May 21, 2007

How to pay off $300,000 of debt

I usually steer clear of war metaphors when writing about money, but for anyone who has faced down a mountain of debt, it can indeed feel like a never-ending battle.

By MP Dunleavey

Editor's note: Join columnist MP Dunleavey and a group of women as they seek to strip away the myths around money, liberate themselves from debt and find financial sanity. Follow the quest of the Women in Red every other Wednesday in Dunleavey's column on MSN Money.

How can you possibly win when the odds are stacked high against you?

As a fierce battalion of the Women in Red has found -- call this group Company C, for cocky, courageous and a little bit crazy -- the best way to beat debt is to band together, damn the interest rates and take the enemy by storm.
The birth of the racers
As Becky Purvis, 28, of Raleigh, N.C., describes it, the idea for an all-out assault on debt began in September on the Women in Red message board and gained strength slowly.

Someone suggested forming an online group dedicated to paying off debt, Purvis recalls, "and everyone said, 'Yeah, that's a great idea,' but then nothing happened."

Armed with a good $25,405 in credit card debt, student debt and car debt herself, Purvis started the Women in Red Racers to inspire other women to join a collective effort to vanquish their debt once and for all.

The rules were simple:

* Tally your debts and post them for all to see. Some people included mortgage debt; some didn't.
* Post monthly updates about how much you paid down -- or didn't.
* Don't give up.

A daunting battle
Consider what the Racers were up against:

Collectively, the 80 or so women who joined the thread were carrying more than $2.8 million in debt. Eleven people joined with over $50,000 in debt (most of those women included their mortgages), according to Megan Paterson, 29, a Washington, D.C., area woman who fell into the role of group accountant, keeping a detailed spreadsheet of each person's debt and payments.

"People were in such diverse situations," Paterson says, from a college student with $10,000 in credit card and car debt to a professional couple with $520,000 in debt, including two mortgages and about $130,000 in student loans. The top debtor, so to say, claimed more than $45,000 in nonmortgage debt.

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