From Six Figures in Debt to Six Figures in the Bank: How They Did It

Staring down any amount of debt can feel overwhelming. But when it’s in the six figures, it can be hard to imagine even getting back to zero, much less building up your savings, too.

If you’re looking at a mountain of debt, let these stories inspire you. The three couples below not only paid down six figures of debt, but now have a net worth in the six figures. Here’s how they did it.

“Two years ago, we had $107K of student loans. Today, our net worth is nearly $150K.”

John, 30, and Rachel M., 27, U.S. Coast Guard officer and stay-at-home mom in Cape Cod, Mass.

“When my wife and I tallied up our student loans in 2015, we learned we were more than $107,000 in the hole. We knew we needed to do something—fast. The idea that making some big changes in the way we managed money today could lead to financial freedom in the future was the motivation we needed.

Getting started:

We started tracking our spending carefully, which highlighted wasteful expenses that we eliminated. We went on fewer trips, stopped buying expensive groceries, gave up alcohol and put off big purchases we wanted, like a boat. With some work, we were able to set aside about 50 percent of our low six-figure income—and upped that percentage even more when we got raises.

We also picked up side jobs: Rachel sold handmade items on Etsy and I started a landscaping business, which brought in a few hundred extra per month. Eventually, we were contributing an average of $3,500 per month toward our loans.

We didn’t put every extra penny toward debt, though. It was important to us to work toward a positive net worth at the same time as we lowered our debt, so we invested. After about eight months of aggressively paying down debt, we began prioritizing our retirement contributions, ultimately maxing out our employer-sponsored plans and IRAs.

Crossing the finish line:

In just about two years, we’ve wiped out about $80,000 of student loans, which has freed up a ton of money. Not only does that allow us to invest more, but it’s given my wife the freedom to stay home with our newborn.

We do still have about $23,000 of debt to pay. But since the interest rate is about 3 percent, we’ve consciously slowed our progress in order to make our money work harder for us in the stock market. Today, our assets exceed $170,000—about $142,000 in retirement accounts, $26,000 in regular investment accounts and a small cash emergency fund—and we’re looking forward to growing it.