First Person: I'm Ending the Year Debt-Free

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For almost a decade I felt like my debt was insurmountable. I was over $25,000 in debt and although I was paying the minimum on everything, I couldn't seem to get out of debt and the dollar amount seemed to continue to grow. All through the last year I've been massively paying off my debt, here is how I finally managed to become debt free.

Call Your Creditors

Yes, I know that this step is emotionally draining, but it's necessary. If the creditors don't know what's going on, they can't work with you. After explaining my situation I was able to negotiate much of my debt down and drop a lot of interest. This helped to make my debt more manageable.

Stick To The Agreement With Creditors

Many of my creditors were willing to make a written agreement with me and allow me to pay reduced amounts on my debt for specified amounts of time. As long as I didn't miss a payment I was allowed to continue until I either paid off the debt or the end of the agreement (at which point you can often renegotiate the agreement).

Every Windfall or Bonus

I applied every windfall or bonus I received to my debt balance. Although it was tempting to run out and buy stuff, I realized I really didn't need more stuff, I simply needed to be debt free. These lump sum payments happened to me several times this year and I put all of it toward becoming debt free. We paid off the last of the debt with part of an inheritance we received. It was so tempting to just spend it on ourselves, but we didn't, we paid off the debt.

Use It Up: Wear It Out

When I was growing up my mother had a saying, "Use it up, wear it out, make it do or do without". I followed this mantra and refused to buy something new just to have something new, instead, I used things up.

Creditors Who Are Difficult

I had one creditor in particular who was very difficult to pay off. They offered me a settlement and I accepted that offer. I drafted the check and they presented it to my bank but, since it was a larger amount than I normally write for a check the bank refused it thinking it was fraud. When I found out the following day I called the creditor and the bank. I finally wound up on a 3-way call with the bank and the creditor to get the issue resolved. The creditor deemed the check invalid and wanted to add $1000 to the final amount. I refused since I had written the check, the funds were available and the bank was in error. After spending from 8:00 a.m. to 4:30 p.m. on the phone off and on with the creditor and the bank, the bank suggested a wire transfer.

Since the bank had created the issue with their error they paid for the wire transfer fee as well. The stress that day was horrendous but it paid off in the long run. The bank also sent me verification that they had made the error which I keep with my records.

Dig in your heals and stand up for what is your right. It was my right to pay the lower amount as the bank had made the error. Through perseverance and determination I was able to work it out.

Staying Out Of Debt

We desperately needed another car. Although we had the funds to buy something fancy or newer, I chose an older 1990 car that is very plush inside and in excellent working condition. One of my sons rolled his eyes but it was a wise decision. We paid under $3000 for the car and it only has 125,000 miles on it. Most cars of this brand go well over 250,000 miles so we should have many good years with this car.

Now that we are debt free we fully intend to stay this way. We've paid off all our credit cards, all of our creditors ($25,000 worth) and set aside some money for emergencies. We have also been able to enjoy a few goodies but nothing fancy and nothing brand new. The wealthy don't get wealthy overnight, they do it by slowly and methodically choosing where they spend their money. I doubt we'll be wealthy but at least we'll be comfortable. How have you paid off your debt this year?

*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.

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