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How this couple paid off $65,000 in credit card debt and student loans in five years

Tammy and Dennis Gray eliminated tens of thousands in credit card debt through a process they call visualization.
Image: Credit cards
The couple used the debt snowball method, where you pay more than your minimum payment on your credit cards.Elise Amendola / AP file

Five years ago, Tammy, 52, and Dennis Gray, 54, owed $65,000 in credit card debt and student loans. After their son and daughter went off to college, the empty nesters realized they wanted more from life than being in debt.

“We knew we needed to do something because it wasn’t going to get better,” Tammy tells NBC News BETTER.

The Pennsylvania couple say they tried different techniques, but nothing worked. “We could never stay disciplined,” says Dennis, a pastor at a church in Kingston, PA.

The couple eliminated their debt through what they call “visualization.”

They combined the envelope system, a method of using visualization to stow away extra cash, with the debt snowball method, where you pay more than your minimum payment on your credit cards.

The couple also made moves to reduce their spending. They began eating less expensive meals, and cut back on things they didn’t need, like cable. They say switching to an antenna, which provided 20 channels for free, saved them a big chunk of cash each month.

How the envelope system works

Figure out the categories where you tend to spend the most. For example: Mortgage, savings, car payment, bills, credit cards. Designate an envelope for each category.

Every time you have extra cash, you’ll put a percentage in each envelope. How much will depend on your unique needs.

For example,

  • Mortgage: 50 percent
  • Savings: 10 percent
  • Car payment: 10 percent
  • Bills: 10 percent;
  • Credit cards: 20 percent

Tammy, a missionary, says the envelope system allowed them to see what steps they needed to take to get out of debt.

“It just became very clear how to make the money work,” she says.

Tammy says using an electronic version of the system allowed her to automate money from her paychecks directly into each category.

“You don’t have to think about it, once you designate that’s how you want to break it down,” she says.

Combining the snowball method

After sitting down with a financial coach, the Grays say they were shocked to see how much money they were paying in interest on credit card debt.

“I remember crying,” says Tammy.

“What opened up our eyes was how much interest we paid on the credit card alone, not counting the principal,” adds Dennis. “That really motivated us to pay it off quickly.”

The Grays began to apply the “snowball method” to paying down their massive credit card debt.

The method requires you to pay more than what you owe on your minimum monthly credit card payments. How much you contribute will depend on your unique needs and circumstances. The key is to continue paying it off at the same amount or more, even as the amount you owe decreases.

Over time, the Grays’ credit card debt began to go down, which means they could increase the amount they contributed to paying off their debt.

After five years, they made their last credit card payment in September.

“That’s an amazing feeling,” says Tammy.

Now that their credit card debt is eliminated, the couple is focused on paying off their home loan. Since they no longer have to pay off credit cards, they can afford to double the monthly payments to their their mortgage.

The couple say their son and his wife, recently married, plan to use the same system to manage their own money.

“My heart is very emotional that they won’t go through what we did,” Tammy says.


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