I Racked Up $370,000 in Debt: 4 Strategies I Used To Pay It Off Quickly
Being deep in debt is an incredibly stressful and burdensome situation that can feel hopeless and suffocating. High interest rates mean your balances keep growing while you’re struggling just to make the minimum payments. It can feel like there’s no way out.
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However, there are proven strategies that can help you dramatically accelerate your debt repayment and get to that beautiful $0 balance sooner than you might think. The path won’t be easy, but taking control of your finances and becoming debt-free will be one of the biggest reliefs and achievements of your life.
Joey Ruffalo, owner of J.R. Financial Coaching, found himself buried under a staggering $370,000 of debt. The mountain of liabilities included 17 maxed-out credit cards, two car loans, student loans and various other lines of credit for medical and dental bills. It was a slow accumulation that crept up on him and his wife when their spending habits didn’t adjust when their business income fell.
“Our business did great in 2007, then in 2008 it dropped by half, but my spending did not,” he said.
The situation deteriorated to the point where Ruffalo had his power and water shut off at the condo he was renting. He resorted to running a hose from an outside faucet just to be able to shower. Fearing his car would get repossessed, he kept it hidden away in a garage for over a year.
Ruffalo had gotten entangled in a vicious debt cycle that brought him to a new low point. He knew he needed to take drastic action to turn things around.
The Debt Snowball Method
Digging himself out of that $370,000 debt hole was a long process that took Ruffalo and his wife approximately three years of extreme sacrifice and hustle. He followed the famous debt snowball method popularized by financial guru Dave Ramsey, going through Ramsey’s Financial Peace University class to learn the strategies.
This classic debt payoff approach has you pay the minimum on all debts except the one with the smallest balance. You attack that smallest debt using all extra funds until it is paid off. Then you roll those payments to the next smallest balance, creating a “snowball” of payments that builds momentum as it runs over each debt.
In Ruffalo’s case, his debts carried a mix of interest rates, some that had started as 0% introductory offers that eventually skyrocketed up to as much as 19%. His more standard debts like the student loans averaged around 7%-10% interest.
“It really came down to focusing on one debt at a time,” Ruffalo said. “Getting the cars and house bills current and paid on time first, then the debt. Making weekly goals to help with bite sized chunks.”
Breaking things down into smaller goals like this helped make the massive task feel more manageable. The debt snowball works because those small wins of knocking out entire balances give you motivation to keep going. As long as you stick to the plan, you’ll gain confidence as you see each debt get knocked out.
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Earn More Income
Ruffalo left no stone unturned in his quest for extra income streams to attack the debt. He picked up all sorts of side gigs, saying goodbye to a normal sleep schedule.
“We did everything from Uber, Amazon, Shipt, Instacart, Doordash, some app based gigs, mystery shopping as well as selling online on eBay and Poshmark,” he said.
All those raises, bonus and side income dollars should be directly funneled into debt payments until it’s all gone. You’d be amazed at how quickly you can make a dent in debt when you apply just an extra few hundred dollars per month.
Live Frugally
In addition to earning extra income, you’ll need to slash your current spending to use every single dollar you can for debt payments. Reduce your lifestyle to the minimums needed for food, housing, utilities, transportation and other basics.
“Best thing we did during this time was set up a few extra savings accounts at our bank and when we got paid weekly from the extra jobs we would automatically transfer funds into these accounts,” Ruffalo said. “This helped control our spending.”
These separate savings accounts created a psychological barrier that prevented him from easily raiding that debt payoff money.
Turning It Into a Game
Simply putting your head down and grimly paying bills month after month is a recipe for burnout. But by gamifying your debt payoff, you create motivation and consistent forward momentum.
Ruffalo and his wife turned it into a personal challenge to meet or exceed that amount they needed to pay off their debts each month.
“What we ended up doing was taking the total we owed on a debt and setting a goal,” Ruffalo said. “Say $1,000 in the next two months, that equaled $500 a month. Thirty days in a month and it came to earning an extra $17 a day in order to meet that goal. Then when we go out and drive Uber, we would always hit that goal (usually way more than that, which would speed up the process, but allowed us to take a day if we needed to recharge). Once we made a game of it, it was on.”
Viewing it as a game with clear objectives allowed Ruffalo and his wife to sustain their focus.
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