How I Ditched Debt: New Parents Quit Credit Cards

Jeanne Lee
By Jeanne Lee 
Edited by Kim Lowe

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In this series, NerdWallet interviews people who have triumphed over debt using a combination of commitment, budgeting and smart financial choices. Responses have been edited for length and clarity.

Lydia Senn How I Ditched Debt Frugal, Debt Free LIfe

Lydia Senn suffered through the Great Recession like many Americans. In 2008, she lost her job, and her husband, Jason, took a pay cut. With reduced income, they racked up credit card debt and had to short sell their home.

The couple never fought about their finances — because they pretended the debt didn’t exist. It's an approach Lydia Senn now calls “worse than fighting.”

In 2012, with a baby boy joining the family, the Senns moved to a new home in Mobile, Alabama, and committed to paying off their debt.

Their journey to debt payoff took more than two years and prompted Lydia Senn to start the blog Frugal, Debt Free Life. Now mom to three boys — Ryals, Isaac and Jesse — she recently connected with NerdWallet to share her story, which may inspire you to pay off your debt.

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What was your total debt when you started your repayment journey and what is it now?

At the beginning of 2012, we were about $36,000 in debt, with an annual income of $72,000. It took us two years and one month to pay it all off.

Today, we are debt-free except for our mortgage.

How did you end up in debt?

The majority of the debt was Jason’s student loans. We still owed over $15,000 after making payments for seven years.

We also had a huge amount of credit card debt, about $13,000, and more than $8,000 in medical bills. I was in a car wreck while pregnant and taken to the hospital by ambulance. I got a bill afterward for $1,500 just for that. At the time, we had really bad health insurance that didn’t cover a lot.

When the recession hit in 2008, I lost my job at a newspaper. Our paychecks bounced, and the publisher said, “We can’t pay you, but in lieu of payment you can take your computer home.” I packed up my iMac and a few reams of paper.

Sad but funny: On the same day, my husband’s pay at his job as a land surveyor was cut to $15 an hour from $22.

We weren’t smart enough to have an emergency fund at that point, so for a time we basically lived on credit cards. It kind of shames me to admit that sometimes.

We hung on to our house as long as we could during the recession, but in 2011 we had to short sell. It was hard to admit my failure.

When did you get serious about paying off your debt?

When I got pregnant. We wanted a family but didn’t want to bring our child into a home stressed out by debt. So we had the hard conversations and committed to pay it off as soon as possible. We wanted to take our lives back.

What steps did you take to reduce your debt?

We went scorched-earth on our spending, cutting out everything possible. We got rid of our satellite dish, which was hard for my husband at first — football is like oxygen here in the South — but we saved $75 a month. We also created a food budget and stopped going out to eat. Before, we had no budget.

We attacked our credit card debt first. With credit cards, we were minimum payment people, and we had to change our behavior.

We lined up all our cards and paid off the highest-interest one first. It was about $7,000 with an interest rate of 22%. Our lowest-rate card was at 9% or 10%. When that was gone, we began to pay extra on the student loan.

» DID YOU DITCH DEBT? Tell us how

Did you make any other changes?

I took side jobs I could do while my baby slept. As a virtual assistant, I prepared marketing and course materials for a business coach, making $15 an hour. I started getting a lot of referrals, and it eventually became my full-time business.

We had to really talk about how bad things were. Once you walk through losing a house with someone, having faced that together made our relationship stronger.

How did you stay motivated?

When I realized I was still paying credit card bills for purchases I’d made two or three years ago, I started to get a little angry. We didn't want to be making payments for the rest of our lives.

How has your life changed for the better since you got out of debt?

Now we have an affordable mortgage payment, a six-month emergency fund, and have money automatically transferred into college savings accounts for each kid every month.

We also paid cash for our first family vacation, a week at Disney World. It cost about $2,000, and was so much fun!

How do you remain debt-free today?

Today we don’t use credit cards. Credit cards aren’t horrible; in the right hands, they’re a tool. But for me, they’re like being around a bad ex-boyfriend — the temptation is too much. I don’t want to get sucked back in, so I just don’t use them.

How to tackle your own debt

Senn paid off debt by quitting credit cards and taking side jobs. A few simple steps can get you started:

  • First, commit to paying off debt. Figuring out what you owe and forming a plan will help you stay motivated.

  • Pick a strategy. Debt avalanche — targeting debts with the highest interest rate first — worked for Senn, but there are other approaches.

  • Build an emergency fund. A savings cushion protects you from turning to credit cards for unexpected expenses. Five hundred dollars in the bank is enough to cover many small emergencies.