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Person Walking on Grass in the Mountains

Today for our debt success story we feature a young wife and mother who turned her debt problem into the ability to travel the world. Welcome, Emma!

How did you acquire $30,000 in debt? What did that debt consist of?

My $30,000 in consumer debt consisted $5,000 for an unpaid tax bill I took out an unsecured personal loan to pay the tax bill and then added another $5,000 for a vacation. I then borrowed $20,000 via an unsecured personal loan with my husband to buy an investment property – for the deposit and refurbishment costs.

What did it feel like to have that much debt?

The $10,000 felt awful so I ignored it. However, I was able to justify the $20,000 to myself as an investment expense for the sake of the future. That was silly as the interest rate of around 14% effectively ate up any positive returns from the property.

How long did it take you to pay it all off?

The $10,000 that I borrowed took me a long time to pay back as I just made the minimum payment every month and effectively ignored it. My husband and I were very aggressive in paying back the $20,000 personal loan for our investment property as we knew it was a risky strategy. We pooled resources and paid that back within one year. After I’d seen what we could do when we put our minds to it I got serious about paying back my other debt.

What resources did you use to help you through this process?

I used a low rate balance transfer for some of my tax debt, moving it from a 13% interest rate to around 2%. This helped me keep my interest costs low which is smart but it also meant I was comfortable to ignore the debt and just let the minimum payment be debited from my account every month.  However, I was able to pay it back very quickly when I finally faced the seriousness of the debt load.

Did you face any challenges along the way?

Not in the grand scheme of things. I am very grateful to live in a privileged world where I can choose how to allocate my funds. So many don’t have that option. The things I struggled with were sacrificing my social life – I was a party girl but in order to make more money I took extra jobs in the weekends and evenings so I could pay off my debts faster.

How did this affect your marriage?

My (now) husband and I weren’t married at the time but we were living together. From the outset of our relationship I was very upfront with him about my financial situation. He had always been a saver and had no debt, yet he was very supportive of me. He bought me a bike so I could ride to work and save on public transport costs and he never minded me working all the extra hours in the weekend (probably because it gave him more time for beers with the boys).

He also very kindly donated funds he received from the government stimulus package (the Australian government gave all permanent residents $900 to increase spending in the midst of the recession) to help me clear the final balance.

What were you doing for a living while you were paying off the debt?

I started my debt journey as the office manager for a dating agency. I also took hospitality jobs for big events and worked at a music store on the weekends. I would often work seven days per week and allocate all the extra income to my debt.  In the Christmas peak retail season I would work in my nine to five in the office and then work at the music store from 7pm until midnight. It was physically exhausting but it also felt like penance for being so flippant with money.  When I made the final payment on my personal debt I was working as the marketing executive for a travel company.

How did it feel once you paid it all off?

I was empowered. I had worked my butt off to get rid of the debt but at the same time I learned that I was a money making machine. After the debt was gone I realized I could now do the things I’d always wanted to do – like extended travel.

Have you been able to realize that dream now that you’re debt free?

Yes, we have. After a couple of years of saving one income and living off the other – a concept that was simply unfathomable in the height of my debt-junkie days –  we quit our jobs and traveled around South America, the US and New Zealand for five months. We then returned to work for another year of saving money, had a baby boy and took off overseas to Ireland and Mexico when he was four months old. We’ve been traveling in some form ever since and we are currently living in Spain.

None of this would be possible if I was carrying high interest consumer debt. The sense of freedom is exhilarating – I have no debt repayments to worry about so we just need enough to pay for our living expenses which are quite low. We rent out our house in New Zealand, and I do some freelance work but the majority of our travel funds come from savings.

Becoming debt-free has taught me so much more than just how to get out of debt. I learned how to manage money and also how little I really need to live on.

What other lessons did you learn from having your debt?

It might sound a little strange to say it but I’m glad I had that debt because the lessons I learned were the kind you have to earn. I mean I can tell people how much it sucked working all those hours to pay back debt but until they’ve done it themselves they’ll never know. It’s the ultimate motivation to always stay in the black. I never want to have to work that hard again.

What practical tips do you have for people looking to pay off their debt?

1. You need to change your attitude before you can change anything else.

I had always been comfortable with debt because my attitude was that everyone has debt, right? After my husband and I paid back our investment property deposit loan I started to read every book I could find about personal finance and I realized that being in debt is not normal and requires drastic action. That was when I got serious about the debt balance I was still carrying. Getting educated about personal finance is the number one thing I recommend people do.

2. Be willing to increase your earning capacity.

Frugality can only take you so far. In order to really succeed with debt repayment you must increase your earning capacity. I increased my employment skills by taking a short course in bar management which allowed me to work at concerts and events in the weekends. From that I would net $150-$200 per weekend. Those extra funds went a long way to paying back debt, much further than trying to cut spending would have (although I did that too).

3. Use a balance transfer to lower your interest rate, but only if you are truly done with flippant spending.

I also believe in using credit card balance transfers to eliminate debt if you are self-disciplined. As soon as I received the new credit card in the mail I cut it up. I knew that any purchase on top of my balance transfer would attract the top rate of interest and I was concerned it would affect any interest savings so I resolved to never use that card as long as I was carrying the transferred debt balance. I can proudly say that card never saw a transaction, much to the bank’s dismay. Once the balance transfer was paid back I cancelled the account.

4. Learn how to make your money work for you.

Once you’ve paid back your debt put those funds to work making you money. At the very least put them in a high interest savings account (depending on where you live – current interest rates in my country are around 4% but I know they are lower worldwide) until you’ve figured out an investment strategy that works for you.  Don’t adjust your lifestyle back to how it was when you were a debt-junkie. That is really my number one tip. When you are in the midst of paying back debt you learn to live a naturally lean life. Keep that up and you’ll be building wealth in no time. I re-allocated debt payments back into a savings account and after a while my husband and I were able to buy another investment property using genuine savings for the 10% down payment.

5. Always have a goal.

For me it was travel. I’ve always loved to travel. But worrying about debt repayments without the comfort of a regular income restricted my travel to the usual annual vacation type. Having long-term travel as a goal kept me motivated during the tough times.  After I became debt-free and learned how to save my money there was no longer a barrier. In 2011 we quit our jobs and traveled around South America, the US and New Zealand for five months. We’ve been traveling in some form ever since and we are currently living in Spain. None of this would be possible if I was carrying high interest consumer debt.

To learn more about Emma and her traveling lifestyle, you can visit her at her blog,

Note: This is part of a series called “Debt Success Stories” which features people who were able to pay off a significant amount of debt. If you have a Debt Success Story I would love to hear about it. Please visit the contact page to let me know the details.