The Top 10 Tips & Tricks we used to pay off $30,000 of Debt in just 11 months!
My husband and I started our marriage $150,000 in debt (not really ideal but sadly this is more common than not today). We were full of dreams and destiny but something was holding us back. We could not move forward on any of our ideas because of the mounds of student loan debt. Like many our age we begrudgingly dragged around our student loan debt like an anchor preventing us from moving forward into what we truly are called to do. So what did we do?
We got angry…
Not at each other of course, but at our debt and the lie that we bought into. Then we decided to get real and realized we had no other choice but to get focused and pay off debt no matter the costs. See how interest motivated us to pay off $30,000 in just 11 months.
How 11 Months Can Change Your Life!
In just 11 months we paid of 30,000 of debt that we will never have again. And we could not be happier! And it all started with one book!. Although we still have quite a bit to go we discovered several hacks to save money and pay off debt fast while still loving your life! If you can do basic math you have probably figured out that we have about 120,000 more to go. But we are not discouraged we are actually picking up more momentum and increasing our income through side hustles and plan on being completely out of debt in just two years. If you are in a similar situation as we are or worse, be encouraged it can be done!
I created this blog because in my pervious career as a university enrollment counselor I saw thousands of students make terrible financial decisions in college and ended up with more student loan debt than what they would make in an entire year in their profession! For many their options are to move back in with the parentals or defer their loans only to realize their student loans are growing larger each year thanks to our little friend called interest. Well I have done both and I can tell you from first hand experience it is the wrong move! I personally have to pay off several thousand more dollars than necessary just because I deferred my loans a few years. However, about a year ago my husband and I had a bit of a reality check and realized our only true option was to tackle our debt full force. What was the result? We made a huge dent and paid off 30,000 in just 11 months!!
How did we pay off $30,000 in our first year of marriage?
One night our Internet wasn’t working so browsed my sister’s bookshelf and found this great book by Dave Ramsey and it changed our life. After reading testimony after testimony of couples getting control of their finances we decided we could do it too! Read about how our journey began.
2. We got Real!
My husband and I sat down together with some pizza and wine and added up exactly what we owed and the interest rate on each loan. Our debt was primarily made up of student loans, except for a small credit card (about 1,000), which we paid off in our first month.
This is the least fun but honestly the most important step! Why? Because it makes you angry enough to do something about it. Also, we needed that sober reality check that although we had decent jobs we were actually still in the negative and we needed to live as such. We calculated the interest and figured if we stuck to the standard 10 year repayment plan most loans have we would be paying back an additional $45,000 on top of the $150,000 we already owed! Read more on how interest can help motivate you to pay off debt. Once we realized we would be spending an additional $45,000 on our education motivated us to pay this debt off fast!
3. We saved $1,000 for emergencies
This was set aside for true emergencies like cars breaking down or medical bills not unplanned items or vacations. We keep it in an account that I don’t use as often and do not facture it into our monthly budgets. This is simply the money we have set aside to prevent us from charging credit cards.
4. We used the Debt Snow Ball
After listing all of our debts we ordered them from least amount of debt owed to greatest. This would become our attack plan. We ignored the interest rates when listing our debts and solely focused on the amount due. Why? The number one thing that slows people down when paying off debt is they get discouraged because they do not feel like they have accomplished anything. The debt snow ball helps combat this by paying the minimum amount due on all loans apart from the lowest amount. The lowest bill becomes your sole target and anything extra a month goes towards that bill. This really encouraged us because we were able to pay off our lowest loan in our first month!
The basics are this:
Lowest bill: $1000.00 owed
Minimum Payment $50.00
Snowball(the amount extra you pay towards debt each month): $950.00
Total amount paid towards lowest bill $1000.00! (in just one month!)
Next month, I take my snowball amount ($950) + previous loan minimum payment amount ($50) and add it together to create my new snowball amount (+$1,000). We now increased the amount we are “throwing” at our debt each month.
Next lowest loan: $2,000
Minus Minimum payment: -$100
New snowball payment: -$1000
Only $ 900 left over
And just like that in two months we were able to pay off 2,100 of debt! The key to paying off debt is it to keep growing your snowball, and to not be tempted to spend the extra money on non-essentials.
5. We made paying off debt our number one priority
Newly married we had so many things we wanted to do. We wanted to travel, buy a house, buy new everything! But when we made paying off debt a priority everything else had to go on the back burner. We continued to rent and sent our would-be down payment to our next lowest loan and completely paid it off. To be honest this was hard for me. I want a home and many tears were shed over this issue. However, in reality if we bought a house at this point in the game I would be able to write to you about how we paid off debt in 11 months but would have to start a blog on home décor instead J
Since we already started using the debt snowball method to pay off debt any time we came into more money we added it to our debt snowball. For example, we got a decent amount back on our tax returns and instead of buying a large item or going on a trip we paid off two small loans! Our debt snowball grew by $200.00 monthly after that!
6. We had budget meetings twice a month
This is probably the least fun but one of the most essential things we did to pay off debt. We went over each item in our budget and determined whether we could cut it. Then, we subtracted every item and determined exactly what we could send extra to debt. My personal method is to immediately move all budgeted items out of my checking by either paying the bills immediately or moving the additional funds to another account. I hold myself accountable by only leaving a small buffer of $50.00 left in my account that way I will stick to my budget because it is a pain to transfer money back. Any month I forget to do this I over spend in at least one area and have a little less to put towards my debt snowball.
7. We used a budget that split our funds by paychecks
One thing that I see that prevents people from getting out of debt is they fail to plan ahead. Often times we don’t get paid on the 1st and 15th but many bills are due on that schedule. For that reason I see many individuals pay overdraft fees because they did not realize that their rent had to come out of this paycheck.
8. We weren’t afraid of hard work
When we started paying down debt I was the only one working and my husband was studying for the Bar exam to become a lawyer. When he got a job we did not change anything in our budget but just added his income to our debt snowball. You may be thinking that my husband got a sweet job making six figures but in reality he works for a non-profit so we had to be creative to continue to pay off debt. I got a second job and we added even more to our debt snowball.
Later my husband although a lawyer, continued to work as a banquet bartender occasionally, and drove for Lyft on the weekends. It was always funny when he would pick up riders and they ask if he drives for lyft full time. He would always smile and say “no, I’m a lawyer with lawyer debt,” and on they would drive. Using the budget meetings to stay on target we were able to pay more than $3,000 a month just towards debt. I later gave up position at a local university to go into full time ministry and even being on a pastor salary for two months we are still moving forward and I am learning how to make every penny count!
9. We Learned to say a Magic Word
once read this great book called Good to Great by Jim Collins. It is one of the best books I have ever read! The premise behind the book is that sometimes you need to say no to good things so you can say yes to great things. I really applied this to our debt by realizing that we needed to say no to really good things like vacations, nicer cars, and clothes in order to say yes to great things like financial freedom and less stress! Read more about the 10 things we said no to which helped us pay off 30,000 in 11 months.
10. We got Creative When Buying Gifts and ate in a lot!
During our biweekly budget meetings we realized that giving gifts and eating out could quickly derail our budget. In order to stay on track I learned to surf the web to find great deals on awesome gifts. To prevent us from the temptation of eating out, I got more creative in the kitchen and paid attention to the sale adds and bought in bulk.
If we can do it so can you!
Free Budget Form Here!
Download the same budget I used to pay off $30,000 in just 11 months!!!