debt

Paying off all your debt is always impressive, especially when it runs up to six figures. Reddit user Biking posted about his and his wife's recent success of paying off $210,500 worth of debt, which includes their $127,500 home, $34,500 in car loans, and $48,500 in student loans. Further, they were also raising a kid, currently 3 years old, while trying to reach their goals. 

The couple had initially bought their home when they were 24 and had been working toward paying of all their debt for five years. Biking says their combined income when they began was $77,000 and their income now is $127,800. Here's how they did it:

• Doing research and finding what works. They both read The Total Money Makeover by debt guru Dave Ramsey and modified his plan to suit their situation.
• Sticking to a strategy. They decided to prioritize paying off debt instead of investing, although they were still contributing a good amount to their retirement accounts. They paid off high-interest loans first and avoided carrying balances on credit cards.
• Keeping track and automating. He automated as much as he could and kept track of everything on an Excel sheet.
• Increasing their income. Both he and his wife worked full-time jobs to contribute toward debt repayment. They increased their income over the years. His wife got a master's (which accounted for their student loan debt) and had a $15,000 salary increase as a result of a higher position, while Biking's average pay raise each year totaled to $3,500. To add to their income, he started a sports photography side business that generated an extra $10,000 a year.
• Tightening belts in various ways. For example, they saved on groceries by coupon-cutting. Biker says, "[My wife] would routinely knock $50 off a $125 grocery bill with coupons from the Sunday paper. She would plan meals by the week and we would save the left overs for lunch the next day or dinner the next night."

The main advice the Reddit user has for others is to create a debt repayment plan and stick to it, which for most people is easier said than done.

Are you inspired by their example?

Don't let debt weigh heavy on you, and take inspiration from this Business Insider profile of someone who managed to lose her debt in five months.

When Kristy Heinz moved to NYC last October, she had no couch, no TV, no mattress and $19,000 in debt.

She was the poster child for cash poor: Between the time she graduated law school and started her job at a firm, she'd been living on a diet of ramen and credit swipes.

RELATED: The 9 Steps I Took To Get My Finances Back On Track

With her student loans due for repayment in December, Heinz's survival depended on plugging that $20,000 black hole.

So, what did she owe?

$1,000 to a friend
$3,000 to parents
$10,000 salary advance from her firm
$6,000 in credit card bills

Heinz didn't freak out—at least not in public. She came up with a plan and got to work.

She talked down her rent

Heinz used negotiating skills to defer paying off her apartment deposit—which included first and last month's rent—until the end of the year.

"I explained to the landlord that I had a good job and good credit but that I was just cash poor at the moment," she says.

"The landlord knew I had a lot of things going for me, so striking the deal was just a matter of asking for it."

Heinz took the extra step of having the agreement written into the lease so neither party could backtrack.

"We did it the same way you negotiate other things, just like not using a bike in the hallway or paying a pet deposit."

Read on for more.

In today's economy we are constantly seeing once prosperous people down on their luck; however, it is especially during hard times that it's most important to remember that there is light at the end of the tunnel. This interesting article from LearnVest shows just that by delving into the life of a once homeless woman and her struggles to eventually end up on top.

I was born in Nigeria, and contrary to the prevalent view of Africa, I had a good life. My father was a high-ranking politician and my mother earned so much running a chicken farm that she out-earned my father.

But, during my childhood, my mother wanted me and my brothers to have better opportunities and a better education. First she sent my oldest brother to America. Then, when I was 10, she moved me and my other brother to England to attend a posh boarding school (non-citizens are not technically allowed to benefit from the free, public education system in England).

Related Link: I Can't Afford My Friends' Weddings

My father stayed behind in Nigeria at his job, but paid for the boarding school. My mother joined the two of us a year later, with plans to start her own business, a bed and breakfast. My father sent her money to help with the down payment and mortgage on a nice house in London. She studied for a master’s degree in tourism and hospitality to make her dream business a reality.

I settled in, made friends and was happy. Continue reading for the full story

This anonymous poster in our Savvy Confessions group wants to know if there's anyone out there who has advice for a young couple buried in debt.

I graduated in 2010 and my boyfriend and I really want to get married, but I'm so buried in debt from putting myself through school that it feels like we'll never be able to afford a decent place, let alone a wedding and a family. Anyone out there in a similar situation or have some advice?

Pose your own anonymous questions or share your work confessions by posting in the Savvy Confessions group, and we'll find the right expert to help you.

If your bill is long past its due date, then expect the debt collectors to come a-knockin'. Hiding from them and pretending they don't exist is not a good solution; it will only aggravate the problem and make things worse. Dealing with the issue head-on might help you catch a break. Here are a couple tips for dealing with those dreaded debt collectors:

Know your rights. As consumers, we are protected under the Fair Debt Collection Practices Act against harassment from debt collectors. There are certain things they aren't supposed to do, such as calling before 8 a.m. or after 9 p.m., using abusive language, and repeatedly bothering you with multiple calls.

Talk to them. Don't avoid them. Pick up the phone, start talking, and address the bills you need to pay. Ignoring them may give them grounds to file a lawsuit.

Dispute it. If you don't owe the money, then it is within your rights to send a letter to the collector up to 30 days after you've received notice. In the letter, you should state that you don't think the debt is yours and that they should stop contacting you.

Document it. Take a lot of notes and ask for their permission to record the conversation (in some states, it's illegal to record someone without asking) and start taping on your end. Whether they consent to recording or not, write down the date and time of the call, the representative you spoke to, and the content of your discussion.

Negotiate. If you do owe the debt but can't afford to pay the full amount, then ask if they would be willing to forgive part of it or to set up some sort of payment plan. Before settling the debt, says Natalie Lohrenz, director of counseling at the Consumer Credit Counseling Service of Orange County, consider "first, that a debt usually must be significantly delinquent before a creditor will even consider settling, after your credit has already been negatively affected" and "second, that a settled debt will appear more negative on your credit report than a paid-in-full debt if special arrangements are not made to the contrary."

Get it in writing. Once you have hammered out terms you're satisfied with, get it in writing, either by "them sending you something on their letterhead or you writing it out and sending it to them for a signature," says Lohrenz. If you pay a settlement before you have it in writing, then "you've lost all your bargaining power." That's because debt collectors can backtrack and claim that they never agreed to settling.

If you owe credit-card debt, educate yourself with these pointers from Kiplinger about how the whole collections process works and what your rights are.

Year after year, debt collection complaints rank among the most-common consumer grievances the Federal Trade Commission receives. In fact, reports of deceptive debt-collection tactics were the second-most common complaint (after identity theft) that the FTC received in 2011.

"Debt collection is complicated, and some collectors may push the boundaries of the regulations and law to get money out of you," says Bill Hardekopf, CEO of LowCards.com. In fact, JP Morgan Chase is being investigated by the government for improper credit-card collections, he says. If you're having trouble paying off your credit-card debt, you need to understand the collection process and know what your rights are.

You have at least 21 days after your credit-card statement date to make a minimum payment. If your payment is late, your card company will report it to the credit bureaus — but you may get up to 60 days if it's your first late payment and you're a good customer, Hardekopf says. That information will remain on your report seven years after the date you first missed the payment.

If your account is 60 days past due, the late payment is noted on your credit report and your credit-card company will turn over your account to its collections department.

If your account is 90 days past due, your card issuer will repeatedly call or send letters and will likely shut down your account.

Beyond the 90-day point, your card issuer will turn over your account to a collections agency or third-party debt collector, which will contact you through phone calls, e-mails and letters, Hardekopf says. The collector can sue you and send you a summons to appear in court. If you don't show up, the collector will automatically win the case and can seize your assets or garnish your wages to pay off the debt.

Read on to find out what you should do if the collectors are bugging you.

This reader posted in our anonymous Savvy Confessions group, asking how she might live it up on a small income without going into debt. Do you have any advice for her?

I finally found an apartment that I can afford and I'm moving out of my parents' house in about a month. I'm usually pretty good with money, if you look past the occasional dress buying, and have never been in the red. I'm scared that once I move out I will have to cut down on an already-minimal social life to avoid debt. I would like to be able to visit out-of-town friends once in a while and go on small trips and vacations, but how do I do it on a small income (I'm a college student) without ending up in debt?

Pose your own anonymous questions or off-load your work confessions by posting in the Savvy Confessions group, and I'll find the right expert to help you out.

We're thrilled to present this smart LearnVest story here on Savvy!

We all have our demons.

Some just lurk under the bed, but others bare their teeth as we go about our day — say, every time we pull out our wallet.

Financial demons are particularly vicious because their effects aren’t confined to the pages of our journal or emails to our best friend. Our finances permeate just about every aspect of our lives, from where we live to the job and lifestyle we choose.

And for that reason, our financial demons can be particularly invasive — and toxic.

But the good news is that demons can definitely be vanquished (or subdued, at the very least). As with anything, they can be worn down with the right tools and the right mind-set. Fortunately, we have both.

First, identify your demon . . . or demons. Then we’ll show you exactly how to send them packing.

If You Have Shopping Demons . . .

The Tools: As you know, “just stop shopping” isn’t helpful advice. Instead, look at your habit from the other end: Your closet. Your makeup bag. Or your gadget collection, depending on the spending that’s most problematic for you. Use our process from Priceless Style Boot Camp to evaluate your 10 most recent purchases. If lots of your recent buys are rated “not worth it,” it’s time to reevaluate your spending patterns. The first step is to avoid letting one bad spending choice drag you into a downward spiral. If you suspect you’re currently in such a phase, you can use this tool to spiral back up. If your purchases are all rated “worth it,” but you know you’re shopping too much, take a close look at your last month of spending and ask yourself whether you’re truly happy with everything you bought, or if that same amount of money could have been applied to a different financial goal, whether it's bulking up your emergency fund or beginning to invest.

Read on for more.

It's a new year and a new you! We're highlighting 12 helpful tips to start off the year right, from quitting your caffeine addiction to mastering time management. Here's another way to start afresh in 2012.

Americans are currently facing credit card debt worth $798 billion, according to November statistics from the Federal Reserve. Don't be another statistic — for a fresh start this year, resolve to pay off your credit card debt. To get started, follow these tips:

• Negotiate a lower rate with lenders. Call your lenders and ask them for a lower rate. Make it clear to them that you are ready to switch to another lender who's willing to offer a lower rate. Talk to the supervisor if the representative is not budging.
• Consider transferring balances. You can opt to move your balance to a credit card that offers zero percent interest, but this is a tricky move because the zero percent APY may only last for a brief promo period. Check the details of the credit card offer to make sure you'll be able to keep on top of your payments.
• Don't add charges. Now that you have a lower rate (hopefully down to zero!), make sure you're not tacking on additional charges just because you saved money by lowering your interest rate. Practice discipline and live within your means.
• Pick your card. Eenie meenie miney mo . . . which card should you pay off? There are a couple of ways to do it. You can pick the card based on the balance or interest rate. Although it seems the most efficient to pay off debt with the highest interest rate, it may be better for you psychologically if you pay off the lowest balance. That's because you'll feel like you're making some leeway when you're done paying off each debt. Another method is to pay off the debts that bother you the most, such as debt owed to family or friends.

Read on for more.