This “How I Paid $40K in Debt and Saved $70K in 2.5 Years” post details how the author was able to pay off debt he owned to creditors and saved more than $70K in under 3 years. The author wishes to provide inspiration to those who are going through the struggles associated with debt or trying to pay off debt.

Not long time ago, I was indebted to the tune of over $40,000 with no savings in the bank and funds for my retirement accounts. During the time when I was buried in debt, I got married and, eventually, had our first baby. There was too much pressure to straighten my life financially for me and my budding family.

Fast forward by 2.5 years, my life has completely changed as I eliminated all of my debt. Yes, free from debt.

In addition, I have saved at least $70,000 in emergency funds, college education funds for my daughter, retirement, and some for leisure. Oh, did I say that during those years, I was the only one working.

Looking back to what I considered as one of the most challenging phases of my life, I could not help but wonder how I and family came out successful in our endeavor.

Up to this day, I cannot believe how I was able to make it happen. I know it was a combination of some many things from cutting down on expenses to stretching out my money to the last cent.

The story of failure

I was about to graduate from the MBA program when the subprime mortgage catastrophe occurred. I had a couple of interviews lined up from some of the big banking companies in the US. But they all cancelled not because of what I did but because of what was going on that time.

After graduation, I attempted to apply but ended up not getting a job. To make the story short, I became unemployed. It was during that time when my sisters and I built our own business.

The business was a retail one. We sold handcrafted bags and women accessories made from the Philippines. We sold our products through arts and craft shows, holiday shows, military base concessions, and malls.

The money was good in the beginning. But our business started to tank a year later. As a result, the business was bleeding money…. a lot of money. Being the person who had a business background, I attempted to revive the company but all my efforts failed.

In 2013 or 2014, we decided to close the business to prevent from incurring more debt. I walked away from the business that I was proud of but I knew it was time. Though we shut down our business, we were swimming in a sea of debt. I can’t remember how much was the debt but my share was around $40,000.

While one of the causes for the business closure was the tanking economy, I believe that some of the major causes were our business missteps or decisions that inevitably affected our business.

Ways To Pay Off Debt

Here are ways I and my family adopted to pay off debt fast.

It’s all about the attitude

It’s always difficult to start on doing something but it gets better when you’re doing it constantly. This was my mantra during those difficult years especially during the time when I was drowning in a mountain of debt.

Instead of subjecting myself into depression, hopelessness, and self-pity, I became optimistic, alive, and eager to pick up the pieces of my life.

I was not married back then when it happened but was in a relationship with my then-girlfriend (now wife). My wife wasn’t in the US when our financial dilemma started to happen but she was worried because I told her the situation.

I knew she was coming to the US eventually and we’re going to have family together. It was that thought that helped me to move on and rose from the worst state of my life. I changed my attitude because I knew it was not all about me anymore, it was about me, my wife, and, our future kids (my daughter wasn’t even conceived during that time).  I didn’t want to continue to live a life of pure destitution.

Some may think that changing one’s attitude will not save you money. They may be right but I will say that it will help you change how you view your life.

I started my quest to eliminate my debt by changing my attitude and moved forward from there.

It’s also about grabbing the right job opportunity

I worked in Las Vegas in 2012 as a financial technician. I was making around $39,000/year (gross), which was considered a good salary for one person. My wife, who came from the Philippines, arrived in Las Vegas in mid-2012 and became pregnant a couple of months after. The good salary wasn’t a good salary anymore. So, I decided to look for another job anywhere in the U.S.

For almost a year, I applied for a lot of jobs. I still remember applying to 435 job openings. Yes, that’s the exact number of applications I sent out. It was hard applying for a job and not getting a call back or an application status.

After 435 job applications and 23 job interviews, I was offered a job from two companies. One was a financial analyst position, which would pay 1/3 higher than the other job, which was a budget analyst position. Many would guess that I took the higher paying job. On the contrary, I took the lower one. I took it because of the potential career growth and salary.

I made the right decision. To this date, I still think that I made one of the best decisions I’ve ever made in my life and for my family because I have moved in my career and salary in a trajectory angle.

Frankly speaking, I used the lessons I learned from running my own business and from my financial technician job to ace the interview, which eventually helped me land my new job.

Basically, the business that I lost helped me get a better paying job and a wonderful career.

It’s all about tightening the belt

During the first month working at my new job, my wife and I decided to set up a flexible budget at first. You may think that it’s not what “tightening your belt” is about? It wasn’t at first but we decided to cut down on our expenses 6 months later and little by little.

The reason that we did it this way was that almost everything was new to us. My wife was new to the US life, she’s pregnant, I had a new job, we’re living in a different state, just to name a few. Changes came so fast and they came all at the same time.

My wife and I wanted to have savings in the bank, funds for retirement and emergency purposes, college education for our daughter, and some for leisure. So, I decided to pay myself first before paying the creditors.  Being the finance person I have always been, I figured and calculated that this strategy best fit our situation.

When I first started at my new job, I was making around $50,000 a year. Every month for the first 6 months, we saved around 45% of our net income and the rest went to debt and monthly living expenses.

After the 6th month, we increased our savings to 46%, decreased our expenses by 1%, and left the debt payment amount the same. Every month, we would increase our savings rate and decrease our expenses until we couldn’t cut our expenses anymore.

Back then, when I had a salary raise, I kept the net increase (i.e. income after taxes), which was the difference between my old and new paycheck, between investments and savings.

Up to now, keeping the net increase every time I get a bonus or a raise has been our saving strategy.

It’s also about others

Many may think that I got lucky for having a good paying job. The truth is, I don’t make a lot of money from my job and have to work on the sides to supplement that $2,450/month savings and that debt payment.

Yes, my savings goal was $2,450/month. I have always known that it’s easier to achieve success when you know that you have a goal or a vision. Without it, you are just looking at walking on a long and winding road with no foreseeable end on sight.

I live near the D.C. area and the cost living is astronomically high compared to that of Las Vegas. Even if I were to make $70,000/year, the cost of living would eat up a big chunk of my paycheck.

In order to continue to save and pay off my debt, I chose to work harder and work on other jobs. I worked as a bookkeeper for a home health agency. I provided tutoring sessions to middle to high school students. I wrote articles for the first two years in exchange for fees. It was during those years that I learned to leverage both my trade and academic skills to earn extra money.

Some of the other ways I used to earn extra money are as follows. Please note that I’m still doing these every year.

  • Helping tenants move. Almost every weekend I help a family move in their stuff to or move out their stuff from their homes or apartments. In a year, I probably get $1,000 in tips (roughly $20 donation each for 50 families). Please note that I don’t ask for a set fee. Everything is by donation. Sometimes, I would get free furniture, which I would sell for an easy profit.
  • Helping others on their tax returns. I have always been helping friends and some acquaintances make their tax returns. I am not a whiz kid and I only use TaxSlayer for doing tax returns. In a given year, I get around $300 just by doing tax returns.
  • Refinishing and selling furniture. Every spring and summer, I work on my projects, which are refinishing and selling furniture. Every year, I would buy used furniture at garage sales or Craigslist, refinish them, and sell them for a profit. I net around $350 a year on this hobby.

Grocery has always been a big piece of my family’s budget. During the challenging days of my life, I clipped coupons almost every night for 2.5 years so I didn’t have to spend a lot of money in groceries and personal items. I used apps like Checkout51 and Ibotta to get rebates for few select items from my groceries.

I wasn’t a fan of clipping coupons back then but I knew I had to. It turned out I was good at it and got more than $1000 of free grocery items in the first year of couponing. Now, couponing has become a second nature to me that a lot of products I buy are deeply-discounted or free. I’ve become a not-so-extreme couponer.

It’s also about luck and passion

If there’s one thing that I know about myself, it is the fact that I like everything about the stock market. Whether it’s buying mutual funds or funding my and my wife’s IRA accounts, I am always passionate about investing in the stock market.

In 2013, my investment return was around 23.65%. In 2014, my return was 16.12%. The returns I got from the stock market contributed to the increase of my family’s retirement funds and college fund for my daughter.

I don’t know if it’s all about luck or if I made smart investment decisions. It’s probably a combination of both.


I think what my wife and I did in the first 2 years was extreme frugality. We stayed away from even the littlest things that my wife and I call luxury like eating out, buying dresses, buying toys for my daughter, watching movie, just to name a few.

We decided to provide ourselves with needs and completely stayed away from the wants. It was hard especially when we wanted to buy something for our daughter but didn’t want to shell out some few dollars. This was the sacrifice we wanted to go through in exchange for a better future. That future has come. We have been debt-free since January of this year. All the challenges and struggles are all in the past. The lessons they’ve given us will always be with us and will be our guide to whatever decisions we will make in the future.

My family has never been in better situation than we are now. If there’s one thing that came out from this phase of our lives, it is that we’ve become even closer as a family. That makes everything that we’ve gone through all worth it.



118 thoughts on “How I Paid $40K Of Debt and Saved $70K in 2.5 Years”

    1. Yes. I remember that number because when I received a job offer, I looked back at all the applications I made and found that it was 435. It was tough but I told myself that nobody could help me except myself. So, I push through and made every effort I could to make it happen. Then, it happened and I got a better job.

  1. This is an incredibly inspiring post Allan!

    The first point you made was about attitude, and not anything related to your financials. I agree that attitude makes up most of what we get in life because attitude and effort are the two main things we can control.

    Would you say you learned more from the MBA or the failed business? Either way, you now have a lot of real life experiences to draw on as you move forward in your pursuits.

    Keep up the great work and I’m sure the next 2.5 years will be just as good.
    Distilled Dollar recently posted…Four Phases of Financial IndependenceMy Profile

    1. Thanks.

      I think the MBA provided me the foundation to learn a business and having a business allowed me to learn lessons that I will use again and again. Having said this, I believe both the MBA and lessons learned from this business will help me become a better person, decision maker.

  2. OMG that’s a post. The situation in Italy is a bit different at the moment, I can hardly save 200 Euro a month right now! Thanks for sharing your experience!

  3. Luckily we are not in any such debt but a lot of your story matches mine. Being in separate countries, getting married, emigration/moving costs, buying a home, starting a family all on one income. The debt may bot be there for us but the pressure to keep our heads above water in the future is. I agree whole heartedly with your point about attitude. An optimistic attitude is the be all and end all here. Without it you won’t even begin to reform let alone succeed.

  4. Very inspiring story. My story is very similar to yours. I had a mountain of student loan debt with no savings, and now I’m in a comfortable situation thanks to similar techniques. Keeping my eye out for the right job offers and a lot of belt tightening.

    1. Good to know that you are way better off now. Yes, a right job opportunity and a right mindset on tightening the belt can go a long way to saving and paying off debt.

  5. Wonderful story and congratulations! Have you loosened the purse strings at all? Living a little and enjoying life a little more?

    1. Yes. I have loosened up. We choose to sacrifice first so we can have a relax, better life in the future. Again, the future has come and today is what the future I was referring.

    1. That is right. The goal now is to invest that savings into investments that can help my family be in the best shape when we retire.

  6. Your story is very positive and can definitely inspire a lot of people.
    I don’t have any debt so I don’t know how it feels to have the pressure to pay back a debt but I agree you need to have a positive attitude!!

  7. I have also started to tightened the belt because I need to save money for my travels. I don’t have a lot of debt, just under £1000 at the bank, but that is easy payable. That is my source of finance for expensive plane tickets. I have to have it because in a year from now, when I’ll apply for my mortgage, I will need to show how good my credit score is. I usually save money for short term goals, which are my trips, as that’s what makes me happy.
    Joanna recently posted…The best food I’ve ever had while travelingMy Profile

    1. I think when you have a goal and a sense of direction, you can achieve whatever it is that you want. That’s exactly what I think you are doing now. Keep up the good work.

  8. Well done on being debt free for 2.5 years, you have come a long way since your business tanked but well done for taking the initiative to create your own path

  9. Sitting down and writing 435 application shows how committed you are in your life. You wanted to succeed and you have made it. This is quite a good learning experience for me and my young family.

    1. Yes, commitment has always been my great strength. I realized during that time that if I quit, I would be subjecting my family to hardship. This thought came to my mind several times and I didn’t want that to happen. So, I persevered even when companies are turning me down left and right.

      It’s a good feeling that you find my story a good learning experience for you and your family.

    1. Thanks for finding it inspirational. This is the purpose of me making this blog posts. I like to inspire other through my thoughts and personal experiences.

  10. This is so great, Allan! I love that this wasn’t some call to a get rich quick scheme but an inspiring post about determination, hard work and sacrifice! Thanks for sharing!

  11. Your story doesn’t add up. Paying off 40k in debt and saving 70k in 30 months based on your numbers doesn’t work. Even if you were making 75k that is roughly 130k net during that time. 70+40=110k giving you 20k to live on or $150 a week.

    1. There are several sources for the total of 110K. It wasn’t just the paycheck I got but also the side hustles I did. Plus, I invested my money, which I had stock market returns in double digits for two years.

      I had several side jobs, which I indicated on the blog post. I did bookkeeping on the side. I helped people move their stuff. I sold refinished furniture. These are just some of the side jobs I had to do to pay off my debt and saved.

      1. It almost adds up using conservative numbers. I gave a higher income and I gave the investment returns up-front. He must have worked part time to get the additional $3.8k/year, which should have been mentioned since it’s significantly larger than the $300-350/year from helping with tax returns and flipping furniture.

        Debt: $40,000
        Main Income: $60,000
        Savings: $30,000 @ 50%/year
        Side income (help tenants): $1,000/year
        Side income (tax returns): $300/year
        Side income (furniture): $350/year

        1st year investment: ($30,000 + $1,000 + $300 + $350) x 1.2365 = $39,135
        2nd year investment: ($39,135 + $30,000 + $1,000 + $300 + $350) x 1.1612 = $82,195
        1/2 year income: $15,825

        Total 2.5 year savings: $98,020
        (Unmentioned side income): $3868/year

        Interestingly, he would still be debt-free and have a savings of $53,735 (not considering any debt interest) if he did zero side work. But maybe the extra time would make a normal person more likely to spend.

        All in all, congrats! I’m envious of your work ethic.

        1. Thanks and yes, there are side hustles that I did on the side. That’s the part-time portion.

  12. My husband and I just started to work on our debt. Your story is quite impressive. Although I don’t think we will be able to tighten out belt that much, I am a fan of using coupons and we do both have hobbies that offer a little extra income. We are going to be diligent about applying that savings to our debt!
    Molly @ Love the Everyday recently posted…Coping with Life ChangeMy Profile

    1. Each situation is different. I believe that you will always do well when you have a goal and stick with it. Thanks for finding my story impressive. Good luck on paying that debt off. You guys can and will do it.

  13. Wow that is incredible! Well done you seriously. We don’t even earn half of what you were saving in month! I would not mind having that much money going in the savers every month, the things we could do with that type of money.

    1. Thank you. It was one of the most difficult times of my life but I succeeded in what I wanted to do. I think with perseverance, patience, and some luck, you would be able to save more in the long run.

  14. That is amazing how much you were able to save each month. That takes a lot of self-discipline and patience to wait for things you wanted during those couple of years. And perseverance on applying for so many jobs and going through all the interviews to get the right one for you. Very inspirational!

    1. Yes. I was able to accomplish this arduous tasking because of my perseverance to get out of debt and discipline. My discipline gave me the strength to focus on what was at hand. It was easy to give up but I knew that if I did that, my debt would hunt me for a very long time. So, I decided to pay it off fast.

  15. WOW! I know quite a few people who could benefit from this post, me included. I don’t have much debt besides my mortgage and 1 credit card which isn’t a lot but I do need to control my spending. I have a bit of money in savings but think I really need to start saving more. Might implement a few of what you did and see the changes for myself.
    Amanda Love recently posted…The Jungle Book Cupcakes & FeaturetteMy Profile

  16. This is an inspiring story. Since a kid, I’ve always been afraid of incurring debts. I also keeps tab on my savings. Yet, there are circumstances, like a depreciating health of a family member, that can cause havoc to one’s finances. I’ve also looked into investing a portion of my money while keeping something for emergency. I learn a lot from your post.Thank you for sharing this.

    1. Thank you reading my post. I know where you are coming. I’ve been there and it is never an easy situation to be in. Investing a portion of your money and keeping some for emergency are good strategies. That’s what I have did in the past 2.5 years.

  17. This is such an inspirational article! I am happy for you – great results – and I wish you to have a debt free life 😉 Also, great tips in the articles linked in this one;)

  18. Great story Allan. It’s amazing what you had to go through. I can relate to you on that end.

    I admire the fact that when times were tough, you kept your head up. It’s definitely not easy. I know there are times when you’re just down but you don’t let that overtake you.

    I guess it’s because you had a strong and firm “WHY” which is your family. They were the reason why you were motivated to make things work out.

    I’m glad to hear that things have drastically changed for the better for you guys. You sure have an amazing story.

    On the side note, one thing that pops in my mind as I read your story is you can do consulting work. Your story is strong enough to change and touch lives. People will want to know how to save more and become debt free. You can cash in on that if you’re willing to learn the skills that will make it happen for you.

    Wish you and your family the best.

    Pete Zafra recently posted…How To Maintain A Positive Attitude: 6 Powerful Techniques To Keep Your Head Up When Life Tries To Force It DownMy Profile

  19. Your story is so inspiring! Life is like a roller coaster, it has its ups and downs but we should never give up, no matter how hard the situation is and find a way to move on! You did a really great job!

    1. Thanks. I learned so much from this experience. The best think I learned is to never give up.

    1. Coupons are among the best inventions of our generation. I don’t know if I can save as much as I can without coupons.

    1. I understand. Sometimes, the risks are greater than the rewards that you just need to walk away with the opportunities that are in front of you. Same thing goes with real estate.

    1. Thank you. Shocking as it is, these applications served as a proof that patience can go a long way.

  20. Your financial tips are quite valuable to me. Can tell you can breath a sigh of relief being debt free. Congrats!

  21. wow inspiring story! it just shows anyone can do it. just got to make some sacrifices and it will be worth it

  22. Man, that is amazing! I have nothing but admiration for you and your wife. You did more than well and I couldn’t help but feel proud for what you’ve accomplished! I hope you continue to save in the following years and secure a bright future for your kids! Congratulations on being debt free!

    1. Thank you very much. I never thought we would get pass this debt stage but we need with determination, discipline, and dedication.

    1. Thanks. That is the whole point of creating and publishing this post. I love for my story to help people realize that things can get better with discipline, action, luck, and time.

    1. Yes. Perseverance, determination, and discipline can make things happen even when things are hard to accomplish.

    1. That’s exactly what happened to me. I found a better job and saved tremendously. These two combined along with other activities I’ve done in the past 2.5 have contributed to paying off the debt and saving money for my family.

  23. Wow what an incredible story. That must have been so tough to stick to so well done you for getting to your goal of being debt free! Having that sum in the bank must be such a load off your mind.

    1. When I finished paying off my debt and looked into my savings, I felt relieved and happy that such painful phase in my life is over.

  24. wow this is amazing ..I really need help in this I am so happy to read this..thanks for sharing!! Your insight was amazing!

    Fashion and Travel

  25. Wow what an incredible read. Congratulations and thank you for sharing your saving techniques. I lived in DC for a 2 years and the cost of living is a little insane.

  26. Great post! I’ve never been in such a situation before, but I know a lot of people that have. It is not an easy situation to get out of, especially when you are unwilling to give up the non-essentials in life. You sound like you had your priorities straight though and stayed focused on the goal you were achieving. Well done!

    1. Yes. I was and am still focused. I believe that it’s one of the reasons that I was able to pay off my debt and saved money at the same time.

    1. Thanks. This is the reason that I made this post. I like other people to see that there are ways to get out of an unfortunate situation. May this enlighten some people who are in the experience as I was.

  27. I always love your tips. For us,it seems like every time we get ahead, something happens. For example, in the past 6 months we have had to replace our roof and completely redo our rental property (floors, counters, paint etc.) because our tenant destroyed it. It gets so frustrating. Granted it is a blessing that we had saved the money and were able to pay for it, but it seems like we can never get ahead!

    1. It seems like things happen when we least expected them. We go through these changes with or without preparation. The best thing we can always do is be prepared for the unknowns. My family decided to tackle our problem right away because we knew many things will happen to and we didn’t want this debt problem to mix with any other challenges we will face later on.

    1. I think everything is doable when you put your mind into it. It may be hard it the beginning but things can better and feel easier to do with time, practice, discipline, and perseverance.

  28. inspiring! i’m also a little bit of debt and feel overwhelmed. but after reading this i feel so much better about my situation. i now believe i can pay it off!

  29. I love so many things about this testimonial. The first, he paid himself first regardless of being in debt. So many people can’t make sense of building a cushion before getting to of debt, but it’s so important to prevent you from going further into debt. The second is his go-getter attitude. Many become overwhelmed by their debt and it leads to inaction. By creating a plan and keeping an upbeat tool, he was able to improve his financial outlook. That’s the smartest way to go if you need to defeat debt!
    Latoya @ Life and a Budget recently posted…Blogging Away Debt: Start a Blog and Pay off DebtMy Profile

    1. Yes, you hit the nail on that. I wanted to save just because something happened and I needed money. Since I was paying my debt, I didn’t want to borrow again to pay for any necessities that came my way.

  30. I agree that attitude is essential to starting your journey to get out of debt. Without starting there, you cannot overcome such a feat (financial or otherwise).

  31. Allan – this is so awesome. Kudos to you for making tremendous strides! I have debt that I’d like to see go away in the next year. I will definitely utilize this post as motivation. Thank you!

    1. Thanks. I hope you achieve your goal of getting rid of your debt by next year. Good luck and if you need any advice, please feel free to message me. I may not be a financial advisor but I can tell you other personal stories of mine on paying debt.

  32. That’s a great success story.

    You mentioned that you went to get your MBA. How did you manage to graduate without having any debt?

    I’ve seen a lot of interest around graduate degrees and if they are worth it. I’d love to hear your thoughts on the value you got from it vs what you paid.


    1. I saved enough and got a partial scholarship, which helped me avoid getting student loans.

  33. Great article – I love that this article is “Real.” Recently I read one about someone making a 6 figure income (as a single person w/ no kids) and “struggling” to save and pay off her debt. Hard to relate with numbers like that! I like that your story actually feels realistic to my situation and has tips that could actually help me!

    1. Thank you. While I was writing this article, I couldn’t help but smile on what my family has gone through. I smile because we were able to make it through and become a stronger family as a result.

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