How to Pay off $56,000 of Debt in 5 Years

Jessica Garbarino has been enjoying the sweet taste of debt freedom since March 5, 2015. That was the day she finally put her $56,000 debt to rest and walked away from a life of owing money to others.

Although her journey to debt freedom was not an easy one, it went much more quickly than she could have imagined. Here’s everything you need to know about Jessica’s path to debt freedom, and how you can follow it yourself.

The lightbulb moment

It was when she was watching her grandmother balance her checkbook during a visit in January 2010 that Jessica realized how much she hated being in debt.

“My grandmother is so meticulous about keeping accurate financial records, and it made me remember all the sacrifices she and my grandfather made when coming to the US from Cuba in 1962,” Jessica recalls. “They worked long hours at jobs below their skill level, learned a new language, and started over from zero in their late 30s.”

“I realized I was throwing away the huge opportunities that were given to me by their sacrifice and that I needed to become more responsible with my money,” she adds.

Finding a debt-payoff system

Luckily for Jessica, her lightbulb moment coincided with a friend’s enrollment in the Dave Ramsey Financial Peace University program. After hearing her friend’s testimonial, Jessica purchased Dave Ramsey’s book and started following his advice.

She started by totaling up her debt and by her calculations she owed $56,000 (not including her mortgage). She then broke it down into $29,000 in student loans for her MBA, $14,000 in credit card debt, and a $13,000 car loan.

Even though it was a somewhat discouraging amount to face, Jessica was on fire to become debt free. She used the debt snowball method to pay off her loans, which meant paying off debts with the smallest balances first:

“I am a firm believer that the small wins help keep you motivated and help you to believe that paying off your large debt balance is possible–you just need to do so one bite at a time,” Jessica says. “I had been great at creating budgets in the past (I’m an accountant by trade) but I had never followed through.”

“Having these smaller debt payoff goals kept me motivated to stay on budget and watch the debt balance shrink,” explains Jessica. “In that first year, I paid off $26,000.”

When life gets messy

Unfortunately, very few debt payoff journeys are completely smooth sailing.

In February 2011, a year after her lightbulb moment, the same grandparents who so inspired Jessica needed some help, so she moved from her home in Minnesota to Florida to take care of them.

Even though Jessica was able to keep her previous job on a contract basis after her move, the hours dried up. She found herself without an income and scrambling to find work.

Not only did she have to put the brakes on her debt payoff, she also had to stop making the mortgage payments on her house in Minnesota. By the time she found a new job in Florida, she was so behind on her mortgage that her house went into foreclosure.

It was a tough time for Jessica.

“Needless to say, I lost motivation and over the next two years, I just lived normal life, paying minimums on my outstanding debts, only sometimes paying extra,” she says

Remembering her goals

During a friend’s Facebook challenge to share their goals publicly in August 2014, Jessica remembered her passion for becoming debt-free.

From that moment on, Jessica worked hard to get her debt to zero. She was able to eliminate it all a mere seven months later on March 5, 2015.

“I wish I had started earlier,” Jessica says. “I know hindsight is twenty-twenty but all those years that I avoided addressing my debt, I kick myself for not doing it sooner.”

“I am grateful that I did start when I did and I wish I had known the time would go by quicker than I imagined,” she adds. “It’s amazing how overwhelming the goal can seem until you get into a new normal. Suddenly a few years go by and you are making your last payment.”

Debt burdens of a “normal American life”

It was easy for Jessica to fall into debt without thinking about it because she lived what she describes as “a normal American life.” She was careless with credit card spending, took on a car loan, and decided to take out nearly $30,000 in student loans for an MBA that may or may not have been worth it.

“I don’t feel like I got any intrinsic value from the education I received, although I may never know what doors that degree opened for me,” Jessica explains.

“I think students need to think carefully about the investment they make into their education and personal development and determine if it really matches their long-term goals,” she says.

But it’s not just the debt of “normal American life” that can be a problem, according to Jessica. She is also worried about the fact that single people do not necessarily have a lot of role models to teach them how to handle money.

Much of the financial advice available is geared toward couples and families with children, but there is no one speaking up for the single person.

She has seen single women in particular who believe they don’t need to really start thinking about finances until they get married. Jessica has decided to fill that information gap.

“I started my site Every Single Dollar to be that resource of information, role modeling, and encouragement to single women everywhere,” she says.

Advice for student loan borrowers

For anyone facing student loans, Jessica’s advice is to look forward, rather than back.

“You finished school. It is a past achievement. Don’t let it follow you for years and encroach on your future goals,” she explains. “Start a plan now to pay off the loans – even if it means taking a part-time job to accelerate the payoff. Your future self will thank you.”

And who knows, perhaps one day you will inspire your grandchildren to reach for big financial goals, just like Jessica’s grandparents inspired her.

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