How to Pay off $50,000 of Debt in a Year

Day 4 - Paying off debt

Day 4 – Paying off debt (Photo credit: quaziefoto)

Earn an extra $50,000 a year and apply it towards debt.

Lately there have been a rash of articles talking about large debt payoffs in a short period of time. I congratulate those on their dedication. But at the end of the day, we need to remember that those numbers are special cases. As the diet pill commercials say, results are not typical. As such, when personal finance bloggers talk about these extreme debt payoff scenarios, and play it off as a simple matter of dedication, we do a disservice to our readers.

The problem with extreme debt payoff stories

I don’t see extreme debt payoff stories as inspirational; I see them as depressing. I’m a pretty frugal guy, why can’t I pay off my $60,000 of debt in a year? Well, to start with, I don’t make $60,000 to begin with. And statistically speaking, there 57.8% chance that in 2011, you didn’t either. How are you supposed to feel about their ability to pay down your own liabilities when you read about someone paying more debt than your annual salary?

Instead of feeling, wow, if they can do it, I can too, the feeling is instead it takes large salaries to pay off debt; I shouldn’t even try.

I understand why other bloggers write those kinds of stories; they get attention. If you write about paying off $50,000 off of debt in one year and you get attention from big media outlets and tons of traffic. When I write a post in 2019 titled “How I Paid off $60,000 Worth of Debt in Just 8 Years” there will be some well-wishes from my regular readers, but no large fanfare. Because that story isn’t phenomenal. it’s simply average.

How can debt payoff stories be portrayed differently?

Could the answer be instead to talk in percentages? If you have $50,000 worth of debt and earned $100,000, you could say you paid off 50% of your income in debt. If I made $100k last year, I’d be debt free by now too. The problem is that would still favor higher incomes. 50% of your income going towards debt sounds more exciting than the 17% we are currently managing.

Maybe we should start talking about payoffs in terms of percentages of our discretionary income. If someone makes $100,000 per year and has $2000 per month in household expenses, their discretionary income is roughly $53,000. Then that 50k paid off is 94% of your discretionary income. Good for you!

Going over my income and expenses for the past year, it looks like I applied roughly 67% of our discretionary income towards debt payments. Finally, an apples-to-apples comparison between my debt payoff efforts and that of my fictional counter-part. I didn’t do quite as good as my straw-man, but I can still stand proud with that number. No longer would I have to slink away in shame comparing my measly $13,000 of debt payments to that $50,000.

And I’m willing to bet that saying that I am applying 67% of my discretionary income towards paying off debt is just as inspirational as that guy who paid off $91,000 worth of Harvard student loans in 7 months.

Do you find extreme debt payoff stories inspirational or do they get in the way of your own motivation?

Enhanced by Zemanta

Related Posts:

44 thoughts on “How to Pay off $50,000 of Debt in a Year

  1. Yeah, I just took a peek a that video from the guy who paid off 91k. When you have $1,300/month spending on entertainment, you can easily cut that to make a big dent.

    I agree with you. I think we all need to look at the relative percentages of discretionary income. These big debt-payoff stories can be motivating, but they can also be depressing! We need to put it into context.
    Alex recently posted..Happiness Experiment 39: Eat the Rainbow Day 3My Profile

  2. I do take your point about debt payoff as a percentage of income or discretionary spending being more impressive than simply large numbers. Some people even sell things to get out of debt so that really inflates the numbers, too.

    • And having things worth any money to sell presumes that you have a higher income in the first place. I’ve looked into selling some stuff from my home before; but I could sell the entire contents of my bookshelf and only come up with about $20. All of my paperbacks are only selling for a penny online!

      • I think we’re in a similar situation of not owning much of value, but some people in their debt payoff stories include, like, mortgaged houses and such! But other than that, you could have objects of value from a prior time in your life when you had more disposable income or things that you’ve received as gifts.

  3. I agree that those huge, huge numbers can be depressing! Especially when the numbers are higher than household income.
    I completely get why you have headed to the discretionary income description, it’s just so hard to determine what is discretionary and what is not. We could share a bedroom in a house full of people for $500 a month plus utilities, or we could have our mortgage. We need some sort of phone, but we choose to have two smartphones… so at what point is it discretionary spending and at what point is it necessary?

    I’m just playing devil’s advocate ;-)

    • That’s a valid point, although dropping “unneccesary” utilities isn’t always as good a deal as people assume. Take my DirecTV bill, for instance. If I got rid of it, I’d have an extra $40 per month to direct towards debt, right? Yes, except for the fact that I’d face an early termination fee that would take nearly a year’s worth of DirecTV bills to pay off. Is going without cable for the next half a decade worth paying of debt a year early? I’m not sure there is a right or wrong answer to that.

  4. I do enjoy those huge payoff stories, but the guy from Harvard could not have done that without a high paying job and being single in my opinion. When you have a family, you can’t spend 23 hours a day working. The headlines are attention grabbing. My post about paying off $30K in credit card debt is by far my most popular. It took 17 months and I was able to make more money during that time. There is an ebook coming out soon by Ben Edwards about debt payoff stories. Some are huge amounts over a short time and some took years, so I think it’s more representative of people as a whole. I think a great headline would be “How I Paid off x Amount of Debt on a $20,000 Salary” That would be very inspiring,even if it did take several years.
    Kim@Eyesonthedollar recently posted..Paying Off Debt is Like a Winter BlizzardMy Profile

  5. I totally agree, as someone who has a boatload of debt, who would want nothing more then for it to be gone ASAP but there’s no easy way about it! It will be, realistically another 5 years before it’s gone.While I commend people who have the means to do so, I enjoy stories about people who are able to do it by busting their butts with multiple jobs etc, rather than walking into a career that offers six figures.

  6. You make a valid point. I enjoy those stories when it took some serious dedication, whatever the amount. Firing the maid and the personal trainer is nothing to be proud of compared to taking extra shifts and working hard to pay off your debt. Kim’s title looks good, comparing salary to debt payoff.
    Pauline recently posted..Budgeting: the no budget approachMy Profile

  7. Hey guys, I really hope that John and I didn’t get you depressed. If you read the articles I wrote under the Debt movement and many others through the live of TMP proportions is something I always said matters. However, three years ago our consumer debt was 32% higher than our annual income before tax. And yes, we did manage to increase our income by a lot over the following three years (and we did work 13 hour days while making sure that we look after our pre-teen son). I am not saying anyone can do – but many could. It needs a switch in thinking – four years ago I had the education, my job was paying more than it does now (because I left a management position) and I never thought that I can make anything ‘on the side’.
    We just had to figure out what we are the competencies where we are unique (here I believe that anyone can do that, each of us has unique competencies but we neglect those).

    And, Edward, the ‘big guys’ have not been around yet; the trafic is good but it as growing fast before we published our story.
    maria@moneyprinciple recently posted..£100K ($157K) to zero in three years flat: we are debt free!My Profile

  8. I paid off $15,000 worth of debt in three years while going to university/working part-time/making below poverty income levels. It required loads of sacrifice, and I am very proud of my achievement considering those circumstances. It may not have been hundreds of thousands of debt but, for me, that amount was nothing to sneeze at!

  9. Thank you so much for writing this! My blog was actually inspired by my depression reading those posts. They make it seem so easy and as if the rest of us just aren’t trying hard enough. I made 20k in 2012 and paid off 8k in debt….and I know most people don’t care, because it’s not a high level success story like the ones you mentioned.

    I find it extremely frustrating, depressing and infuriating when I read posts like that. It’s all about income and discretionary money. Until I get a better paying job, I will be plucking away at my debt.

  10. Haven’t read a truer post all day!
    A significant part of my writing is about maintaining the attitude you need to conquer a debt mountain, and being a mountain, it takes a lot of time and hard work to pay off, again related to your idea of percentages.
    Certainly, in my case, it’s going to take at least 10 years, at the rate we’re currenlty going, so I know only too well how you feel, fortunately, it’s blogs like yours that help me keep sight of my target, so keep up the good work!

  11. I don’t mind reading those stories and I think it’s great that they were able to save in order to pay off debt. I don’t care if someone paid off a $500 credit card I’m happy for them but that’s just me. What I don’t do is ever compare what someone else has or makes or is able to save as we all have different financial debts and situations. The titles of the posts are eye catching and doing exactly what they intended to do, grab an audience. I’m happy if my mates or people are doing well, I think that’s great, but my motivation comes from with-in and comes from those that believe that anything is possible. When you write that post Edward in 2019 I’ll be right here to cheer you on mate.. $60 k is alot of debt to kill.. be proud of it!
    Canadian Budget Binder recently posted..Becoming a Single Homeowner – Part 1 “The Plan”My Profile

    • I’m happy for anyone who pays off debt as well, I just find such posts as false marketing.

      BTW, with a flick of the pen about 4 1/2 hours ago, we paid off almost $17,000 this morning! :)

  12. I think it’s great that people can pay of $50k in that short of a period but I’m in the same boat as you Edward. To pay down that much would take me at least 4 to 5 years at best, or I would have to increase my income substantially like you are saying.

  13. While I do generally like reading debt payoff stories, because I am no fan of debt I completely get your point. Generally, those stories are by no means the norm because it takes a good amount of time to pay off debt if you have a significant amount. It took me just over five years to pay off $20k in debt and I was throwing a huge chunk of what I made at the debt and was not making much money at all.
    John S @ Frugal Rules recently posted..4 Reasons Why Having an Investment Plan Will Save Your ButtMy Profile

  14. Pingback: Dealing with debt: frugality is not the answer

  15. When I read these type of stories I wonder what they are not telling us in the article. Did you get an inheritance that contributed to the debt payoff? Did you sell some investments that you are not telling us about? What personal belongings did you sell to accomplish this task? I don’t like feeling skeptical about good stories but it seems that’s my natural inclination.

  16. Pingback: Friday recap 21

  17. Edward, THANK YOU for this post! I find those types of stories discouraging sometimes too. Our situation is similar to yours: not a huge income or alot of discretionary income. So paying off our debt is going to take longer. I love your idea about viewing your goals and achievements in percentages of discretionary income instead. It will really help in terms of motivation, at least for us.
    Laurie recently posted..Motivation: Do it for the KidsMy Profile

  18. I actually have a post scheduled for next week talking about this very topic. How I paid off $30k in student loan debt making $40k per year (that might sound like a lot or a little depending on where you live, but here in the greater NYC area $40k was not much money). I don’t find the pay off debt articles depressing, but I can imagine how some people might. We’ll see how it goes over.
    KK @ Student Debt Survivor recently posted..Big Beer Companies Paid Me $350 Last YearMy Profile

  19. Pingback: Sunday Worship | Do or Debt

  20. Pingback: Survivor’s Standouts 2/17/13 » Student Debt Survivor

  21. Pingback: Carnival of Personal Finance #399

  22. Pingback: Mr.CBB's Personal Finance Reading List #7 Air Fare Wars~ Air Canada Price Guarantee! - Canadian Budget Binder

  23. Affordable loan

    Good day every body,

    This is to inform the general public that adamswilfred is
    currently giving out Loans to the general public at a low interest
    rate of 3%.You don’t need to have Collateral before you can get a
    loan.Our aim is to make life easy for our Client.
    For more information,contact us now via

    Email: adamswilfredfinanceloanfirm@gmail.com

    Regards.

    adamswilfred.

  24. I Am Mr. Lewis Harry. A legitimate & accredited Loan lender. We give out
    loan at 3% of all kinds in a very fast and easy way, Personal Loan, Car Loan, Home Loan, Student Loan, Business Loan, Inventor loan, Debt Consolidation.get back to us if interested.Contact us via email lewisharry_lending@aol.com FULL DETAILS:1.Name:2.Age:3.Phone Number:4.Country:5.Loan Amount.6.Duration.7.Sex

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

CommentLuv badge