My Story: Beating $140k Debt

At one point in time not too long ago, my wife and I were crushed under a monumental mountain of debt. In a period of less than 3 years we eradicated almost $140,000 of this debt and, today, we are nearly debt free.

How did we accomplish such an amazing feat? Well, it took dedication, hard work, perseverance, and some good fortune. We had to make many sacrifices along the way, but we also didn’t starve ourselves and make life miserable. Instead, we struck a fine a balance between digging ourselves out of our burdensome debt load while still enjoying life. That approach is key!

The reason I am telling this story is not to brag about our accomplishments. Rather, it’s to share with others who may be afflicted by a similar situation. I know all too well the suffocating dread one feels when carrying debt especially when the amount owed is at astronomical amounts. It’s a crushing feeling that weights heavy on the soul and sucks the life right out of you. There is good news though. There is hope. There is a brighter future if you take control of the situation. Nothing will change, though, if you don’t aggressively take action.

If we can erase our debt – you can too!

Debt Situation: Mr. Utopia

I have always been wary of debt. My upbringing was fairly conservative when it came to finances. While my parents were by no means financial geniuses, they did stress the importance of saving and not over-extended oneself. Throughout my life, I have maintained that mentality. I’ve never carried a credit card balance. There’s been no personal loans or cash advances. In fact, aside from educational loans, the only debt I had ever incurred was for a car purchase (and a home mortgage – that’s a unique story though which you can read about here: foreclosure nightmare).

Speaking of educational loans, that’s how I accumulated a fairly significant amount of debt. I borrowed roughly $15k to fund my undergraduate studies. I graduated in 2003, consolidated in 2004, and made the minimum payments (that’s all I could afford) until 2005 when I put the loan in deferment because I went back to school. This time around I was pursuing my MBA. To me, an MBA was not worth it unless I was attending a nationally ranked school. Of course, the cost of doing so was rather exorbitant. My MBA was going to require over $60,000. The cost-benefit analysis indicated the long term payoff was worth it. To minimize the buildup of debt I took advantage of the tuition assistance program through my employer (I even switched jobs part way through to a company that had a more beneficial reimbursement policy). When all was said and done, I graduated in June 2008 with $27,000 borrowed. That’s not too shabby considering the overall program cost. However, I was now $42,386 in debt.

Student Loans H

Debt Situation: Mrs. Utopia

The future Mrs. Utopia and I met and started dating in June 2006. She was also obtaining her Master’s degree in a science field and, once completed, planned to go after a Ph.D. In early 2007, as our relationship become more serious, she revealed to me that she had a considerable amount of student debt. My initial reaction was fairly calm. After all, student debt is pretty much the norm and I obviously had my own loans. However, I did a double take when I found out how much she had borrowed – just under $100,000! To make matters worse, approximately 85% of her loan balance were from private loans which carry a much higher interest rate than federal student loans. All of her private loans had variable rates and were all 9-10% at the time.

Needless to say, the bombshell she dropped on me that day became a dicey issue in our relationship. I’ll be writing more about the relationship ramifications in the future, but suffice it to say that, as difficult as it was at certain points, we did not let this destroy us. At that point in time in 2007, there wasn’t much we could do. She was still in school, so all of her loans were deferred and we didn’t have to start making the massive monthly payments yet. I did encourage her to and assist her with consolidating her numerous private loans into one single private loan in order to streamline everything and to lock in a “lower” interest rate. She was able to do so at a fixed rate of 8%.

Toward the end of 2007 as she was graduating with her Master’s, she decided not to continue on for the Ph.D. Doing so would have required another 2-3 years at a minimum and even more student loans. The opportunity cost was just too much. At the beginning of 2008, she found employment and was able to put her education to use. On the down side, after 7 years of post secondary school and $100k school loan debt, she was only earning about $35k base. After a 6 month grace period, her consolidated private loan entered repayment. The payment was $940/month. Her fed loan was $105/month.

Times Were Rough

We hit rock bottom in August 2008. We owed over $140,000 combined on our student loans. That alone was enough to make our future look bleak. To make matters worse, we were suffering through a foreclosure nightmare and my perfect credit score was about to be ruined. I was having health issues which required surgery the previous month. And, as if that weren’t enough, I was laid off on my birthday. You can’t make this stuff up folks. It doesn’t get much worse than that.

Digging Out – Phase I

How does that expression go? “When you’ve hit rock bottom, the only way to go is up.” That certainly proved true for us. The next several months were full of high anxiety and ridiculous amounts of stress. The economy was collapsing and we were just completely lost in all the misfortune that had beset us. Sometimes, though, good things come out of ominous events.

The layoff turned out to be a blessing in disguise. I was thoroughly worn out and utterly exhausted from the 3 long years of night school, working full time, the foreclosure/lawsuit mess, health issues, etc. I needed a break from everything. Furthermore, I had come to detest my job anyway and loathed going into work each day. However, I was obligated to stay because had I voluntarily departed I would have had to repay a large amount of my tuition reimbursement. Being forced to leave was a relief.

The bank that laid me off actually paid me for 2 months to not come into work! After those months were over, I then received a 3 month severance package. The problem at the time, though, was I had no idea when I would find employment again and with the economy crash getting worse every second the severance package was of little comfort. I caught an extremely fortunate break in early November. I received a call back about a job I had applied to via a Fortune 50 company’s site a few weeks prior. The manager scheduled a phone interview for the next day and then had me do a 2nd phone interview later that day with his senior analyst. I thought both discussions went well and was hopeful that I’d hear something back soon for an in-person interview. The manager ended up calling back the very next evening and offered me the job on the spot! I was dumbfounded. All of a sudden I was employed at Fortune 50 company and ended up with a raise to boot.

A few months after starting the new job, I turned my attention to our loan situation. While my girlfriend’s private loans carried the higher interest rates and should have been tackled first, I decided to address my debt instead simply because, at the time, I wasn’t certain of our future together (and I don’t say that to imply we were on the rocks; I just mean we weren’t married yet so I needed take care of my direct obligations first). With my severance pay and a little bit of savings I already had, I was able to pay off all $27,000 of my MBA debt.

Student Loans H2

History of Mr. Utopia’s unsubsidized graduate loans including payoff amount

Student Loans H3

History of Mr. Utopia’s subsidized graduate loans including payoff amount

Student Loans H4

History of Mr. Utopia’s unsubsidized graduate loans (2nd disbursement) including payoff amount

A few months later, after saving big chunks of my new paychecks and combining with what little I had in my savings account, I was able to pay off my consolidated undergrad loan of $15,386. I was now personally 100% debt free!

Student Loans H1

History of Mr. Utopia’s consolidated undergrad loan including payoff amount

Digging Out – Phase II

Continuing the trend of positive momentum, future Mrs. Utopia found a new job in early 2009 at about the same time I was paying off my debt. The new opportunity was an university lab research position and was a considerable step up from the work she had been doing for the past year. Along with a better working environment she has received a bump in pay. Granted, her income was still below what one would hope to earn after amassing so much student debt. That said, the job switch did make the combined $1,050 minimum monthly loan payments a bit more feasible.

Fast forward about a year to April 2010 and we still have over $100k on my soon-to-be wife’s loans (I had proposed to her in December!). We were in the planning stages for our wedding which was set for October. As I’m sure many can attest to, we quickly found out just how absurdly expensive weddings can get and those discussions brought our overall financial situation back to the forefront. To be sure, neither of us had forgotten about the massive debt remaining, but there was an element of “out of sight, out of mind.” Knowing full well that if we didn’t aggressively attack her private loan (which was around $93k by then due to capitalized interest from when it was previously in deferment) then we’d be handcuffed for what could be the majority of the rest of our lives. In particular, we both wanted to start a family and there’s no way we could have afforded to raise children under those circumstances.

So, here is the plan I drew up. It was quite simple in concept but challenging in actuality:

  • The two of us buckle down and live on my salary alone. We pay all expenses out of my income.
  • Every cent of her monthly paycheck goes to debt payments.

The intent was obvious. Each month we would be paying the principal down a considerable amount. According to my rough calculations, this approach would take 4 years (until May 2014) to accomplish complete payoff. That seemed like forever back then, but, in a way, we really didn’t have a choice.

Guess what? We obliterated my projections. The final payment was made on January 5, 2012 taking less than 2 years!! Here’s how we accomplished this:

  • Dedication: We stuck to our regularly scheduled payment plan. We didn’t veer or allow ourselves to get off track for any reason.
  • Frugality: We minimized our expenses as best as we could without going overboard. In other words, we lived frugally without depriving ourselves.
  • Maximized Opportunities: We used every bit of unexpected income to make additional payments. Taken individually, these were small contributions but they certainly added up overall:
    • my year-end bonuses (which were pretty meager, but enough to help)
    • holiday gift money received (from family)
    • tax refunds
  • Took Advantage of Past Success: Back in 2004, I invested a little over $3k in the Vanguard Energy Fund (VGENX). The value had nearly tripled and, as difficult as it was emotionally to sell a prized investment in order to pay down debt, I went ahead and did so.
  • Took a Risk: As the loan principal balance was dwindling down, we took a calculated risk and used our emergency funds to make one last large payoff payment. We literally had about $100 cash to our name after the final payoff.
  • Good Fortune: Perhaps a better way to classify would be to say “a lack of bad fortune.” Thankfully, there were no major catastrophes or set backs (ie, expensive car repairs, medical emergencies, etc.) to derail our progress.
Student Loans W1

Payoff letter indicating the original balance and payoff date for Mrs. Utopia’s consolidated private student loan.

Debt Situation: Present Day

The only remaining student debt we have is Mrs. Utopia’s federal loans. As of July 2013, the current balance is approximately $8,500. In addition, we have an auto loan with a remaining principal balance of just under $18,000.

Conclusion: Living Debt Free

We’re obviously not quite there, but once we pay off the last bit of remaining debt, our goal is to be debt free for as long as we remain alive. About the only debt I might consider taking on is a mortgage to purchase a house (although it would have to be in the right circumstances especially after my prior home ownership debacle). For everything else, we either have the funds to spend or we wait until we do. From now on, I am going to have the power of compound interest working for me – not against! No more will the confines of debt emotionally ravage us.

If you are inspired or encouraged by my story, please share via the comments section below or by contacting me.

In the future, I’ll be sharing more about our experiences with debt including deeper analysis, helpful advice, and interesting tidbits. If you’d like to receive those articles, then please subscribe or follow along:

25 Responses to My Story: Beating $140k Debt

  1. Adam July 19, 2013 at 8:46 pm #

    Wow that’s awesome to be able to take the route you did to knock that kind of debt out. I would love to do something like that but I am the primary income earner right now and my wife’s income varies so we never know where exactly her paycheck will be out every other week.

    I definitely like the game plan you chose to rid yourself of it. I may have to come up with a creative alternative using a bit of your strategy to see if we can do something similar. Right now we are strictly focusing on our school loans which is around $20k between the both of us.

  2. Financial Samurai August 19, 2013 at 5:29 pm #

    What a fantastic story! 3 years, $140,000 is HUGE! That makes me want to buckle down and see if I can save an extra $140,000. That said, I’m in the trying to spend more phase of my life. Have spent more than I have in a while over the past 45 days.. I don’t know if it can continue, but will be going to the US Open for two weeks, so that’s going to be expensive.

    That payoff letter for $83,000 is awesome!


    • Mr. Utopia August 20, 2013 at 4:13 pm #

      Thanks, Sam! Glad our story might possibly “inspire” you to ramp up your savings although I think trying to eradicate debt is more motivating than simply trying to hit a savings target. The hard part for us now is building savings up too since we exhausted essentially all our resources to pay the debt off (plus, now we have a little munchkin to support).

      I’m thinking of actually framing that payoff letter and putting it up on the wall!

      • dorian khoury April 11, 2015 at 9:18 pm #

        Great post… however I personally do have a problem. I have an amount of $280k (funnily double your loan amount: that needs to be settle by April 15… half of it for April 13, and the other half on the 15th. I have 2 or 3 properties on sale… 1 of them we have signed the sales agreement but need to wait until may to complete the deal and get paid. The other 2 are overseas and can be sold in a 1-2 month timeframe.. the 3 properties will allow me to settle this week’s debt and have around $50k cash to keep in savings… one of my banks made a mistake last year and they ruined my credit history… so getting a temporary loan (6months or 1 year tenor) isnt possible.. anyone have any suggestions….. you can reach me on my email Any suggestions or help is welcome, and I assure you I will always remember…. thanks

  3. John Wedding August 23, 2013 at 10:17 pm #

    This is really fantastic. You have a lot of material for future posts! $140k in three years is HUGE.

    • Mr. Utopia August 26, 2013 at 9:58 pm #

      Thanks, John. It felt HUGE the whole time…a huge burden followed by a huge feeling of relief once eradicated!

  4. John September 21, 2013 at 7:06 pm #

    That’s truly an amazing story, not too many people can say they were able to defeat that kind of debt. Congrats to you and this wonderful story!!!

  5. Eva @ Girl Counting Pennies September 28, 2013 at 6:44 am #

    This is an amazing story!! I’ll be honest and say that while reading I was a bit teary-eyed, especially when I read you were laid off on your birthday 🙁 Luckily, it turned out to be a blessing a disguise! To pay off such a substantial amount of debt is a huge achievement and you should be so very proud of yourself and your family! This just goes to show that dedication, hard work and good fortune goes a lot way and anything can be done!

    • Mr. Utopia September 30, 2013 at 8:22 pm #

      Hey, Eva – thanks! My intention wasn’t to cause any tears to start welling, but I do hope my story can inspire anyone out there who is in the midst of the battle against debt. Sometimes the struggle seems insurmountable, but if you know others have pushed on during the tough times and managed to overcome, then it can be a motivator to persevere and keep on fighting that debt.

  6. Sherry February 13, 2014 at 3:26 pm #

    Mr. Utopia,

    Thank you so very much for sharing this TRULY inspirational story. I too have $140,000 in student loan debt and will soon be embarking on repayment. I am SO overwhelmed and was wondering just how we were going to move forward.

    After reading so many nightmare stories online I wonder why there aren’t more You Tube student loan suicides reported :(. But sir, you and your wife have given me and my husband real hope that we can beat the evil lending master before he overtakes us.

    It gives us the hope and courage to fight through 3 or 4 years and get this monkey off our backs. I printed out this blog and put in the loan folder to get organized!

    Much much apppreciated!

    Sherry & Ken

    • Mr. Utopia February 25, 2014 at 11:31 am #

      Hey, Sherry and Ken. I’m delighted that our beating debt story has given hope and inspired you guys. The first step is to face the debt demon and start making it a priority to pay it off. It’ll feel like a long journey even if you blaze through it as fast as you can by fulling dedicating your efforts to it. Just keep your “eyes on the prize” and do your best to not get side tracked.

      The current sacrifice is worth it in the end – to have that burden lifted and know you are “beholding to know one” is priceless.

  7. Tyler March 17, 2014 at 7:03 am #

    This all great! Inspirational story for those of us that are facing a large amount of student loan debt. My wife and I have recently started working hard to tackle are student loans. Although not as much, they are still a strain on our daily finances.

    • Mr. Utopia March 17, 2014 at 8:11 pm #

      Good to hear you and your wife are focusing on eliminating the student debt. Even if it’s not as much as we had, the feeling of getting rid of the burden will still be unbeatable.

  8. Syed April 2, 2014 at 6:59 am #

    Amazing story. I have a similar amount of debt after finishing professional school and am working to get that paid off quickly. With minimum payments I would be paying for 25 years. I’m in the midst of a plan to finish it off in 10. After reading this post I want to get rid of it even faster. Time to find some stuff to sell and make some money on the side!

    • Mr. Utopia April 3, 2014 at 7:20 pm #

      Thanks, Syed. I’ll bet you can do it even faster if you make it a main focus. What I usually tell people is to really develop a hatred of your debt. Realize debts of that magnitude will severely compromise the quality of your life…maybe even the most of the rest of your life! That’s scary and should make you angry. Use that anger to tackle the debt head on. If you do that, you’ll find yourself being disciplined in your debt pay down efforts. You’ll even find ways to divert more funds to reaching that final payoff.

  9. Elizabeth @ Single Mom Debt May 22, 2014 at 11:00 am #

    Fantastic job! And thank you for the inspiration. I hope to make it debt free in 3 years, as a single mom. But with my teen kids, it is tough to be 100 % dedicated. Because you want to balance their childhood with having some of the perks (not going to school with patches on the knees). there is so much more I want to do in life with my family then be shackled to debt. Thank you for sharing your story.

  10. Impoverished Teacher January 5, 2015 at 8:21 pm #

    Your story is very inspiring. However, it is nice that there were two of you. My debt matches Mrs. Utopia’s in amount, and I will be graduating with my (basically useless) Ph.D. this semester. However, I don’t have a husband or boyfriend’s salary that I can live off of in order to put all of my salary towards my debt. My meager teacher’s salary goes to pay the mortgage, food, and $550 monthly student loan payment. I can’t even afford a car, so I share rides or walk. My lender put me on the 30-year repayment plan for my student loans, so I will be paying $550 per month on student loans until I am 75 years old!!! I have always been single and I am sure I always will be. I can’t take a second job because my first job is already too demanding on my time and energy (60-70 hours per week when grading, lesson planning, and course development is included). I’m at a loss for what to do. Is there any hope for me to get out of debt?

    • Sonja October 6, 2015 at 3:52 pm #

      Me too…been struggling alone with 4 part time Jobs and only making enough to make ends meet let alone pay off debt. I have nothing of worth to sell and can’t buckle my belt anymore than I already am. How on such a meager salary do I tackle 95000$ debt?

  11. Reda April 3, 2015 at 10:14 am #

    Mr. Utopia,

    I just want to say thank you for sharing this story. Your story is inspiring. It shows me that not only is it possible to get rid of any debt but that it is also possible to accumulate wealth.

    May you and your wife have more financial success!

    Thank you.

  12. Sara January 27, 2016 at 4:44 pm #

    This is very inspiring! I found myself in the worst position today while discussing wedding plans with my fiancé and finding out that my $117,000 loan is 20 years, not 10 for repayment. I found your article and it was exactly what I needed. My question is, did you still have your wedding? And about how much was that?

  13. New healthy man November 11, 2016 at 3:13 pm #

    Many thanks, this website is really practical.

  14. Tanya June 27, 2017 at 11:59 am #

    I relate to your story very much. I graduated during the recession, couldn’t find work and went back to school to defer my loans and hopefully make myself more marketable in a really tough job market. I amassed $53,000 in debt. Finally found a job that allowed me to make paying it off a priority, and got laid off two years later. As soon as I found my current job, I consolidated the remaining $47,000 in August 2015, and will pay my loans off next month. Stories like yours have been such amazing motivation to me during the last two years or hard work and sacrifice.

    IDK when this was written, but I hope you paid your remaining debt off and you and your wife are living a fabulous debt free life!


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