These newlyweds paid off $21,000 in credit card debt using their own method. Here's how they did it

Shortly after their 2014 wedding, Michael and Taylor Lacy set a goal of paying off $21,000 in credit card debt within a year.

Eight months into their plan, however, Michael lost his job and health issues forced Taylor to take unpaid leave from work.

Despite the setbacks, the Lacys got their debt down to zero in 16 months, just 4 more than they planned. Along the way, they learned to be flexible while still keeping the goal in mind.

CNBC Select spoke with Michael Lacy about the strategy he developed to get out of five-figure credit card debt.

With $21,000 owed across six cards, the Lacys had almost three times the average credit card debt. It took years for them to accumulate that much debt and they found it difficult to imagine life without luxuries like travel, shopping and dining out.

Michael remembers the moment he realized it was a serious problem.

"It hit me when we were on our honeymoon," he told CNBC Select. "I realized we were 'marrying' our debt. There we were at an oceanfront resort and I was starting to panic."

He tried to downplay his anxiety until after the honeymoon, but it surfaced again on a snorkeling excursion. "It started raining, and the guide asked if we wanted to reschedule or get a refund."

Michael opted for a refud, which signaled to Taylor that something was on his mind. Right there in the middle of their vacation, they started talking about their money problems and strategizing their financial future.

"My wife was not really on board with the budget I presented her," Michael recalled. "She was sad to get rid of all the fun stuff. That was when we had an honest conversation."

The Lacys looked at their monthly payments across six credit cards and two car loans. They were startled to realize that just making the minimum payments would cost them $2,000 a month.

"I asked my wife, 'If we didn't have to spend $2,000 per month on minimum payments, what could we do instead?'"

They realized they cared most about travel. Once they realized what they could gain in the long run, cutting back on shopping and restaurants and making other short-term sacrifices felt a lot easier.

The Lacys set an ambitious goal of paying off all $21,000 in one year. When they began their journey, Lacy was the leading sales representative at his company and they had considerable income to devote to getting out of the red.

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But the Lacys had good salaries and were able to put $3,900 a month toward their bills, just from their paychecks.

"I was working extra, trying to make additional commissions and pay off the debt faster," Michael said.

Many financial planners recommend the avalanche method, which involves making minimum payments on all your bills and putting anything extra toward the balance with the highest APR. But the Lacys knew they'd be more motivated if they saw results early. So they initially chose the snowball method — paying the minimum on all their balances, then applying the rest to the smallest bill until it's paid off in full.

It only took a month for them to see a win: They completely paid off a $1,200 balance on one of their credit cards. 

For eight months, the Lacys put every spare dollar toward paying off debt. But one day, Michael received unexpected news. 

"I got a call that the company was restructuring and, in two months, I wouldn't have a job," he said. That meant a huge drop in their income and a major wrinkle in their payment strategy.

But the Lacys were still committed to a debt-free future, with more time to travel and raise a family.

"We already had the important conversations about what we wanted our life together to look like," Michael said. "I was determined not to fail on this journey."

He got a job delivering food while he interviewed for new jobs. For a while, Lacy made enough as a teacher to support them both.

But, after a while, the stress of the situation caused her autoimmune disease to flare up and she had to take two weeks of unpaid leave. At that point, the Lacys decided to take a break from paying off debt and focus on building an emergency fund.

After four months, Michael got a new full-time job. But instead of jumping right back into the snowball method, he and Taylor pivoted to a hybrid approach that incorporated their own method.

Instead of focusing on APR, they made paying off their car loan first their priority. Their monthly payment was $500, the largest minimum they had.

They drafted an emergency spending plan, or what Tiffany Aliche, a.k.a. the Budgetnista, calls a "noodle budget." It's a bare-bones budget incorporating the absolute minimum needed for essential living expenses, like housing, food, insurance and transportation.

An emergency spending plan can help people survive a financial crisis by reducing costs to the bare minimum for a limited time. Once you knock off a big monthly expense, like a car payment, you can add to other categories until you're able to afford more non-essentials.

By polishing off their car loan first, the Lacys drastically lowered their monthly fixed expenses. That made their emergency budget even more manageable and allowed them to divert more money to their emergency savings in case another layoff was in the future.

Before committing to any debt management strategy, think about your goals, your needs and your options. By developing their own plan, the Lacys were able to aggressively pay off debts while freeing up money for emergencies.

While the snowball and avalanche methods are excellent guidelines, they're not set in stone. Your debt payoff journey will be unique to you and your situation may change often. As the Lacys learned, flexibility is key toachieving any personal finance goal.

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