Pathway out of debt There probably aren't any professional financial advisers on the site, but maybe you've got an idea or issue that someone can help you with.

[Neo]

Everyone has encountered a point in their life when something hit them so hard financially that put knocked them into debt, or pretty close to it.

What's your story? What put you in or near debt?
If you didn't go into debt, what did you do to avoid it?
If you did go into debt, what did you do to get out of it, or how are you currently handling working toward being debt free?
I know there are some people who follow the Dave Ramsey dude (Agent Smith's family, Bethnangel's family), but there are certainly other ways to do it or avoid it altogether as well.

And if you want specific advice about something, feel free to about that as well - maybe someone has a more relevant example that didn't come to mind in their larger story.

Hopefully this will help someone else who is currently in a situation you've already overcome.

[Neo]

My story started with moving out on my own and having 3 credit cards - one I used for gas, one for food and one for other things. None of them were limited to those things, but that was how I used them because of their credit limits.

I was making $14/hr and working 40 hours a week. When I calculated whether I could afford to move out, I figured that I would be able to just barely make it with the things I've decided to live with (Cable tv, cable internet, voip phone, cell phone, etc).

A couple months into living alone, I started to realize I had nearly a whole paycheck left over every month, and started putting it into savings. I wasn't sure why I had so much money left over since my calculations didn't indicate that I should.

It wasn't until a couple months later that I realized I was continually using a credit card and never paying it off. I don't know why I was allowed to continue to use it. This was around 2005-2006. From them on, I carried a credit card debt.

Around 2009 things had gotten worse as the credit card industry had increased rates to near 30% (at least for me) before regulations were put into place a couple years later...and the credit card companies kept increasing my limits. At the same time, I didn't make near enough money to keep up with my credit card payments and living expenses. I was also dealing with car repairs at the time, and spent my entire savings on getting my car up and running only to have it throw some kind of rod in the engine and completely die. I had dumped $1000 into the car, only to throw it all away. I had no cash, no savings, no limit left on my credit cards. And now I had no car.

So here's how I got out of it.

I was at the point where I had to tell my boss I needed a raise, enough to cover the cost of a new car payment, or I would have to find another job - supplemental or otherwise - to continue to afford to live. I was the only IT guy at the company and he was an understanding man - though, at the time, I didn't realize the company barely had any money at all in the first place. He managed to get me a $2500 increase to my salary, which was only about $200 or so per month before taxes, about 150 after.

While looking for a car, I was able to borrow one from BinaryAngel (who I worked with) for a week. During that week, her husband contacted his sister who worked at a credit union. I used to have a credit union membership, but closed it since my step dad was also on the account.

At the credit union, I was able to restructure all my debt. I took out a credit union loan at a rate lower than all my credit cards, for around $20,000. I had them cut the loan into checks I could use to pay off all my credit cards. Then I got a new car (so I wouldn't have to deal with repairs for years) but failed to negotiate - I got it at sticker I was young and stupid.

Now with a single payment to pay off credit cards (instead of 3-4 payments with a minimum amounts totaling higher than the new payment) and a car payment (which was less than the loan payment) I was able to get through the month. The only down side was my paychecks were $1300 each, and my rent was $750, loan was $390, car was $320...that takes up one paycheck and then some. Not to mention the other utilities I had like car insurance (required full coverage), electricity, student loans, cable/internet (under contract) and cellphone (under contract), and gas for the car taking up the majority of the next paycheck. This is why I couldn't make it out to any LAN parties anymore, as my finances approached zero. The only thing that was variable was what I spent on food...that got down to $1/day. I was able to survive on that by eating cheap bags of salad, homemade spaghetti, and nothing for breakfast.

And then I got a "roommate" - my girlfriend moved in in 2010 and with the money she no longer had to spend on rent and her utilities, we were able to buy groceries for us with her paycheck and pay for our cellphone bill. Everything else she made was put into a Savings Account under her name...in case things didn't work out, she wouldn't be broke and there wouldn't be any dispute about how much money she gets to leave with - it was all there. Fortunately things did work out, and when we got married we already had a hefty savings account built up.

We used this savings to pay for a small wedding with family and close friends who were in the wedding. It also covered our honeymoon cruise...so we ended up married without any debt from the wedding. Once we were married, our combined tax return allowed us to put more money into savings than we were allowed to alone. We were still barely getting by though because of both our student loans and in 2010 we had to get her a new car for the same reason I had to get one.

The thing that really helped us out - the company I worked for during all this went bankrupt. When that happened, it forced me to get a new job. In searching for a new job, I found I was being underpaid by 50% that whole time. I would have never had to go through it if I had been paid a market wage - or even what I asked for, which was only 8k more than what they gave me...though still under market by 33%. Once I got market wage, my paycheck nearly doubled, and the savings accounts grew.

Eventually my bank loan got paid off in a lump sum. Then my student loans were paid off (being of a lower interest rate than the bank loan). At the start of this month, I paid off the last $1000 of my car.

We only have one credit card in use - a card that generates points. Everything we buy that can be swiped gets put on that credit card - vacation, groceries, bills, etc. - which generates points. Anything that can't be paid with the card is paid through bill pay with the bank. No money goes out of our account with a debit card, so that we bear no liability if the number gets loose. Every paycheck I get, I have an automatic transfer of $250 into savings immediately, which builds up savings without us having to worry about it. When we finish paying off a thing, that money gets added to the automatic transfer to savings. It started out as $50 every paycheck, and grew from there. And when we finish paying off a car, we continue paying ourselves, so that when it comes time to get a new car, we've already made all the payments, and can buy it in cash....or at least most of it, and finance the last hundred bucks or so for credit improvement (a thing I learned from one of my bosses who's husband is a financial risk analyst).

So, debt is only a temporary master as long as you stick to a plan. I'm curious what other methods there are out there. I had tried a couple - and credit consolidation services are a complete scam.