You may have seen on social media that my husband John and I recently became debt-free after paying off $36,872 in consumer debt! We’re thrilled to be done with this step in our financial lives and even more excited to share with others how we did this so they can see it IS possible.
You may be thinking: why did you feel such a rush to pay it off when you can just pay the minimum payments? Truth is, having that number hanging over our heads scared us. We didn’t want to pay off student loans for the next 30 years, making small payments that barely covered the interest. We realized that getting serious and paying it off as quickly as possible would be a challenge that would benefit our marriage, teach us discipline, and set us on a better path towards a stronger financial future.
We by no means believe this is the only way to live. A year and a half ago, we weren’t even able to afford our monthly bills, let alone setting aside money for debt each month. We know it doesn’t always seem possible in your current situation, but what we learned is that we had the power to change our current situation in order to be in a much better position a year down the road. So how did we do it?
WE MADE A BUDGET
Following the Dave Ramsey baby steps, we first saved $1000 for a starter emergency fund then got to work on cutting back our spending. We sat down each month and created a budget to live by for the next 30 days. We gave every single dollar a job and committed to sticking as closely to our plan as possible. Here’s a look at how tight we were able to get some of our monthly expenses:
- Groceries: $295
- Necessities: $80 (like household goods and haircuts)
- Gas/auto: $50
- Phone: $7.86 (thanks to a crazy good Sprint deal and paid off phones)
Of our other budget items, some changed slightly depending on our income (like our tithing), and some differed depending on what events we had that month. For example, we might have taken away from our “fun” spending money to budget a little for eating out if we had friends visiting. We tracked our monthly spending and income in the EveryDollar app and used a spreadsheet to track our progress.
WE COOKED AT HOME
When we first started making a budget, we were shocked at how much we were spending on food each month. Not only were we spending hundreds on fast food and Starbucks each month, but we were also wasting tons of food every week by grocery shopping without a list.
I love cooking, but I wasn’t being very efficient in my plans. After we chose to live on less than $300 for food each month, the planner in me came to life. I planned meals a week at a time in order to spend less than $75 weekly on groceries. This was probably the most drastic change in our lives and it made a huge difference in how quickly we could become debt-free. We also lost weight when we made this change!
WE SOLD THINGS
Like, a lot of things. We sold our second TV, things we made, old clothes, pieces of technology we weren’t using, random items we could flip to make money on, and furniture. If we didn’t need it, we sold it.
WE CHANGED JOBS (AND ADDED NEW ONES)
Over our year of paying off debt, John and I each transitioned to better-paying jobs. I was only working part-time last fall and found a stable full-time gig with great benefits. John just started his new job at the end of the summer.
In addition to these job improvements, we picked up side gigs often. Someone needed calligraphy done for a gift? I did it. Scooters all around Louisville needed charging? John charged them. We also did a few online jobs off and on to make more money.
In our best month, we made over $1700 of extra income that went straight to our debt on top of our normal monthly contribution.
WE REMEMBERED OUR “WHY”
One of our biggest motivators was our “why”: to live generously and not have to live paycheck to paycheck. In order to stay focused throughout this year, we thought about the baby steps ALL the time. John and I listened to the Dave Ramsey podcast every day. We watched his YouTube channel for motivation and cheered along with (and sometimes cried) watching debt-free screams.
The people in our lives also helped us in this process. We were constantly encouraged by our families and close friends. For example, I found a few friends at work who were also doing the baby steps and we kept in touch. Most importantly, John and I dreamed together about what life would be like when we could spend money on the things we wanted to buy instead of dumping thousands on debt each month.
Interested in becoming debt-free?
Though the baby steps are easy to follow, we know you might need some extra help along the way. We love talking about paying off debt and the Dave Ramsey principles, so feel free to reach out to us if you have questions. Also, check out the following resources and check back here soon for more blog posts about personal finance and budgeting. Most importantly, we CAN’T WAIT to see all the progress you’ll make on this debt-free journey!
