How to Be A Debt Hero: Pay Back $107,000

Toni Husbands was 31, unemployed and $107,000 in debt when she convinced her husband, Colin, that it was time to get serious about where they spent their money.

The Husbands, both computer engineers, were making payments on two cars, student loans and owed the federal government more than $20,000 in back taxes in 2005. They were paying on a home equity loan, a timeshare, medical bills and had credit card debt that “was somewhere around $20,000, but I can’t even tell you where it came from,” Toni told Debt.org.

And that didn’t include the monthly mortgage check for a $160,000 condominium they bought near downtown Chicago.

Toni’s solution to this pile of woes: Buy a laundromat. After all, what’s an additional thousand-plus dollar investment when you’re already knee-deep in debt?

“Everybody who buys a business goes into it thinking the same thing: ‘Oh, this will make a lot of money … everything’s good,’” Toni said. “But if you’re knee-deep in debt, the first thing to do is stop borrowing. The next thing is to cut up all your credit cards, except one, and stick that one in the freezer. That’s what we should have done!”

Deep Debt? Stop Digging

Toni can say that now because she spent seven years getting out from under the mountain of debt she and Colin built. They paid off the last of their credit card debt on Dec. 5, 2012. The journey, and the determination the Husbands showed throughout it, made them the runaway winners in “Debt Hero” — Debt.org’s social media contest.

“Debt was necessary, inevitable and unavoidable 10 years ago,” Colin said. “I felt like we could manage, but now I recognize the value of not being in debt, at least not to the extent we were [in].”

So does Toni. She sums up her feeling in one line: “If we don’t have the money for the purchase, we aren’t buying.”

The Husbands, like many couples, married into debt. She brought $21,000 in student loans to the ceremony and he had about the same amount due in credit card bills. A year later, they bought the condo and, because they loved to travel, threw another $8,000 at a timeshare.

Around town, they often ate out, took advantage of Chicago’s many entertainment opportunities and didn’t think twice about dropping $50 on a visit to the movies. They had good jobs and could easily make the minimum payments due on every debt they incurred.

So that’s what they did: Pay the minimum and watch their debt swell out of control.

Make a Plan to Cut Debt

Eventually, the debt load became a regular topic of discussion. Toni had voluntarily quit work to lay the foundation for opening a business. Then Colin lost his job and the discussions took on a new tone.

“We realized that we had to get on the same page,” Toni said. “I was always uneasy about carrying debt, but Colin was like ‘Hey, as long we can cover the payments, don’t worry about it.’

“That changed when we were both unemployed. He was only out of work two months, but it brought a lot of clarity to our situation.”

They spent the next four months drawing up a budget and ignoring it. Lots of blue, green, red and yellow markings made for a beautiful spreadsheet, but it sat neglected on the computer screen. Toni decided to post it on the refrigerator and suddenly the budget came alive.

“It’s easy to see where you’re wasting money when it’s right in front of you every day,” Toni said. “I don’t think either one of us realized we were spending $200 to $300 a month eating out and another $150 a week at the grocery store, most of which was going to waste because we were eating out so much.”

Reduce Debt with Lifestyle Change

Habits changed. They ate in instead of eating out. They rented a movie instead of going to the movies. They quit leasing cars and bought them. They stopped traveling and found things to do locally.

Toni insists they didn’t stop living. They just paid more attention to how they were living.

“You’ve got to find ways to enjoy life during this process,” she said. “We swapped out costly activities for free dance in the park festivals. I pay for low cost tennis lessons ($40 a month) or just play with friends on public courts.”

The Husbands attacked the debts one at a time, starting with the smallest. Toni got a job and dedicated her paycheck to reducing the debt. With two incomes and a more disciplined approach, the debt slowly, methodically and sometimes painfully, dissolved.

“Debt is not a good thing,” she said. “Make a budget and stick to it.  Save regularly and build an emergency fund. Realize this is a marathon, not a sprint. You’ll find a whole lot less stress in your life when you’re living debt free.”

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at bfay@debt.org.

Toni Husbands wins Debtonator contest

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