How I Got Out of $18,000 Worth of Debt by Age 30

Since my recent Facebook post, many have asked how I become debt free.  I'm still in disbelief myself.  Debt has been a part of me, like a limb on my body, for over 10 years that it feels almost abnormal not owe anyone money.

I find no other way but to be honest with you readers about my past financial difficulties.  Without honesty, no one would be able to relate, since most of America is swamped in debt!  I hope my honest, transparent story inspires those who are burdened by debt to take the initiative and get out once in for all! So let's jump right into NUMBERS shall we?

Disclaimer:  Some of these financial decisions below is nonetheless naivete, juvenile, and irresponsible.  It does not reflect who I am today for I take full responsibility of these mistakes, and have learned from them!


Here is a concise breakdown of my debt and how it was resolved.  I thought it was around 13,000, but there were a few I forgot about (all numbers are rounded to nearest hundredth):

1.  Credit card- $8,700

This was my first credit card ever offered through my bank at the time.  At first I was doing so well making payments ontime, and they raised my credit limit higher and higher until I reached Platinum with a $10,000 credit limit!  (You give a kid just out of high school that much money to spend with no financial education, I say the results were inevitable).

My credit score skyrocketed!  I then took on five other credit cards, and used them rambunctiously.  I decided it would be easier to maintain payments by doing a "balance transfer" from my other credit cards to this Platinum credit card.  Why not since I had room ($10,000) to do it, right?  WRONG.

What I did not know is with EACH balance transfer, your interest rates goes up.  What I also did not know, was my minimum balance would bounce to the other end of the spectrum!  I then got behind on payments could not afford the minimum payment.  Therefore it went into collections.

Two days ago I negotiated a settlement.  They accepted.  This was my last creditor.

2.  Medical bills- $3,900

While on unemployment, I had a medical emergency and went to the ER.  The doctor ordered a pap smear as well.  BAM!  I received bills from left to right!  From the ER doctor, the pap smear doctor, their practices, the hospital, and a few more I don't even know what they were for!  While in the hospital I applied for an assistance program and was denied.  So like a champ, I began paying on each bill.  While at my current job, I received a call from an "angel" at the hospital.  She qualified me for assistance in contingent to a letter that showed I am now working.

Conclusion, all $3,900 was paid in full!  Even though they neglected to refund the money I already paid, I was nonetheless happy to have this burden off my shoulders.  This was truly a blessing.

3.  Debt consolidation loan- $2,900

I took out this loan because I was behind on bills and needed manageable monthly payments.  I consolidated a car loan and various credit cards at the time.  Unfortunately, I got laid off and fell behind on payments so it went to collections.

Fast forwarding  to the future, I landed a contract position with a student loan company and was making good money.  I seized the opportunity and negotiated a settlement.  They wanted a huge lump paid all at once, but I told them flat out NO, and counter offered to split the payment over a few months.  They agreed.  Done.

4.  School loan- $1,500

I was a teenager just out of high school when I took out this loanbut for the wrong reasons.  This was the DUMBEST financial decision I ever made!

How'd I cleared this one up?  Thanks Dad!  Another blessing.

5.  ER visits- $790

This was an ER visit due to a car accident where I incurred a shoulder injury.  I had medical coverage through my car insurance and submitted the appropriate paperwork to the hospital.  On a later occasion, I went the ER again.  While making a payment arrangement, to my surprise my car insurance failed to pick up the bill from my car accident!

So then I negotiated a payment plan over a few months.  They accepted.

6.  Bank overdraft protection- $740

This debt was from my early twenties.  I was laid off (again) and became very irresponsible and desperate with my expenses.  This particular bank gave me a line of credit to use for overdrafts.  Unable to pay them back within a reasonable time, it was charged off.

They offered me a settlement and I took it.

7.  Cell phone bill- $140

After porting over my number to to a different cell phone carrier, they last bill went without payment.  I accepted their settlement offer as well.

Total debt: $18,670

Paying off my debt was a combination of working hard (job), settlements, negotiation (communication skills), and good luck.  But there are a few more things I want to elaborate on.

Financial Education

This paragraph was initially at the bottom, but I brought this to the top.  In my opinion, there should be a financial education class required to take before you graduate high school.  The goal would be to better equip seniors into the real world of borrowing.  You'd learn about credit cards, loans, mortgages and verbiage such as APR, balance transfer, compound interest, and secured credit card vs. unsecured.  I can only imagine what one class could have done for me.

Here is a list of books that gave me the tools and courage to grab a hold of my finances again:

  • Debt Proof Living by Mary Hunt: She's written more books that I cannot wait to get my hands on.  Her alone taught me how to manage money and SAVE like a champion!
  • If You Want to be Rich and Happy, Don't Got to School? by Robert Kiyosaki: Cantankerous subject to say the least, but this book is loaded with financial info!  It is also very inspirational.
  • Rich Dad Poor Dad by Robert Kiyosaki: To me he is a financial genius.  Helped me to learn more about investing in the near future.
  • Getting Loaded by Peter G. Bielagus: Gives it to you straight!  Funny guy, but very knowledgeable.  Recommend this author to high school and college students.
  • Why Bother? by Peter G. Bielagus: Tackles investing and financial security more in depth.

All of these books you can find on  As you can see, I limit myself to only a few authors.  You don't want too many opinions, it only clouds your own judgement.

Learn thy enemy! Educate yourself!


I created an excel spread sheet that lists my income, and ALL expenses down to gas and groceries.  I use this religiously, especially for any financial decision.  If it does not look right on paper, I don't do it!  I recommend you do the same.  It may seem scary because you may have a little to negative cash flow, but you'd know some adjustments need to be made!

Housing- I've been living with my Mom and sister my entire 20's (I'm going on 29).  We split the bills.  Every time I wanted to move out, my debt would not allow me.  I knew the amalgam of rent, utility bills, and debt would be overwhelming on my own.  I'd be back living with my folks in no time.  Because of my living arrangement, I was able to save and pay more creditors.

Saving's account-  I became a saving fanatic (thanks to Mary Hunt)!  Instead of using a credit card to buy what I wanted (that I could not afford at the time) a save a small amount each month to reach my financial goal.  Now I have a separate savings account specifically for travel that is deducted automatically from my checking account.  This is a good habit to have.  The key is DISCIPLINE!

Cell phone bill-  After dropping Verizon Wireless, I went to Cricket Wireless now paying $47.00 per month.  I am on a smart phone plan with unlimited text, data, and minutes!  The coverage is not as reliable as other big cell phone carrier, but it does the job.  Besides, Cricket expanded their coverage drastically across the U.S., I will remain a long time Cricket customer.  The way I see it, paying a $100 cell phone bill is $1,200 a year.  I am paying $47 per month which is $564 a year.  Difference being $636 that can go toward debt!

Car-  I have a 1999 Honda CR-V.  I  have NO car payments.  Honda vehicles are reliable cars, and so far I haven't incurred any straining expenses.  I put a set amount in savings specifically for unexpected car repairs and maintenance.  The way I see it, I'd rather pay $300 every 5-6 months in repairs and maintenance, than $300 a month car note.  That is about $900 versus $3,600 a year!  The difference being $2,700 that can go toward debt!

Update:  Unfortunately, I had to say bye to my Honda.  I now have a used Jeep in which I took out a car loan.  Since my credit has improved tremendously, I was able to obtain non-strenuous monthly payments!

Gym membership- I canceled my $10 per month gym membership.  I know it doesn't seem like much, but that is $120 per year that can go toward...well you know already.  Instead, I bought a stationary bike and exercise at home (since all I did was spin and yoga anyway).


Settlements are nice.  BUT please note, if you settle a balance and the excess amount exceeds $600, you must report it as earned income on your tax return.  So you could end up paying the IRS or having or else less of a refund.  For instance, you owe $1,000, you settle for $300, the $700 dollars must be reported as earned income since it is over $600.  The company will send you a 1099 form that you have to report on your income tax.  If you do not and the company has reported the settlement already to the IRS, the IRS will be contacting you and you could get an audit!  PLEASE DO NOT BE SCARED BY THIS.  Go over the numbers with a tax professional.

Also please note, whenever you settle for less, your credit score will be hit.  Depending on your personal credit situation, the affect could be negative or positive.  I decided to go a strategic route to build my credit and offsetting the possible negative results on my credit score: I got a secured credit card.

Credit Cards

In my opinion, credit cards are the safest method to rebuild your credit IF YOU USE THEM TO YOUR ADVANTAGE.  I suggest to read the fine print! DO NOT get a credit card with ridiculous interest rates, annual fee, and does not give you the opportunity to avoid paying interest by paying the entire balance by the due date.  Trying to advance yourself more than you can afford (even paying more than your minimum balance) can easily put you in a financial strain.

How I used credit cards to my advantage?  I started with a secured credit card.  Secured credit cards are for those with poor credit scores to give people a chance to rebuild their credit after first paying a deposit.  For instance my $50 deposit gave me a $200 credit limit.  There is no annual fee, and extremely low interest rate.  I use it for small purchases only.  Financial experts suggest using no more than 30% of your credit limit for positive credit score results.  So therefore I do not exceed $60.  MOST IMPORTANTLY, I pay the ENTIRE balance (not the minimum payment) by the due date.  By doing this, I AVOID any interest charges.  Since October 2013, my credit score boosted 50 points by using this method.  I continue to use this card applying the same method.  Click here to find out more about secured credit cards.

Since my score boosted, I was was approved for an unsecured credit card (no deposit) with reward points, to assist rebuilding my credit.  Still using the 30% rule, I use it for gas and groceries only.  The reward points turn into cash and DOES NOT EXPIRE.  Since this card is fairly new, I project to use these reward points to offset the annual fee next year (which is very small).

Please note, I DO NOT use any of these cards to shop or splurge on luxuries.  Only for NECESSITIES, things I know I can AFFORD and pay off in one month.  You see, make it work for you!


Most debt collection company after seeing on-time payments every month, they will offer a settlement.  Many of my settlements I called them first, and either negotiated a payment plan or settlement.  They like that and it gives you LEVERAGE.  That means you are willing to pay, and they don't have to hunt you down.  Some tried to bully me to a ridiculous settlement that I could not afford at the time.  I flat out told them NO and counter-offered.  If they would not accept I would hang up, wait a day or so, and call back until another agent accepted it.  I knew what I could do, they had no choice but to accept if they wanted their money.  This method I did for debt #1 and #3 (the big ones).

In other words, persistence pays off.  Although, I would not recommend giving a creditor your updated phone number, how much you make, or where you work.  That gives them the advantage over you.  In fact for debt #1, I contacted them when I was on unemployment and negotiated a payment plan.  After a year on or so they gave me an offer I could not accept at the time.  When I was ready, I called them back, gave an offer, and they accepted.



Again, paying off my debt was an combination of working hard, settlements, negotiation, and good luck.  It took a lot of affirmations, meditation, and positive thinking to get through it psychologically.  Believe in yourself and do not be afraid of bill collectors!  Remember, you are still breathing, you are loved, and they cannot kill you!

Staying with your folks (or roommates) is not a bad idea until you get yourself back on your feet.  There were people who had negative things to say about my living situation.  I ignored them knowing it was the best financial decision at the time.

Quitting school is viewed as something negative to society.  But that is what I did, I quit.  Not having the money to stay on on campus, I commuted 50 miles per day.  Unfortunately, I got behind on bills and ran out of money.  So I put school on hold to work a full-time job to pay of debt.  My family was disappointed, but I knew it was the best decision for me.  Besides, colleges do not have feet, you can always go back!

Point is, do not let society, status, nor people's ignorance drive you to make the wrong financial decision.  Forget how it looks to others!  Stay focused, set attainable goals, become financially literate, STAY STRONG, and you too can be out of debt!

P.S.  I will be taking my first vacation in seven years this year!

~ Jo Jo
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