1999: $60,000 in Debt, No Ph.D. in Physics, a Drop-out. 2004: Debt-Free

Bill Corley

In January of 1999, I had withdrawn from a graduate program in theoretical physics with no Ph.D., no savings, $70,000 in debt, no marketable skills and no idea what to do next.

I had gotten a job working for Dell Computer doing phone-based technical support (back when 100% of their employees were in the Austin, TX area). The job paid $13 an hour, which (at full time hours) was more than I made as a graduate research assistant, but utterly inadequate to pay back the debts ($55,000 in student loans and $15,000 in unsecured credit card debt) I had piled up.

I considered bankruptcy, but soon realized that student loan debt is basically non-dischargeable.

Today I make $140,000 a year as the Chief Information Officer (and junior partner) of a privately-held architectural and civil engineering design firm. I own a home with a reasonable fixed-rate mortgage payment, have no debt (besides the mortgage) and ~$100,000 in cash and retirement savings. In short, in ten years I was able to turn my net worth from -$70,000 to + $150,000 without gifts, lottery winnings or speculation of any sort.

What made it possible was a change in mindset. I remember the exact instant when it occurred. I was sitting on the stoop of the porch of the house in Austin I rented with 3 other people, having just concluded that bankruptcy wasn’t going to work, and realizing that there was no one who could help me, so I would have to figure out how to help myself.

I began by cutting up my credit cards, purchasing Quicken and tracking every penny I spent. I then used the threat of default to negotiate lower interest rates and (temporarily) lower payments on my credit card accounts and got a 1 year forbearance (interest continued to accrue) on my student loans. These moves allowed me to begin to accrue cash savings, which, together with a yard sale in which I sold most of my possessions (including my car), gave me enough money to leave Austin and move to Boston, MA, where I had friends (fraternity brothers) from my undergraduate days.

My cash lasted long enough to secure contract employment doing Y2K system upgrades, and, through that, ultimately land a full time job as a systems administrator for the engineering firm I currently work at. For the first time in my adult life, income — expenses > 0, even when I resumed paying down my debt. This is when the second stage of my personal economic recovery began, because I made another decision: not to increase my spending. For the next five years, I dedicated all of my excess cash to debt repayment. With each raise I received, 50% went to debt and 50% went to cash savings, until I had six months expenses saved. Then that portion went into a 401(k) plan. All that time, I took the subway to work, walked to the Laundromat to wash my clothes, and pushed a cart back and forth to the supermarket (a mile away) to avoid buying a car.

In November 2004, I was debt-free, had six months of expenses in the bank, and $25,000 in a 401(k). I was 33.

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