How I Paid off Nearly One Million Dollars in Debt in Two and a Half Years

How I Paid off Nearly One Million Dollars in Debt in Two and a Half Years

I think it's safe to agree that debt has become a normal part of our lives. Everyone has debt, heck we all know people well into their fifties still paying off student loans.

But do we really have to be in debt? 

You can dramatically increase your chances of becoming wealthy by eliminating your debt. Your greatest wealth building tool is your income. Your income should be freed up to save and invest instead of making debt payments. This is how you build wealth.

I spent years of living paycheck to paycheck, and no matter how much money I made, I was still in debt. On the outside it looked like I had it all figured out. The nice car, the giant brand new house, but I was struggling financially.

Once I realized that no matter how much money I made, if I didn’t get my debt under control, I would continue to struggle. I knew I had to became intentional with my money and put a plan in place to eliminate my debt.

What I thought would have taken me five years or more to achieve, took me less than half the time. I am now going to share how I was able to pay off almost a million dollars in debt, in such a short amount of time. You will discover how you can tackle that debt, that’s standing between your financial freedom, and eliminate it altogether.

Related Content:

The short version

Here’s the cliff-notes version for those of you who want quick answers. I figured out my assets and liabilities. Diligently budgeted. Sold things that no longer served me and threw every extra penny I had at my debt. Want to know more? It gets really interesting...Read on...


How the heck does someone have almost a million dollars in debt?

I know that’s what you’re thinking.

Well, it’s pretty easy if you own a home the San Francisco Bay Area. Here, the median home prices are well into the seven hundred thousand dollar range. Now include the debt accumulated from pursuing two advanced degrees. Add some miscellaneous obligations and there's your formula for a seven figure debt.

How it all started

My journey to debt freedom had little to do with me wanting to be wealthy. It was more about me being able to keep my head above water. I was broke and had nothing to show for all the money I made.

From the outside it looked like I had it all figured out. I had a custom built house and a luxury car. On the flip side, I didn’t even have a hundred dollars in the bank. Around my daughter's first birthday I found myself in a position of having to borrow money to make ends meet. That was my breaking point. I hate asking for help. I made too much money to be this freakin broke. Enough was enough.


Weighing my options, I decided to sell a rental property I had in Southern California. With the proceeds from sale I planned to pay off debt, build savings and invest. The problem was, I knew nothing about investing. I always said once I finished school, I would take the time to learn about investing. I asked friends to recommend their favorite investing books. I searched online for the top financial podcasts. That’s when I stumbled upon the Dave Ramsey podcast.

The Man with the Plan

At first I felt a disconnect. Dave's southern drawl and conservative values made him feel unrelatable. What did intrigue me though were the families that came on his show to discuss their journey to debt freedom.

These Debt Free Screams brought me to tears more often than not. Family after family shared how they overcame financial struggles, paying off massive debt. I was most impressed with the fact that people did this while not making tons of money. On average they were able to pay off all there debt in two years.

If they could pull this off, there was no way that I couldn't.

The Student Loan Struggle

Immediately after receiving the proceeds from the sale of my condo, I started to attack my debt. I paid off my brand new Honda Civic I used as a commuter car. I paid off the loan against my retirement account. Those were funds I used to put a downpayment on my mini-mansion.

Only associating those loans as my debt, I was ready and eager to learn how to invest. After funding an emergency savings account, I planned to invest the balance. That’s when Dave Ramsey threw a wrench in my plans.

Over and over on his shows, he talks about how people keep their student loans around so long they think they're pets. Sadly, I was one of those people. I was conditioned to think that my student loans weren’t debt. Changing my thinking around student loans was a struggle. It took some time to apply urgency in paying them off.

At this point, I owed around $200,000 with monthly payments of $2,000. I was participating in the Public Service Loan Forgiveness Program. Being two years in, I was on track to have the loans paid off in eight more years.

Dave Ramsey opposes to the loan forgiveness program as he feels ten years is too long to be in debt. I struggled ...and struggled with this. For the life of me, I couldn't see how it would be possible to pay down so much debt is a shorter time frame. I thought, wouldn't investing be a better use for that amount of money?

Taking the plunge

On my way to work one night, I heard a debt free scream that changed it all. The featured women shared how she had done the math. She figured it would cost her more to keep paying her loans through loan forgiveness program. She was able to pay off over $100k in two years.

That's when it clicked. The way she presented her rationale made total sense to me. I thanked God at that moment for giving me the clarity that I was seeking.

Seconds after my gratitude prayer, I was t-boned making a left turn into the hospital parking lot. This accident totaled out my commuter car.

Instead of viewing the accident as a setback, I took it as a blessing. It resolved an internal struggle. Though the car was now paid off, I didn't know if it was financially responsible to keep it. I had another car and having the cash instead would put me one step closer to my new goal of debt freedom.

How I Did It

I know we are well into the post and I have yet to explain how I paid off the debt. Here is where I deliver.

I was able to pay down nearly a million dollars in debt by doing three things. Selling property, zero based budgeting and the debt snowball.

Here are all my debts listed in ascending order.


The majority (68%) of my debt was in real estate totaling $646,462.

I already talked about selling my Los Angeles condo. I bought this two bedroom, one and a half bath townhouse in 2004 as my primary residence while in grad school. When I relocated it became a rental. Buying this was my first exposure to real estate and not the best investment. The building was old, the pool condemned and the homeowners association was in turmoil.

I sunk more money into this property over the ten years I owned it than I could have ever recouped. Selling released me from the financial burden and the associated stress. Pregnant with my daughter, in 2013 I bought the biggest house I could “afford." My criteria of being able to afford it was getting pre-approved for the loan. My credit was laden with a bankruptcy, foreclosures and short sales. Approval meant I deserved this McMansion.

I bought a five bedroom, five and a half bath 3,900 square foot new construction. It was ready for us to move in two months after my baby was born. I choose an FHA loan with a 5:1 ARM because it required only three and a half percent down and the initial interest was low.

Throughout my debt freedom journey I went back and forth on whether to sell or keep my house. I loved the house but it was a 45 minute drive from my friends and family. I loathed the $700 a month going down the drain to MIP and $10k in annual property taxes. I finally decided to put my house on the market the end of August 2017. It sold in ten days and allowed me to pay off the last my last few debts.

Zero Based Budgeting

A zero based budget gives every dollar of your take home pay an assignment. For it to work, it has to be realistic. It should look different every month to adjust for holidays, life events or one off expenses. It's also ideal to have it done at least ten days in advance of the month.

Here is a YouTube video detailing how I set up my budget. 

I used to think budgeting was just tracking income and expenses. I knew what was coming in and out of my accounts every month but I didn’t have a plan for my money. It wasn’t until I started keeping a zero based budget, that I realized I wasn't actually budgeting. Without having to make any lifestyle adjustments I was able to find and $4,000 a month and more to throw at my debt.

The best way to start is to go through two months of your bank and credit card statements. List out all your income sources and start putting your expenses into categories. Make these categories as broad as possible. It's the simplicity that encourages consistency.

You can make your own spreadsheet or use an app or online tool. I use EveryDollar. There is a free and a paid version. The paid one automatically downloads your transactions from your accounts.For those new to budgeting, I recommend the free version. Manually entering your transactions is powerful in helping you take control of your money. I still use the free version myself.

The Debt Snowball

The debt snowball is a method where you pay off your debts in order from the smallest amount due to the largest. You focus on throwing every extra dollar you can dig up at your smallest debt and only pay the minimums on the rest.

Once the smallest debt is paid off then you have freed up that minimum payment. That's extra money to contribute to the next debt on your list. The money you have to use toward your debt accumulates, or snowballs. You are able to make bigger payments as you knock out debt after debt.

So where do you start?

  • Figure out your why. Determine what financial freedom means to you and why you want it. Make sure the why is stronger than any desire you may have to fall back to your old money habits.

  • Create a budget. Find a budget that works for you and stick to it. Make sure it’s realistic and done in advance, so you know where everyone of your dollars are going.

  • If you are married, make sure you are on the same page financially and work together on your budget.

  • Frequently review goals and make sure your actions are lining up to meet it.

  • Start finding ways to decrease your spending and increase your income.

  • Surround yourself with others that are on the path to financial freedom.

  • Make your plan known. Get an accountability partner and check in often.

But what if I don’t make as much as you or have houses to sell?

It’s all relative. Most likely you don’t have six figures in debt. You may not have a house to sell but you have a house full of things to sell. Regardless of where you’re at financially don’t let comparison hold you back from taking action.

You can do it!!! You have everything it takes to build wealth.

The path to wealth is no secret. It's about increasing the gap between your income and expenses and using that money to invest. Investing can be in the market, real estate, saving or in my case, paying down debt.

I took time to explain my mindset upfront believing that you too believed that debt was normal. I don’t want to make it seem like I had it all figured out. I stumbled and struggled just like you will.

If you were looking for some magic formula to make your debt disappear, sorry to disappoint you. You can fall into debt but you have to fight and claw your way out.

It may seem like an insurmountable goal but you can reach it. With intentional action, it’ll take less time than you think.

Cheers to financial freedom.

Why I won’t be doing my debt free scream

Why I won’t be doing my debt free scream