My Epic Journey Out of $30,000 of Debt

No matter how long you’ve been frugal, just about everyone wrestles with large bills and debts at some point in their lives. You’ll be going along fine and something blows you out of the water. Maybe it just wipes out the emergency fund, or maybe it does a whole lot more damage, leaving you in a deep dark hole that you slowly have to dig out of. It could be medical, legal, or some act of God that just cleans you out above and beyond anything you can prepare for. (I live in Tornado land, I’ve seen this first hand!)

In my case, I was hit with a string of huge life events over several years that made it feel like I would never climb my way back out of that hole. And let me tell you, the truth really is stranger than fiction. I could not make up the crazy stuff that’s happened to me in the past few years. If I can pay off $30,000 in medical, credit card and consumer debt, anyone can. Let me tell you my story.

Spending some family time hiking at Starved Rock State Park shortly after the divorce.

Me and my older boys at Starved Rock State Park shortly after the divorce.

I’ve been frugal for most of my adult life. In 2007, my world got shaken up for a while and just kept going. I got divorced after 17 years of marriage, most of which I spent as a stay at home mom. I had worked on and off, but had dedicated my life to raising my children. I found myself with no job, no support system and (regrettably) no lawyer. It didn’t help that I was also severely depressed after years of being told I couldn’t do or be anything beyond a simple housewife.

For a while, I actually believed that. It was a deep, very dark hole. And without anyone fighting for me or supporting me, I lost almost everything. My ex husband made six figures and wasn’t about to lose the house, the kids, or anything else. This was his home state, and he was surrounded by family and friends he’d known since childhood. I’d been isolated for years and had none of those luxuries. What he promised would be an “amicable” divorce, turned out to be a nightmare. But there is no such thing as an amicable divorce. In fact, they are all nightmares.

I had all of my health checkups and routine tests done because I knew I would lose my health insurance in the divorce. Two days after my divorce was finalized, my very first mammogram came back with a lump on it and I had to go in for biopsies and extra testing. It was frightening, but everything turned out to be ok. But that peace of mind cost me a chunk of change at a time when I had none. I tried to make the best of things, cramped into a tiny apartment and seeing the kids as often as I could.

Sledding in winter between the apartment buildings in 2008.

Sledding in winter with son #3 between the apartment buildings in 2008.

Credit cards and a small amount of temporary alimony was the only way I survived as I searched for a job and went back to school. Eventually, I was able to start a career in IT making entree level pay (about $10-$15/hr), but now I also had a student loan payment for the next 15 years. For a while I worked two jobs and went to school. Any free time was spent with kids. Things got better, and I was able to find a nice little house to rent so I had more room when the boys were over. As soon as I moved and finally had some money, my ex husband took me to court for child support. This time I did hire a lawyer (more $$$). It  was a big, long, crazy costly mess.

Shortly after, I met my current husband, got engaged, had a baby and got married. In that order. And went on an unpaid maternity leave. We paid cash for everything we could, but of course there were more bills, especially medical ones. Somewhere in there, my oldest son came to live with me, graduated high school, went to college, and then later moved in and out a few times. All during which I was still trying to pay off credit cards, pay child support, and pay for daycare. I found myself drowning in bills despite my ninja frugal skills. Many, many times I had to choose between food and gas to get to work just so I could do it all again.

Baby #4 arrived in 2010. My husband and I were both 40. What a surprise!

Baby #4 arrived in 2010. My husband and I were both 40. What a surprise!

I had read and reread Dave Ramsey’s book, The Total Money Makeover many times and tried to implement his baby steps to climb out of debt. The problem was, it was hard to even get Step 1 done (save $1000 in a small emergency fund) because money was stretched so thin. A lot of that was credit card and medical debt. I tried negotiating with the credit card companies and the hospitals to get the payments lowered and give us more time.

That worked with varied results. The hospitals at the time were much better to work with than the credit card companies (I’m not sure that’s true any more). GE Money, which handled my Walmart card and my Paypal Plus card, were the worst. For some bizarre reason, the Walmart card side of things were great, but the PayPal Plus side was a NIGHTMARE. They would charge the wrong amount, go back on agreements, try all kinds of bizarre tricks. I documented every call  made over the course of a year and who I talked to. I could not get a straight answer navigating their nightmarish maze of automation and customer service reps.

Finally I decided to go with a local, reputable consumer counseling credit service (CCCS). The one in Peoria, IL had been around for over 40 years helping people get out of debt and they were wonderful. They were able to get all of my interest rates down (in some cases, to 0%) and together we came up with a reasonable five year debt management plan. All of my credit cards were closed, which was fine by me. I never wanted to see them again.

My family could breathe again, barely. Every time we thought we’d see a savings, such as lower daycare rates as the baby got older, the rates would get hiked, or gas and food prices would increase, but at least we could now keep up. Every month, I’d go in to make my payment and chat with the ladies in the office. They offered all kinds of programs to help people manage their money better and stay out of debt.

Our famous "Fiesta Graduation Parties" for my oldest two sons.  Despite being crowded into a two bedroom house, we managed to  have plenty of frugal fun.

Our famous “Fiesta Graduation Parties” for my oldest two sons in our very crowded two-bedroom rental house. We still managed to have plenty of frugal fun.

Over time, I got a few raises, my older kids grew up and left home, and my teenager came to live with me. No more child support, but plenty of challenges. When I could, I made extra payments to my debt management plan. Usually I’d throw part of our tax return or a raise towards it. Things were looking good. Then our rent was raised to a ridiculous amount, the water bill tripled and payroll taxes in Illinois went up by 66% overnight. Our lovely politicians had voted in the middle of the night to raise them while everyone was sleeping. Nice. Every gain seemed to be met with a setback, but the baby’s medical bills were finally paid off (using Christmas money, birthday money, tax refunds, and whatever else we could scrounge).

We were getting crowded in the small home we were renting, and it was definitely time to find our own place. There were some great programs for veterans being offered in Illinois, including a $10,000 grant for buying a home. CCCS also helped by giving me great references since I could show I was paying my bills off on time and had a great payment record. After a year of intense house shopping, we were able to buy a hundred year old farmhouse on five acres of land in a gorgeous part of the state. The entire process was a total nightmare, but with the help of family and friends, we got an amazing deal and moved in.

Our beautiful, "as is" farmhouse is in great shape, but still needs some TLC. It's a work in progress, like everything else.

Our beautiful, “as is” farmhouse is in great shape, but still needs some TLC. It’s a work in progress, like everything else.

Strangely, our entire budget came out dead even. Owning a house on five acres + taxes cost the same as renting the flimsy two bedroom home we were squashed into before. We were on a well, which eliminated the water bill. Daycare was much cheaper, but I had to commute 125 miles a day (round trip), so the gas budget was more and I had less time at home. A garden helped with the food bills, and we even started raising chickens. I continued to throw what I could towards the debt management plan, which was still shrinking.

Shortly after, we found out there was another baby on the way. Through the pregnancy I commuted and tried to keep myself healthy. I had a normal delivery and was only in the hospital for 36 hours, but the bills came out to over $6000 after health insurance paid their part. Crazy.

Baby #5: worth every penny of the medical bills

Baby #5: My unexpected angel was worth every penny of the medical bills

We managed to make our way through another unpaid maternity leave, and continued to keep everything paid. But there was no room at the daycare for the baby, so they would have to go back to the more expensive one near Peoria that we’d had our little boy in before. And now we’d be paying twice as much. I’d be hauling two tiny children over 60 miles each way every day, while nursing. I returned to work in November, dreading the bad weather I knew we’d all be driving in and wondering how we’d be able to afford Christmas at all.

Then a tornado hit Washington, Illinois and wiped out a good part of the town. All the windows of our daycare’s infant room were smashed out. The tiny apartment I had rented during the divorce was completely destroyed. The whole town looked like a war zone! Thankfully, this was on a Sunday, casualties were low. One man died, which was still very unfortunate, but it could’ve been so much worse. The tornado had literally gone between two churches full of people during worship service. Insane.

My old apartment building. I lived on the top floor of the first building on the right. We used to sled down the hill between the buildings in the winter after a good snowstorm.

My old apartment building. I lived on the top floor of the first
building on the right. Compare this to the sledding picture earlier on this page!

This meant I had no daycare for the kids for a while. We made emergency plans to put them in the small, more affordable one close to our new home, and that arrangement stuck. It was about half of what we’d been paying in Washington. With the savings, I was able to pay off the debt management plan completely in four years instead of five. More breathing room!

We were still dealing with the baby’s medical bills and the hospitals were incredibly aggressive this time around. I didn’t know where I’d come up with $6000 to pay them off. I was still commuting 125 miles a day through crazy winter weather, still nursing, and so exhausted I nearly crashed a few times. After a couple of very close calls in the same day, I knew it was time to find a new job. I had been looking on and off for a while, and finally found one close by. I would have to take a big pay cut, which came out to exactly what I was paying in gas to commute so far. I figured I had really taken that pay cut when I moved.

So I changed jobs and changed industries in the middle of winter. I had a new office and a shorter drive, and lots to learn. Two weeks later, my car broke down and ate up our entire 2014 tax return. We had record cold weather that year, and my husband could not get outside to work on the car. He’s a master auto mechanic and has the skills, but we had a tiny one car garage full of stuff and no place but outside to do repairs.

The hospitals were now threatening to sue over the medical bills, even though the baby was only 6 months old. I decided to cash out my 401k from my last job and pay it off. I didn’t have much in there. I had stopped contributing years before when I had started paying child support. So the money was what the company had put in for me. 3% of my salary for several years. After paying taxes on it, it was enough to cover the medical bills and refill our emergency fund. So we did it, and finally found ourselves completely clear of all of our debt except my student loan and our mortgage.

The little guys are getting bigger. I still drive 70 miles a day between daycare and work.

The little guys are getting bigger. I still drive 70 miles a day between daycare and work, which are in opposite directions.

Seven years of craziness. We accomplished a lot in that time, and had some really awful setbacks. Some were our own fault, some were caused by others, some were random acts of God. I tell you this long, crazy story to show you that it IS possible to pay off huge amounts of debt even when the sky is literally falling. Not everyone would agree with some of the choices I’ve made. Looking back, I kick myself for some of them. But I did the best I could with what I had at the time. We can’t go back. We can only go forward. Maybe that’s a blessing in disguise.

Unfortunately, the sky is still falling. Kind of. My husband has been laid off twice in the past year. It’s always been our goal to survive on one income, and we’re almost there. Unemployment is helping for now, but will run out in November. Hopefully he’ll find something by then, but if not, we’re looking for other ways to get through it. We know we will. We always do. We do our best with what we have and keep on going.

Counting blessings and dandelions on a beautiful day.

Counting blessings and dandelions on a beautiful day at our farmhouse.

Some Takeaways: 

Here are the things I’ve learned through this process:

  1. Your debt does not define you. You are still you regardless of what’s in your bank account, or what isn’t. In fact, nothing you own or don’t own defines you. You define you.
  2. Don’t let other people tell you what you are worth, or are not worth. Your worth comes from inside of you, and also from God. It doesn’t come from other people.
  3. Keep going no matter what. Always keep the end game in mind and try not to get distracted or discouraged by the crazy things life throws at you. They are almost always temporary, though it may not feel like it at the time.
  4. Tomorrow always comes, whether you want it to or not. Try to use your time wisely and meaningfully, especially with family.
  5. Your kids will grow up so fast your head will spin. Treasure every moment you can with them.
  6. Enjoy whatever season of your life you are in, no matter how hard it may seem right now. Look for the good.
  7. Never give up. Never.



  1. selena says:

    If a person finds him/herself in need of a lawyer as you were, please investigate low/no cost legal services in the area. There are lawyers (and firms) that do pro bono work. I’d urge you to post on trusted forums/websites asking for suggestions in your state/area if need be. I wish I had been in touch with you, I’d have done all I could to find you a lawyer.

    As to contributing to a traditional 401k (not a Roth 401k), a 2% contribution usually does not affect the net amount of your paycheck. And the beauty of 401k (and HSA) contributions is you can change the percentage at any time. While we should all strive to keep retirement savings for retirement, IMHO it is the emergency funds emergency fund for necessities. Necessities such as food, medical, housing, reliable vehicle, utilities qualify in my book. I even told my financial planner this is my thinking.

    I suspected the VA financing was an option for you, you confirmed it. I’d also to mention USAA. I have my credit card through them and I’ve been happy (I do pay my bill in full each month). Unfortunately since the financial meltdown, non-military cannot be members. I cannot attest to how competitive their products are but worth a look-see for those who qualify.

    I too am in IL – the financial issues of the state have been building since the 1940s (despite my local senator’s attempt to tell me otherwise). To solve we need revenue and prudent spending. Our income tax is too low and should have never been cut. It needs to be tiered IMHO – 3% for those making $50K and under and at least 2, if not 3 more tiers above that. Property taxes are my biggest tax expense and I have but one option to lower them (and even that isn’t a guarantee). Off my political soapbox but I still think IL is one of the better states in which to live. Cost of living is reasonable and our weather, despite tornadoes and snow, can’t be beat.

    Unemployment – when my last job ended, supplemental pay was part of my agreement (I knew the job was ending and made the short list to stay to the end). My “severance” was decreased by the amount of my unemployment. This caused me to collect unemployment sooner than I needed. As a side note, FICA was not withheld from my “severance” but given other income, it did not negatively affect my SS wages for the year. Companies can no longer neglect to withhold FICA as as the result of “US vs. Quality Stores Inc”. Every two weeks I had to go online and “register” to get my “severance”.

    I was burned out after that job ended plus the federal budget impasse pretty much dried up job postings for a few months. Unemployment and “severance” ended by then and extended UE went away at the end of 2013. Knowing my job was going away, said job lasting 1 1/2 years longer than I was originally told, and preparation allowed us to weather the storm. I know have my dream job – doing what I like (IT for me too) and from the comfort of my own home. Job is a challenge and a lot is expected but I wouldn’t trade it.

    The next financial part of my life has started – getting set for retirement (almost 15 years away for me but not for the spouse). In January we start our five year plan to get the house paid off.

    • Kim Tilley says:

      Selena, There are definitely things I would do differently if I could, especially not having a lawyer. That mistake cost me a lot more than money. Lawyers really can be worth their weight in gold! I just wish I hadn’t been so depressed and isolated at the time, so I could see that. But I am putting it all out there, hoping to inspire those who may be in similar situations or about to make the same mistakes. I wouldn’t wish this stuff on anyone. At the same time, you can survive it. It’s not fun, but it can be done.

      That’s amazing that you’re also in IT and in Illinois! It really is a small world. 🙂 So glad you had that much time to prepare for your unemployment and that you now have your dream job! Congratulations!

      Unfortunately, my husband hasn’t had much notice with his layoffs. The auto industry got hit so hard in this recession. He had done well fixing farming equipment, but now that side of things is taking hits. He knows so much and is getting older. I’m not sure how much longer he can take the physical aspect of his job, though he’s in great shape for his age. I’ve told him maybe it’s time to use his experience in a different way.Perhaps through teaching or doing something online.

      We are so close to living off one income, but of course the real goal is to be financially independent. That means getting the student loan and house paid off. I’m not sure how fast that can happen with two small kids still in daycare. It’s like having two mortgages right now. But I love them at this age, and I know they grow up way too fast!

      Congrats on getting ready to start your five year house payoff plan! That’s fantastic! Would love to hear how that goes!
      Kim 🙂

  2. selena says:

    I hear you on daycare being like a 2nd mortgage. For a brief time, day care was more than our mortgage (thankfully our mortgage payment was not all that much).

    “Participate in this conversation via email” – does that mean you can reply by email or your reply turns into a private conversation?

  3. selena says:

    Also, paying for childcare using the Dependent Care benefit (if available) can mitigate the expense. This is a use-it-or-loose-it type of account and your provider has to claim the money to the IRS.

    • Kim Tilley says:

      Yes, I’ve tried it both ways (can only do one or the other)- childcare benefit claim on the taxes or using a pretax Daycare Flex HSA. I’m not sure those are the correct names for them (brain is foggy this morning). I found the daycare flex HSA to be such a hassle that I prefer to use the tax claim instead.
      Kim 🙂

  4. selena says:

    Technically it is a Dependent Care FSA. I will admit when the DC FSA first came into my life, it was easy to use. I got “vouchers” which I submitted to my provider. I could take the money out in “unequal” increments so I took it out the first few months of the year. I paid my provider monthly but I can’t remember the face value of each voucher. I was paid once a month at that time and wish I still was. Made budgeting easy IMHO but I’ll admit my transition from bi-weekly to salary was painless due to being at the same company.

    If I remember correctly, it did change over to filing for reimbursement but details are fuzzy.

    Again, my “first” experience with DC FSA was 25 years ago. If memory serves me (and that is a roll of the dice these days lol), claiming child care on your taxes was income based. It very well may still be that way.

    • Kim Tilley says:

      There is the Earned Income Tax Credit, which is income based, but there’s also one that you can claim if you’ve paid daycare because you work, regardless of what you make. It maxes out at a fairly low amount, but at least you get some credit for the money paid out during the year. You can use that, or the DC FSA, but not both.

      I found it easier to just deal with that once a year rather than constantly submitted receipts to FSA so I could get reimbursed for money that was taken out of my check before I even spent it on daycare. Things were so tight that the arrangement created some financial hardships when it initially kicked in, which of course was right after Christmas, in the middle of winter weather, high heating bills, etc. It’s just easier for me to keep it as simple as possible with all these little guys running around!
      Kim 🙂

  5. selena says:

    I think we’ve covered all the options to save tax dollars when paying for childcare!

    We were also able to negotiate a lower rate for before/after school care. They were at the providers just in time to catch the bus and my husband would pick them up within 30 minutes of getting off the bus. At that time, we had been long time clients who always paid on time. So also an option to save some money if you and your spouse have flexible hours or hours that can make such an agreement work.

    • Kim Tilley says:

      LOL, I think we have! Right now the in home daycare we have our youngest boys in is very affordable and DCFS licensed. My husband has known our provider and her family for 20+ years. It’s a good arrangement for the kids, who are 2 and almost 5. We’re paying the same amount for both of them that we paid for just one at a the daycare center. My husband also watches them a couple days a week and then job hunts on the other days. Best we can do at the moment.
      Kim 🙂

  6. selena says:

    Perhaps I am just not patient enough (wouldn’t be the first or the last time in my life) but my “reply by email” hasn’t shown up yet. So I’ll risk a double post.

    Because that is how I am lol.. I looked back to 1990 instructions for claiming credit for dependent care expenses. It was a hard dollar limit for married filing jointly so using the DC FSA was our only option.

    Also, dependent care is just not for children under age 13. A disabled child or you an adult for whom you can claim as a dependent (your parent or in-law for example), you may also be able to take advantage of the DC FSA or dependent care credit.

    • Kim Tilley says:

      The comment did show up, but in my queue to approve it. They should just show up. I have them set to be auto approved after someone has posted here a few times. I’ll look into it tomorrow and see if I can figure that out why it’s doing that. Sorry for the inconvenience!

      As far as the taxes go- there is also a claim that runs out when the child turns 17. Can’t think of it off the top of my head. My third son just turned 18, so we lost that one last year for him.
      Kim 🙂

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