I was laid off from the small newspaper in New Hampshire in 2013. Like any other sensible unemployed person, I decided to move to a city I couldn’t afford and didn’t have any savings for!
We’ve all heard that famous New York City motto — you know, “The city so nice they named it twice” — but allow me to propose an updated version: They named it twice because everything here costs double.
Back when I first moved to New York, my thrilling life as a 28-year-old, college-educated person in the modern era meant I also brought along tons of student debt.
“How did I get here?” I pondered, while I attempted to sleep on a couch that wasn’t mine.
Well, it all started when I decided I would go to college. Ah, yes — it started when I decided to educate myself.
Dealing with debt, especially a large amount like $70,000, can feel incredibly overwhelming. However, with some planning, discipline, and persistence, it is possible to become debt-free. Here is a step-by-step guide on how to pay off $70,000 in debt.
Step 1: Assess Your Current Financial Situation
The first step is to clearly understand your current financial situation, including
- Your total debts and remaining balances
- Interest rates on each debt
- Minimum monthly payments
- Your current income and expenses
List out all of your debts in one place along with the key details. This gives you a clear picture of what you are dealing with so you can start strategizing.
Put the debts with the highest interest rates at the top of the list because you’ll want to pay them off faster.
Step 2: Cut Expenses
The next step is to find ways to cut your current expenses so you have more money to put towards debt payoff Look for areas where you can reduce spending such as
- Downgrading phone, TV and internet plans
- Reducing grocery and dining out budgets
- Pausing gym memberships, streaming services, etc.
- Limiting shopping and entertainment budgets
- Moving to a less expensive living situation
Even small cuts like reducing your weekly coffee shop trips can make a difference. Finding an extra $100-500 a month to put towards debt can help speed up payoff timelines significantly.
Step 3: Increase Income
In addition to cutting expenses, look for ways to increase your income. Options could include:
- Asking for a raise at your current job
- Finding a higher paying job
- Taking on side jobs like freelance work, Uber driving, etc.
- Selling unwanted items around your home
Even an extra $200-300 a month from a side gig can accelerate your debt payoff.
Step 4: Create a Written Payoff Plan
Time to put it all together in writing and make a plan to pay off the debt. This should outline:
- Your total debt amount
- The extra amount you can put towards debt each month
- A list of your debts ranked by interest rate (highest first)
- Specific timeline and targets, e.g. pay off CC1 in 10 months
Having a clear written plan in place is key to sticking with it. You can re-evaluate and adjust the plan as needed, but it will serve as your roadmap.
Step 5: Use the Debt Snowball Method
The debt snowball method is an effective approach for paying off multiple debts quickly. Here is how it works:
- List your debts from smallest balance to largest
- Make minimum payments on all debts except the smallest
- Pay as much as possible on your smallest debt while making minimums on others
- Once the smallest debt is paid off, roll that payment to the next smallest debt
- Repeat until all debts are paid in full
This method helps you build momentum and gives you quick wins along the way. Sticking with it can make a big difference in how fast you become debt-free.
Step 6: Track Your Progress
As you pay off your $70,000 in debt each month, keep track of your progress. Review your plan to pay off your debts once a month and change your goals as needed.
Seeing your total debt go down over time will push you to keep going until you are debt-free. Celebrate big steps along the way, like when you pay off your first debt.
Step 7: Avoid New Debt
While paying down your $70,000 balance, be very cautious about taking on any new debt. Avoid unnecessary purchases on credit cards and say no to any new loans.
New debt will only prolong the payoff timeline and add interest costs. Stick with your plan and focus on your payoff goal.
Step 8: Seek Help if Needed
If at any point you feel overwhelmed by the debt or unable to make headway, don’t be afraid to seek help. Non-profit credit counseling services can provide guidance and debt management plans.
You can also look into options like debt consolidation loans and balance transfer cards which could reduce your interest costs. Don’t be afraid to ask for assistance.
Stay Motivated and Celebrate Your Wins
Paying off a large amount of debt takes time, commitment, and sustained effort. But taking it step-by-step and tracking your progress can keep you motivated.
Celebrate each milestone and debt you pay off fully along the way. Envision how great your life will be without the burden of debt. The key is to stay positive, be patient, and focus on the end goal of becoming debt-free!
How I ended up with debt
A few years after I graduated from high school, I was still living at home, paying rent to my parents and working a third shift at a gas station in a rural Tennessee community.
I decided I wanted a change. I knew if I continued down this path, I would never be able to live the life I dreamed of.
Few in my family went to college and my high school didn’t exactly push higher education. I remember my guidance counselor telling a friend of mine to just leave and get a factory job, because college would be too difficult. So, incredibly late in the game, I stumbled my way through the Free Application for Federal Student Aid, or FAFSA, and received some money in the form of grants. My parents couldn’t help me with tuition and couldn’t even qualify for PLUS loans (federal loans for students’ parents who meet certain criteria).
With my limited knowledge, I took out my first student loan, based on an “estimate” from the college’s website.
It’s no secret that higher education is expensive, but I wasn’t prepared for how much my degree would end up costing me. Let’s start with the fact that the basic cost of college has gone up dramatically — in the past 20 years, according to U.S. News & World Report, in-state tuition and fees for the average public national university have increased 221%, while the average tuition and fees have gone up 154% at private national universities.
When I got my loans (known as Stafford Loans) in 2006, they came with one of the highest fixed interest rates federal student loans had had during the 21st century. The total made it incredibly hard for me to keep up every month.
After I graduated, my first job didn’t pay very well and any money I made went toward rent or my whopping mountain of debt: $57,000 in school loans, $1,500 of credit card debt and whatever was left on my car loan. Sure, I was more educated (thanks, college!), but I was still ignorant about finances.
Because I couldn’t afford it, I pushed off making a dent in my loans, spending a few years living on income-based repayment plans and deferments. Without paying my interest, my debt ballooned up to $66,307. (It’s debatable whether or not Albert Einstein was the one who said “compound interest is the most powerful force in the universe,” but whoever said it was spot on.)
Of course, I wasn’t alone.
Eighty percent of Americans have debt, according to a report by the Pew Charitable Trust. Seventy-three percent of Americans die with an average debt balance of over $61,000, according to a study by Experian and Credit.com. You hear a lot about the 1% but the 20% was always super rich to me.
Thankfully, through luck, connections and a little determination, I managed to land higher and higher-paying gigs. Side hustles became full-time jobs, which led to new career paths — and even more side hustles. I rarely had a day off of work, and if I did, I picked up more work. I sold my car, paid off my credit card debt and managed to get a little savings, because I worried work would dry up.
After I got out of my consumer debt, I wanted to tackle my student debt with full force.
I literally took a pen and wrote down the original balance, the unpaid interest, the current balance, the interest rate and the type of interest (fixed or variable) on my loans. Using all of this information, I calculated my minimum monthly payments and even the cost of the daily accrued interest, so I could know how much my student loans were costing me to the day.
It was $11.76 a day, by the way, so, yeah — that daily coffee seemed crazy expensive at that point.
With all the information I gathered, I plotted a course to pay off everything in two years.
How I Paid Off $70k In 18 Months – Debt Free Journey
FAQ
How long does it take to pay off 70k student debt?
| Total Student Loan Debt | Repayment Period |
|---|---|
| $10,000-$19,999 | 15 years |
| $20,000-$39,999 | 20 years |
| $40,000-$59,999 | 25 years |
| >$60,000 | 30 years |
How do I pay off debt if I live paycheck to paycheck?
Tips for Getting Out of Debt When You’re Living Paycheck to PaycheckTip #1: Don’t wait. Tip #2: Pay close attention to your budget. Tip #3: Increase your income. Tip #4: Start an emergency fund – even if it’s just pennies. Tip #5: Be patient.
How do I pay off a large amount of debt?
Paying off debtFigure out how much you owe. Write down how much you owe to each creditor. Focus on one debt at a time. Deal with the loans or credit cards that charge the most interest first, and then pay the minimum on your other cards. Put any extra money toward your debt. Embrace small savings.
What is the best debt payoff method?
Debt avalanche: Pay off the debt with the highest interest rate first, while still making the minimum payments on the others. Then move on to the account with the next highest rate, and so on. This might help you get out of debt faster and save you money over the long run by wiping out the costliest debt first.