How 1 Person Paid Off $100K of Debt Working 2 Jobs

— -- Nick Gabel had run a convenience store for about four years when the building he rented was sold. He wasn't able to work out a deal to stay where he was, and he found himself both $100,000 in debt and without a job in early 1996.

He said he didn't want to file bankruptcy because he hoped to invest in real estate again, and he couldn't afford to ruin his credit score. He soon got a union job, working for a phone company, starting at $7.17 an hour. He said he knew that after about three years, he'd likely be making close to $20 an hour, but in the meantime, his 35-hour-a-week job wasn't going to help him make much headway — it would barely cover current expenses. So he took a second full-time job helping to care for disabled people. His phone company job offered split shifts and weekend work, which made it easier to work an overnight shift, Sunday through Thursday, at his second job.

He was careful to be sure the income from his second job went straight to paying off debt. Most of his debt was on credit cards, and he called all his credit card issuers to ask for lower rates. "Some reduced them to 5 percent and some reduced them to nothing, which helped a lot," he said. He reviewed his progress and strategy every month to see how things were going. He later looked into balance-transfer and low-interest credit cards and was able to help himself that way, too. That strategy was available to him because he had maintained a good credit score.

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He ended up using the "snowball" method to tackle his debt, paying off bills from smallest to largest, and once one was paid off, redirecting the money that had been paying that bill to the next-smallest one until all are paid off. He estimates that it took about four-and-a-half years. (He was able to leave his second job in mid-2000, he said.)

No Frills

He describes his lifestyle then as "like a college student," but it sounds far more spartan. He kept his thermostat set at 60 in winter unless he had guests, replaced his incandescent bulbs with CFCs, signed up for a barebones phone plan and scrutinized every expense. There was definitely no money for pizza and beer. (He did invite friends over for potlucks and the like, and if he went to a movie with friends, it was a matinee.) He learned early on that he needed to put aside $10-$15 a week into what he called a "contingency fund" to cover expenses he had not budgeted for, from home repairs to birthday gifts for nieces and nephews.

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He said he always saw "light at the end of the tunnel," and he was able to buy real estate again. Now retired, he says the effort to pay off the bills and preserve his good credit was worth it.

He retired in 2012, and bought a house in Florida with cash. These days, he typically keeps his thermostat at 78 and uses fans to keep cool. "I'm still living the frugal lifestyle using a lot of the things I learned along life's way and applying them now to the retirement lifestyle. I always look for deals, discounts, coupons, special sales, used items, etc. It just makes a lot of sense to me to pay less for whatever I need and save up for those things that I want," he said.

His tips for others who are working to pay off big debt are:

• Be aggressive. Paying just the minimum won't do the job, he says. "If people can pay off a $35,000 car loan in five years, why do they just pay minimums on student loans? If you just pay the minimum, it will never go away."
• Automate payments. Don't give yourself the opportunity to spend money that is earmarked for debt. (Also don't risk a late payment or oversight.) Set up autopay on your mortgage, credit cards and student loans, so the bill is paid immediately.
• Use windfalls. A birthday check, a bonus or a tax refund can help you reach your goals faster, he said.

The payoff? Well, he's considering buying a summer home in Massachusetts, where he travels frequently to escape the summer heat and visit friends and family. And, it's financially realistic to do so.

If you're working on digging out of debt, you may also want to keep an eye on your credit scores to check your progress and watch for important changes that could signal a problem. There are many ways you can get your credit scores for free, including AnnualCreditReport.com, where the three major credit reporting agencies provide a free copy every 12 months, according to The Fair Credit Reporting Act.

Any opinions expressed in this column are solely those of the author.