Huge debts, paid off fast

By Liz Pulliam Weston

Greg Cards of Newark, Del., was saddled with $154,000 in debt after his divorce.

Wanda Wilkinson of Santa Fe, N.M., had $49,000 in credit card bills, a daughter in college and a husband facing a potential layoff.

Bethany and Stephan Gordon of Tacoma, Wash., were fresh out of college and carrying a mortgage nearly three times their income.

Joy Thompson of Pullman, Wash., and Mary Klein of Midland, Texas, had relatively low incomes -- and big debts.

What do these folks have in common? They're debt-payoff champions.

The Gordons, for example, retired a $150,000 mortgage in just five years. Wilkinson eliminated half of her debt in a year. Thompson paid off $8,000 in just nine months.

How did they do it? Among other things:

• They made debt payoff a priority, although most continued to save for retirement as well.
• They kept their basic living expenses as low as possible.
• They looked for creative ways to speed up their debt repayment, and some took extra work. (Cards, for example, volunteered for overtime and took a second job. Wilkinson, a lawyer, moonlighted as a package loader on a FedEx loading dock.)

Your situation might be different from theirs in the details. But if you're facing a big debt hole, you might find their stories offer inspiration and ideas you can use.

Living like college students

One way the Gordons were able to pay off their mortgage in five years -- starting with an income of $55,000 a year -- was that they continued to live like broke college students after they graduated.

"It was years before we had living-room and dining-room furniture," Bethany Gordon said. "We kept our older cars. We were diligent coupon clippers and only went out to eat occasionally."

The Gordons, who have always contributed at least 10% to their 401(k) accounts, initially paid an additional $400 on their $1,000 monthly mortgage. As their incomes rose, they increased that payment until it reached $2,500 a month.

"When the balance was less than $20,000, we searched under the couch cushions, emptied our savings accounts and paid it off completely," she said.

Stephan and Bethany, now in their early 30s, are delighted with their decision.

"It has been great to be so young and live in a paid-off house," Bethany said. "We can be more flexible with our lives since only one paycheck can easily pay for our necessities. We can choose to stay at home when we have kids and aren't chained to our jobs if, for example, lower-paying but more rewarding career options open up for us."

Having a dream

Joy Thompson was a conference planner who made about $32,000 annually, until she figured out what she really wanted to do: work part time so that she could spend more hours mentoring girls at her church.

To do that, she knew she needed to be able to live on less money, which meant paying off her debts: credit cards, a car loan and student loans.

"It started with a clothing fast. I said for a period of time I would not buy any clothing," Thompson said. "It was a simple choice at first, and it was amazing how much less money I spent when I said that I was done for a time period."

Thompson also decided to live on a cash system rather than try to "budget every dollar -- that would drive me crazy." (For another simple system, try the 60% solution.) She is paid twice a month and allots herself $150 in cash to cover "gas, groceries and anything else I want that is not a bill. … When the money is gone, it's gone."

Thompson said she still goes out with her friends but typically uses coupons or dollar menus when she eats out. She still gives $300 a month to her church.

In nine months, Thompson paid off $8,000 of her debt. She stayed motivated by remembering her goal.

"It's focus. This is what I really want to do," Thompson said. "I ask myself, 'Do I want this cheeseburger or my dream?' I always pick my dream."

Doing what it takes

Wanda Wilkinson's life looked pretty good from the outside: She and her husband made $140,000 a year and had just $20,000 left to pay on their mortgage. She even employed that epitome of yuppie luxury: a personal trainer.

Then, at 59, her husband Bruce was threatened with a layoff from his $80,000-a-year job just as their daughter was about to start college.

"It would (have been) disastrous for us because of the extreme debt we were in -- $49,000 on credit cards," said Wilkinson.

Continued: Getting ahead by will power

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