How to pay off $300,000 of debt

By MP Dunleavey

Editor's note: Join columnist MP Dunleavey and a group of women as they seek to strip away the myths around money, liberate themselves from debt and find financial sanity. Follow the quest of the Women in Red every other Wednesday in Dunleavey's column on MSN Money.

How can you possibly win when the odds are stacked high against you?

As a fierce battalion of the Women in Red has found -- call this group Company C, for cocky, courageous and a little bit crazy -- the best way to beat debt is to band together, damn the interest rates and take the enemy by storm.

The birth of the racers

As Becky Purvis, 28, of Raleigh, N.C., describes it, the idea for an all-out assault on debt began in September on the Women in Red message board and gained strength slowly.

Someone suggested forming an online group dedicated to paying off debt, Purvis recalls, "and everyone said, 'Yeah, that's a great idea,' but then nothing happened."

Armed with a good $25,405 in credit card debt, student debt and car debt herself, Purvis started the Women in Red Racers to inspire other women to join a collective effort to vanquish their debt once and for all.

The rules were simple:

• Tally your debts and post them for all to see. Some people included mortgage debt; some didn't.
• Post monthly updates about how much you paid down -- or didn't.
• Don't give up.

A daunting battle

Consider what the Racers were up against:

Collectively, the 80 or so women who joined the thread were carrying more than $2.8 million in debt. Eleven people joined with over $50,000 in debt (most of those women included their mortgages), according to Megan Paterson, 29, a Washington, D.C., area woman who fell into the role of group accountant, keeping a detailed spreadsheet of each person's debt and payments.

"People were in such diverse situations," Paterson says, from a college student with $10,000 in credit card and car debt to a professional couple with $520,000 in debt, including two mortgages and about $130,000 in student loans. The top debtor, so to say, claimed more than $45,000 in nonmortgage debt.

What made matters worse was that at first, the Racers didn't see any unity in their shared plight. "People kept talking about the race and who was going to win, and 'It wasn't fair if so-and-so has a thousand dollars in debt, but I have $50,000 -- so how am I going to beat them?' " Purvis recalls.

It was disheartening. "We had to work really hard to make it clear that this wasn't a race against each other," Purvis says. "It was the race toward debt freedom."

Tortoises and hares unite

Purvis dubbed herself a tortoise and conceded that her own "race" would be of the slow-but-steady variety -- and reminded others that paying even the littlest amount was still a step toward the finish line.

Meanwhile, others enjoyed the chance to compete. "I am finally beating Kristen L!" one woman wrote gleefully. "Sadly, however, BuyBuyDebt has taken over the lead by a fair margin, and if she makes it to the $10,000 mark this month, I fear I will never catch her."

Either way, the point was always to keep people moving toward their goals, no matter what the pace. To that end, Purvis introduced a playful reward system.

Every time a participant pays off $100 in debt, she earns a smiley-face icon next to her name. Pay off $500, you earn a "big smiley"; pay off $1,000, you get a "hot smiley" with sunglasses. Purvis has kept a running tally, with icons, on the first page of the thread.

People caught the spirit of the smiley system, and the momentum began to build. After three months, as the holidays were looming, fraught with financial peril, Paterson announced a huge morale booster: "The great news is that as a group, we have paid off almost $75,000 in debt!"

Continued: More than money

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