Raise Your Minimums to Climb Out of Debt w/ Joan Otto

NameJoan Otto

Joan Otto

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Why do you think it was so easy to fall into the debt trap?

“I don’t think in our case it was the “”racking up the debt”" that was the easiest part.

In my case, the debt was mostly accrued more than a decade ago – for health expenses and home repairs as a newly single mom. My husband had also accrued his debt before we even met, in large part for college expenses (at a time when APRs on credit cards were BETTER than those on student loans!)

The trap for us was the “”paying only the minimums”" mess.

We weren’t charging any more – but we were actually getting further behind every month. Then, when rough times hit and we missed a payment, the interest rates went up across the board, and our small payments were making even LESS of a dent!”

What was the defining moment that made you realize that you needed to get out of debt?

“When our daughter, Sarah, was diagnosed with Asperger’s syndrome in early 2011, everything changed. My husband, Chris, and I had always wanted to “be there” more in her life, but now, that became an absolute necessity. If we were going to make it through the rest of middle school and high school, at least one of us would need a work-at-home, flexible-schedule career. And more immediately, we committed to being able to home school Sarah, which brought with it some great possibilities but some unexpected expenses.

We had been making some efforts to pay things off before then, but that crisis just pushed us over the top. We were drowning in so many ways, and the debt seemed like something we could actually make progress on. We make a good income combined – it had always seemed like we “”should”" have a lot more to show for it!”

What obstacles did you have to overcome in paying off your debt?

“Well, there was the card with the$40,000 balance at its highest and a 28.99% APR… I feel like that’s enough of an obstacle!

We’ve since dropped that under $20,000 and negotiated the interest rate down to 23.99%, which sounds terrible but makes a big difference.

Our other biggest obstacles continued to be unexpected expenses, but our emergency fund and our hustling to make extra income have REALLY helped offset those!”

How much total debt did you have?


How long did it take to pay off your debt? (If still paying on it, list how much you’ve paid in what time)

Paid off $28,320.73 since Jan. 1, 2011. $61,366.50 to go!

What’s your best tip for someone finally want to get out of debt?

“My biggest tip is to make it MANUAL. Case in point, I keep a handwritten transaction register (http://manvsdebt.com/checkbook/). I almost never write checks, but there are still so many times when the bank hasn’t processed a charge yet or something, and if I simply went by their automated online statements, I’d be in the hole!

Same goes for bill-paying. I don’t like auto-debits. I want to do the work of making the payment each month, because that’s how I most easily spot something odd (like the time our electric company misread the meter and charged us about three months’ worth of use!)

It seems counter intuitive to a lot of people, but I find taking the time to keep track of my finances by hand has saved me time in the long run.

We still use services like ReadyForZero to help us stay on track – but they’re not “”how”" we keep track, if that makes sense. I know going into it what the dollar figures are, and the bells and whistles are just gravy!

If I get to have a bonus tip? Have an emergency fund of at least $1,000 before you start earnestly paying down your debt. I cannot tell you how many times in the past I paid something down only to charge it back up again because a car repair or broken appliance left me in the lurch!”

Check out Some of Joan’s Awesome Posts on Debt

  • http://www.facebook.com/joanotto Joan Concilio Otto

    Thanks for featuring my story! I just hope it’ll help :)

  • Jennifer

    this is helpful! We have begun the climb to get out of our debt hole, and needed some practical application tips! Thanks Joan!

  • Gene

    If Joan would be eligible for 0 % interest rates, it would help to get out of debt much faster. This is what I am doing every chance I get.