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Use The “Savings Triangle” To Pay Down Debt Faster

I paid off $80,000 in debt in 3.5 years by using what I call the Savings Triangle: Cut spending, increase earning, then automate and optimize.

When U.S. News  ran a story earlier this year about how I paid off $80,000 of debt before turning 30, I was flooded with emails from new and existing readers wondering how I did it. Even veteran finance journalists were curious.

I’ve written a lot about debt in the past – from this single post condensing everything you need to know about kicking debt’s butt to a more detailed seven-step series. You can read about my experiences with tools like balance transfers, peer-to-peer loans and debt management services (yes, at some point, I tried them all).

But today I want to share a bit about how I put it all together to reach my goal of being free of debt.

First, accept that it’s hard!

If you’re committed to getting out of debt, you have hopefully learned a lesson or two about credit. Having been through the fires of debtor’s hell myself, I’m extremely credit-shy now. I have a mortgage (which I look forward to paying off) and I use two credit cards that I pay off monthly. But I’d be extremely reluctant to borrow money ever again.

The reason is simple. It’s far easier to get into debt than get out. With a single pen stroke, one can invite a burden that takes a lifetime to repay: a loan for a $30,000 car, a $100,000 college degree, or a $300,000 home.

This is what makes getting out of debt so hard. Unless you’re the fortunate beneficiary of a windfall, you can’t wipe out your debt overnight; paying it off will take months or years of sacrifices. It’s no different than losing weight – millions of us would not struggle with keeping off the extra pounds if there were an easy solution.

Once you acknowledge getting out of debt is a war, not a battle, there are three areas in which to focus your planning.

The Savings Triangle: Spending, Earning, Automation & Optimization

The Savings Triangle provides 3 areas in which to focus when you're trying to save or pay off debt.

I began taking on debt in college – a combination of student loans and credit card debt – but didn’t get in super deep until a couple years after I graduated, when I had maxed out several credit cards and added a car loan to the heap. By the time I was 25, I was trying to live anywhere but at home with my parents, and between the debt and the rent I was running out of options.

This is about the time the stress of my debt started making me physically sick. My blood pressure and heart rate went through the roof to the point I couldn’t sleep because my heart was beating so fast. I developed vitilago – the permanent loss of pigment in patches of skin. My doctor did all the tests, but all was normal; this was just stress.

This is about the time I began writing Money Under 30 and also reading other personal finance blogs like Get Rich Slowly and Consumerism Commentary. I got introduced to Dave Ramsey and listened to his radio show from time to time.

The concept of frugality and budgeting wasn’t new to me – my father was frugal and I had read personal finance books before – but I faced two challenges:

  1. I was already so tapped out, there wasn’t much spending to trim.
  2. No matter how hard I tried, I couldn’t give up the small indulgences like coffee or the occasional night out with friends (and I really didn’t want to).

I don’t have a tome of academic papers to back this up, but I suspect people have innate tendencies to save or spend just like we lean towards introversion or extroversion. And I definitely lean towards the spending side of the room.

Despite my predisposition to spend, however, this is where I began my battle with debt: cutting back.

1. Spending

Just like every other advice columnist says, budgeting and watching your spending should be everybody’s first weapon of choice against debt. First, you must stop the bleeding. This is why it’s the first leg of the Savings Triangle.

Get data (don’t assume)

If you haven’t already, track every dollar you spend for two or three months. This is a tedious process, although apps like these make it easier. The data will reveal invaluable information. If you guess how much you spend each month on different discretionary expenses – eating out, groceries, entertainment – chances are you’re actually spending much more than you think on one or more of those things.

The easiest way to trim spending is to get rid of things you’re not using or really don’t need (think subscriptions). Cable, the gym, your meat-of-the-month club. One phone call can save you money every month.

Of course, trying everyday to pack a lunch or refrain from an afternoon coffee will save you some money, but it will also be painful.

Attack your biggest expenses first

Finally, there’s the option I took – radically reduce your largest expenses. At one point I made a huge mistake and rented my own apartment for $1,000 a month. I saw it as a sign that I was a “real adult,” and I loved every minute of it. Problem was, I couldn’t really afford it, I had only tricked myself into thinking I could. So when I got serious about paying down debt, I ditched it in favor of another rented room in a shared house, reducing my rent to less than $500. I lived there until I moved in with my now wife.

Moving is a big change – and not everybody’s a transient, single 25-year old – but if you can reduce your housing payment either by moving or by taking on a roommates, it’s the easiest way to free up a big chuck of extra cash each month.

2. Earning

Even after I had ditched the apartment, canceled the gym membership and clamped down on daily spending as much as possible, I was still looking at more than five years to pay off my debt (all the while living a very Spartan lifestyle).

And the other thing about my debt that frustrated the heck out of me was how it limited my choices in life. I would’ve loved to travel more in my 20s and I would’ve liked the option to go to grad school – something I never considered because I couldn’t afford more student loans.

I didn’t want to be stuck like that forever, or even for five more years.

And that’s why I got second jobs.

If you’re serious about getting out of debt, find a way to earn more money.

Again, this was easier for me as a single 25-year old than it will be for a working single mom. But almost everyone can find some way to bring in a few extra bucks. I chose to work at Starbucks on nights and weekends. I would go to my day job at 8, work until 5, battle rush hour traffic for 40 minutes to get to Starbucks by 6, then sling lattes until 10.

Soon, I also started staying up until 2 a.m. to work on this blog, which eventually became an income source, too.

Now a single mom might not be able to take a second job, but could babysit for other parents on the weekends or start a blog or eBay business. There are always options for earning money on the side if you’re willing to make the sacrifice.

No, a side-hustle is not an overnight solution. No, it’s not glamorous. And no, it’s anything but easy.

You will have to give up your favorite TV shows, sleep and – sometimes – even time with friends and family.

That’s why it’s called sacrifice.

But, hopefully, these are short-term sacrifices that will lead to long-term gains. When you’re out of debt, you’ll have more money and more time! How awesome will that feel?

If there’s one piece of advice I can instill in you, it’s to seriously pursue ways to increase your income. If somebody has a story that involves paying off a lot of debt in a short amount of time, there story almost always involves working on the side or starting a business.

And though it may seem like it now, you won’t be alone. I know people who have professional day jobs of all kinds: They are lawyers, bankers, teachers, software developers, nurses, massage therapists and foundation managers.

They all hustle on the side.

They cater, coach, tend bar and blog. They teach, they write, they’ll clean up your yard. They design and code and fix your IT. They babysit and dogsit and work at the mall. They photograph, bake, or deliver the goods. They stock shelves and pick orders and the answer phones.

That’s not just a random list: I have done or know someone who has done all of those jobs as second jobs at one time or another!

If you want to get out of debt faster, find some ways to earn more money!

3. Automation & Optimization

Too often, we focus on this last step first, when it should come last. It’s important to automate and optimize your finances when you’re trying to get out of debt, but if you don’t address your spending and earning first, having the right payoff priority won’t help you.

To me, automation and optimization is about using technology and financial products to make reaching our savings goals easier.

It means:

  • Establishing automatic monthly debt payments.
  • Cancelling credit card accounts.
  • Paying the lowest interest rate possible.
  • Allocating your debt payments correctly.

Create a positive default behavior

Automating your monthly payments and cancelling unnecessary credit card accounts are more important steps than you might think. Studies of human behavior show that every time we make a decision, we are most likely to choose the default.

If we’re served fries with lunch but could ask for veggies instead, we’ll likely accept the fries. If, however, lunch comes with veggies but we’d have to ask for fries, more of us would go with the healthy option. If our employer automatically enrolls us in a 401(k), most employers will participate. But if we have to enroll ourselves, many of us won’t.

The same thing is true with savings and debt: If you make it easy for yourself to use a credit card, you will. If you set up an extra automatic payment of $200 to your student loans each month, it’s less likely that you’ll call up your bank to cancel that payment one month so you can go out a couple nights instead.

Details: Pay off method

So much has been written about debt pay off snowballs and avalanches and other pay down strategies, but we don’t talk about them that much here on Money Under 30.

(To the uninitiated, a debt snowball is when you pay off your debts with the smallest balances first whereas the avalanche is when you pay off the debts with the highest interest rates first. The avalanche saves you the most money but the snowball is often more rewarding because you feel like you’re making progress sooner).

And the reason I don’t write about them that much is that your debt pay off method doesn’t matter if you’re not working to increase the amount of money available to pay down your debt! 

Once you’ve done that, then you can take the time to choose a pay off method that works for you and stick to it.

Details: Interest rates

Last but not least, it pays to pay attention to the interest rates on your debts. Could they be lower?

Student loan interest rates are typically fixed, although consolidation that reduces your interest rates is sometimes available for private loans.

With credit cards, you can always try to get a better interest rate by simply calling your bank and trying to negotiate a lower APR by threatening to transfer your balance away. The key is to not give up. Call twice a day every day until someone says yes. (Admittedly, this works better if you haven’t missed payments or maxed out your card.)

Finally, if you have strong credit, doing a balance transfer to a 0 percent credit card isn’t a terrible idea as long as you stop using credit cards for new purchases! You can see how much you might save now with our balance transfer calculator. 

Putting it all together

The Savings Triangle isn’t some radical new theory on personal finance. (Managing money is pretty simple, so it’s hard to turn it on its head!) Rather, the Savings Triangle is a simple way of thinking about the big ways you can pay off debt faster:

  • Cut your spending (look at the biggest line items first!)
  • Earn more money (hustle!)
  • Automate and optimize your pay off (make it easy and don’t pay more than you have to!)

And this is exactly how I dug out of $80,000 debt in just over three years. First, I cut my spending (including downsizing my apartment and cutting my rent in half). Next, I radically increased my income by working two, sometimes three jobs, including slinging lattes at Starbucks. Finally, I moved balances to the lowest interest rates when possible, automated my debt payments, and cancelled all but one credit card.

Hopefully you can achieve similar success!

Published or updated on October 24, 2013

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


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  1. Syed says:

    Awesome article. Instead of focusing on one thing it really pays to get spending and saving working in conjunction.

    I have run into some problems applying extra payments with my lender. Sometimes they’ll do something stupid like applying the extra payment to interest and extending my due date. I’ve found you have to specifically tell them you want the payment to go to principal. It can be a pain but it beats the alternative.

  2. Micro says:

    Nice article. I think tracking your spending is a big key. It’s one thing to think you are spending too much on food, cable, internet, etc. It’s another too see the number staring you in the face and seeing just how much of your monthly income it is consuming. Although for automation, I am not personally a fan. I like having to pay each and every bill. It keeps my memory fresh with where my money goes every month and when. If I automated that, I might forget about something if I ever had to change bank accounts. I realize that will not work for everyone though. For some folks if they see the money, the will be very tempted to spend it.

  3. Marie says:

    Great article and very inspiring. I was in a similar situation with student loan debt and could not WAIT to be free! I put every single penny I could toward my debt to pay it off as quickly as I could. It is NOT fun at the time and takes a lot of sacrifice but it feels amazing when you’re done!

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