debt payoff one year

Things We Learned from Year One of Debt Payoff

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In December of 2015, 6 months after my husband graduated from his SECOND grad school program, we sat down finally able to catch our breath.

We got married at 22, had a baby at 24, and moved several times. My husband started a PHD program, but switched fields of study after the masters. We moved to Boston & borrowed a lot of money for him to attend a very intense 1 year masters program.

At that point, I was staying home with our 1 year old & pregnant with a second.

We literally lived on beans and rice, spending as little as humanly possible & still ran out of student loan money right at the end of the year.

Thankfully, Ben got a job right away, but we spent a few months “catching up” financially… we had a couple hospital bills from the new baby. Had to buy a $1500 beater car for hubs to drive to work in. The nice landlord couple gave us an extension on our deposit… that they rented to us at all was a MIRACLE!

Money was very very very tight. By December, though, our first minimum loan payment was coming due and we wanted a plan for getting out of debt. We were on board with Dave Ramsey’s “debt snowball” advice, so we sat down to create the first budget we’d ever stick to. (I wrote more how we learned to actually stick to a budget over here.)

In our first month’s budget, we had only a couple hundred dollars over the minimum loan payment due. At that rate, it would take us 12 years. Talk about a letdown.

We were discouraged and devastated, but we decided to go for it. That we’d take a swing at this whole budgeting and crazy debt paydown idea and hoped it would lead to being able to pay it off in less than 12 years.

We both agreed to put every extra penny towards debt payoff & we stuck to that.

I would buy a table for $10 on Facebook marketplace & paint it. Then I’d sell it for $50. I’d save $10 from the profit for buying another table and we’d put $30 towards student loans.

Every week, we checked our spending against our budget and if there was $5.34 leftover in the grocery budget, it went to debt payoff.

The first year, we paid off a third of the total.

A third.

Thousands more than we ever thought possible.

How!? Well, that’s what I want to share.

There is no magic formula or promise to make you rich at a passive income side hustle if you just follow my $999, 20 step plan.

It’s mostly common sense, hard work, and a lot of faith!!

Maybe you’re piled in debt and it seems like there’s no way out, so why bother.
Or maybe you have audacious financial goals.
Or maybe you want to make a budget for the first time in 20 years.
Or maybe you and your spouse just can’t get on the same page.

I don’t know your personal financial situation, but I do know this: it is possible to change it.

If you want. And I would love to be a tiny part of encouraging you in that process.

Here’s what we learned in our first year of paying off debt like crazy people.

1. You can pay off more than you think.

Put every extra penny towards debt; agree in advance that any raise or bonus will go towards debt payoff.

Find creative ways to cut costs. It’s literally a zero sum game. You have a finite amount of money. Shaving off $20 in 5 spending categories is $100. $100 a month is $1200 a year.

    2. The budget is key – for tracking and communication.

    You may be able to get out of debt without a budget, but I don’t know many people (or anyone) who has!

    We have used several budgeting methods over the years.

    The simplest is a spreadsheet, which you can get here. I used this method with cash in envelopes. That is the easiest way to spend as little money as possible. It’s been researched & proven, everyone spends less when they pay with cash.

    We also used Everydollar for a while and really liked it.

    Eventually we landed on YNAB and have been using that now for over 9 years. It’s the most robust & complicated, but also the most flexible.

    Just pick the method that you can stick with!!

    For maximum success, discuss your budget monthly, weekly, or even daily!!!!!!!! You both have to be tracking spending & seeing the progress to maintain motivation.

    One of our weekly “money dates!” – lol we’d sit down together once a week after the kids were in bed, and do our budget. We called it a money date because dates are more fun than budget meetings.

    3. You don’t need that: there’s a lot you can go without.

    Truly, for a few years, you can just live without. If you have nice people in your life buying you birthday and Christmas presents, inform them of your debt payoff goals and ask for anything you need/ want for those special occasions.

    4. You probably don’t need clothes (or other new things).

    You can probably live with whatever clothes you have for a long time. That’s an easy one to cut from the budget. For kids who are always growing, I asked for clothes they needed for their birthdays/ Christmas, and shopped at local kids’ consignment stores when they really needed something.

    We kept their wardrobes simple, which actually makes it easier to manage anyway!

    Other things that you’re inclined to replace, just wait! Seasonal decor, dishes, household goods, nice looking landscaping, new cars, toys, etc. etc. etc.

    The truth is, it can probably wait.

    5. Fun Spending Money Helps

    We did have $25-50 worth of “fun money” for each of us to spend every month on whatever we wanted too! No questions asked!! So I could go to coffee with a friend or buy a new shirt and not feel guilty. Ben could save up his money for two months and buy new running shoes without feeling like he was slowing debt progress.

    That made it a little easier to resist alllll the other spending temptations.

    Here is LOTS of other help with budgeting/ debt payoff: