The limited-edition BMW he drove was swapped for a 14-year-old Lexus. He sold his designer watches, handgun, iPad, clothing and any personal possessions he did not need. He used to spend around $24,000 per year on shopping, eating out and entertainment. Now he spends $227 a month.
"It's been a huge scaling back in my lifestyle and it really hurt. Status took a hit," he said. "But it was also probably the greatest thing that could have happened to me in my life because it forced me to realize and face these problems that I was running away from by overspending."
In March, Vandagriff began blogging about journey in getting out of debt on gregoutofdebt.com. Since that time he has paid down $20,000 of debt. His motivation for blogging is to provide accountability for himself and to help others who are looking to change.
Both Malloy and Vandagriff recommend a certain amount of flexibility with budgets because financial needs change from month to month. Vandagriff said he has identified the areas of his spending that are most important to him, and has "ruthlessly cut spending" in other areas.
2. Build an emergency fund
Eliminating debt includes creating a safety plan to guard against further debt that could come through job loss, emergencies and economic downturns.
This was one of Vandagriff's first steps. Before he started paying down debt, he put about $1,000 into his bank account as a cushion for emergencies. One of the biggest mistakes people make when they start paying back debt is they don't save for emergencies, making it that much easier to use a credit card when a financial need hits, he said.
He sets aside a little money each month to prepare for anything from car registration to future hearing aids.
"I never want to go back into debt," he said.
He now pays for college with cash and began investing in emergency savings at the same time he started paying down his debt. It was a departure from his former habit of subsidizing his lifestyle with student loans, using them to pay down credit card balances.
3. Use The Island Approach
People who use credit cards should employ what CardHub calls The Island Approach: use different credit cards for different transactions.
Credit cards are not necessarily bad, Vandertoolen said, and can be beneficial for building credit, but only if they are used like a debit card, with the balance paid off each month.
CardHub suggests putting existing debt on cards that have 0 percent interest rates and no introductory or annual charges. This way people can pay off debt without accruing interest. CardHub also suggests using rewards cards for everyday spending.
"That allows you to not only get the best collections of terms possible but also separate debt from ongoing expenses," Kiernan said.
This strategy comes with a warning, however. Jeff Lambert, a certified financial planner, people should avoid debt when possible and consumers should avoid putting balances on credit cards if they do not already have debt.
4. Use systematic approach to pay down debt.
The fastest way to pay off debt with the least amount of interest paid is to apply more money toward the debt with the highest interest rate first and make minimum payments toward the rest, Kiernan said. Once the high interest rate debt is paid off, apply that payment to the debt with the next highest interest rate. Continue this method until all debts have been paid off.
By following this method, the Malloys have paid off their credit cards and have made a sizeable dent in their car payment, which they plan to pay off by October. They will then whittle down student loans, followed by their mortgage, which they hope to have paid off within 10 years.
"It will be a good feeling knowing that I don't owe anybody anything," Malloy said.
5. Consider a job change.
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