financially powerful.

    • tylermj23 profile image

      tylermj23 

      3 years ago from Roanoke, VA

      Do you follow what Dave Ramsey says concerning debt or what are your thoughts on his principles?

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