Paying off debt can be hard, but once you start to see your debt go down, you’ll be hooked. When we paid off our debt, our lives changed for the better.
All those payments we had to make can now go towards things that we WANT to spend our money on, like investing it instead if burning it every month. That’s what it felt like every time we made a huge payment towards our debts.
In this blog post, I’m sharing 9 steps we took that allowed us to pay off $20,000 in debt and start a completely new chapter of life together. I’ll be covering:
Why it’s important to pay off debt
Spending habits and why they are important to get ahold of
Starting a disciplined budget and how to stick to it
How to live on less, and learn to love it
What method to implement to pay off debt
How to negotiate on bills
How to stay consistent and why it’s important
So if you’re tired and struggling to pay off debt, falling off the wagon of every time you start, constantly feeling like a failure, and still never reaching your goal of being debt free, then you’re in the right place! All of that is about to change for good!
Our Story
It all started when we first got married in 2020, we moved into our first apartment and everything felt great. My husband was in the military so our rent was low and we had a good income. Everything was going great, but we still had that thought of our debt in the back of our minds. Every few months we would talk about it and create a game plan to pay it off, we would only get so far and then we would forget and continue on with our lives not even thinking about it.
Fast forward to 2022, we moved into a beautiful little cabin in the mountains. It was our little dream home nestled away in the forest. We absolutely loved living there surrounded by all this beautiful nature, but once again, we were faced with our debt. We lost a lot of our income when my husband got out of the military so we had to improvise. I started working full-time at a new job that didn’t pay nearly as much as my previous, and my husband got a job at night while he was in school. Eventually, we hit a wall. We were exhausted and so tired of constantly feeling like we weren’t ever catching up to everyone else around us. Burnt out and tired of life, we finally decided we needed a change. This meant cutting back on our spending and getting serious about paying off debt.
I started to do a ton of research on how to pay off debt and how to do it quickly. I had known about this man for years, Dave Ramsey, but never actually used his principles. We have had enough, we needed to do something about feeling buried. I started listening to his podcast DAILY. Absorbing as much information as I possibly could. Eventually my husband got out of school and started at a new job making around $50k (gross). 80k seems like a lot of money for the both of us, around 6,500 a month (with my husband working two jobs), but when our rent was $2300 a month and our local gas prices are $6 a gallon, we drove SUV’s and had to drive 30+ minutes to work, plus all of our other bills, cell phones, internet, insurances and debts that had to be paid, this was hard. We only had about 1k left every month to play with.
This seems like it would be fine, but with random bills hitting us and unexpected expenses popping up left and right, we couldn’t catch up. Right when we felt like we could use it towards debt, we’d get hit with a car not working and be forced to pay well over 1k to fix it, pulling out of our savings too which was so hard to build back. It was miserable. So how did we do it? How did we end up paying off this debt?
Here’s how we paid off our debt and took control of our finances and our lives:
Step One: Learn why it’s important to pay off debt and change your mindset
We have to start with the reason and importance of this journey, or else it won’t seem worth it. A study shows that people with debt are more likely to face common mental health issues, such as prolonged stress, depression, and anxiety.
Living paycheck to paycheck can cause a lot of stress, having debt on top of this can be even harder. But sometimes, it’s the debt that is causing the majority of us to live paycheck to paycheck. We need to understand that this can cause so many problems with our mental health. The burden of debt causes more problems between marriages and families than most things do.
A quick google search showed that on average, around 20-40% of marriages end in divorce due to financial disagreements. Now this can mean a lot of things, but one thing this all has in common is one thing and that’s MONEY. Not having control of it, whether wealthy or not, can wreak havoc on your relationships.
This is why it’s so important to gain control of your finances. Save your marriage. Save your relationships. Save YOUR MENTAL HEALTH. It’s worth it!
Step Two: Look At Your Spending!
How many times do you look at your bank account? After this experience of paying off debt, I am now an AVID bank checker. Every day I log on and check our spending. The reason for this is because when we first started this journey, I did not realize how much money we we’re spending on unnecessary things. Random subscriptions we forgot about, bills we thought we cancelled and spending WAY too much on Amazon. I added up how much we spent on Amazon in one month and it was well over $1,000. HOW!??
This was a HUGE eye opener. I promise if you spend one hour looking at your recent bank statements, you will see areas that need to be improved.
Step Three: Start A Disciplined Budget
This next step is pretty obvious, especially after going over your spending, this will be the absolute GAME CHANGER when paying off your debt.
Here’s a few simply steps to start this:
Figure out how much you’re bringing in monthly AFTER TAX.
Write down all FIXED expenses, these are the expenses you know will NEED to be paid in order for you to live. Examples are: Rent, Car Insurance, Utilities like Water and Electricity.
Next, Write down all of your variable expenses, these are items that vary month to month but you know you will spend on, things like groceries, gas and clothing. Estimate an average total for those and write them down (I recommend to over-budget on these items as you will usually spend more than you think)
Now subtract all your expenses from your income. Write down your total. If you’re under on your income, meaning you’re spending too much and you don’t have anything left, this means you need to evaluate what you’re spending too much on and see how you can improve/cancel those expenses.
If you are still doing good on your budget, meaning you have some money left over, the next step is to decipher if there are any areas where you can save some money and then figure out where this extra income will go.
Start an Emergency Fund. This is critical in surviving in this world. You HAVE to have an umbrella to save yourself from emergencies. Considering inflation is ripping us apart, you’ll want a little bit more of a cushion for emergencies. I would save 2X your monthly income to start. If you make $3k a month, save $6k. This way you will be prepared to pay for unexpected expenses AND be able to pay your bills for two months if you were to somehow lose your job.
After you have your emergency fund in place, and your budget is finally tuned up, start paying off debt. I’ll explain this in a minute, but for now, start working on your budget!
Step Four: Sell Stuff You Don’t Need/Use
This journey of paying off debt means you need to be finding any possible way to make extra income. This means going throughout your house and finding all the things that you can sell. Set up days to do a garage sale and start sorting through all the items. Do yard sales every weekend until you have nothing else to sell. Use Facebook Marketplace, Offer-Up, Mercari, Craigslist and any other platform you can think of. Get your whole family on board and make it fun. If you have children, explain the benefits of all this extra work and what it means to be debt free to get them excited about it.
Step Five: Find A Way To Earn Extra Income
This kind of goes hand-in-hand with the previous tip but this also means potentially getting a second job or finding a side hustle. After my husband graduated school, he started his new job and kept his old part-time job at night and continued to pay off debt. I know this can be hard, trust me, it wasn’t easy NEVER seeing each other. A day off together felt like an absolute dream. Those days were far and few in-between. We had a dog and could not leave him home every day for 17+ hours so I just asked for more hours on my schedule which helped. We still had a home to maintain, so it would have been impossible to do this while both of us worked two jobs. Find what works best for you and your families schedule, and as Dave says, become Gazelle Intense.
Step Six: Learn To Live On Less & Be Content With This Lifestyle
Yep, you heard it. You need to learn to ENJOY living off nothing for a while. Remember this is going to take a while depending on how much debt you’re in. For us, we needed an additional $1,666 a month to pay off our debt in one year. We had to sacrifice SO MUCH to do this. When all of our friends we’re out having fun and spending money on the weekends, we were saving every penny. While everyone was out enjoying their weekends, we were working them. We had to learn to be more minimalist during this time and learn to be okay with having less. This is the mental sacrifice of becoming debt free.
Step Seven: Start Implementing The Snowball Method From Dave Ramsey (Not The Avalanche)
This method has helped MILLIONS of people, whether you like Dave or not, he is the king when it comes to paying off debt. This is his method and it worked amazing for us.
Start with your smallest debt and continue paying the minimums on your other debts. Once the smallest is paid off, start with the next smallest debt and use the minimum monthly payment you would have used for the previous debt and add that to your new debts minimum. Throw any extra that you can on the next debt and keep the process going until all of your debts are paid off.
The Avalanche Method is the opposite, it’s the process of paying off your high-interest debts first instead of your smallest. This works, but can be extremely difficult for people. There’s a lot of positive phycology in paying off your debt from smallest to largest, the reason for this is when you start to see a dent in your debt, it helps you to stay motivated and excited to continue. Most people who start the avalanche method end up quitting or giving up because it’s too hard. Imagine trying to pay off a student loan debt for $60,000 instead of a credit card for $2,000? You would want to give up within a few weeks. Don’t look at the biggest debt, start with the smallest and build momentum!
Step Eight: Negotiate For Lower Rates On Your Bills
This seems like it would be hard, but it’s actually suuupppeerrr easy. All it takes is a phone call to your provider and asking for a discount, help on lowering a bill or asking to negotiate a debt.
What’s the harm if they say no? Shoot your shot!
When I was 18, I was living on my own and drowning in bills and debt. I thought no one would take me seriously if I called and requested for help. I remember it like it was yesterday, my phone got shut off and I only had about $15 for gas and food for the week. I had no family near me as I was living alone in Colorado at the time, I felt hopeless. I obviously didn’t have the money to pay for my phone bill which was around $130 at the time, but I was on-call for overtime hours with my two jobs and I needed every hour I could get so I needed my phone to be on. Someone told me to call and ask for help with my phone company, I didn’t believe they would help me, but what was the harm in asking?
Ask and you shall receive…
But I did and they helped me set up a payment schedule with what I could afford to turn my phone back on until I got paid again. This got my phone back on and prevented my phone bill from getting sent to collections.
Speaking of collections, I had one on my record around this same time (life was really hard) and I needed to get it taken care of. After saving up some money I was able to call the collection agency and ask for a payment plan, they ended up offering me a 40% discount if I paid in full, this dropped the total amount significantly. I paid it and it dropped off my credit within a few months!
Moral of the story, don’t be afraid to ask for help! Most companies are willing to help you.
Step Nine: Focus On Staying Consistent
Here’s a tip!
Keep the end goal in mind! Remember, this won’t last forever, this is only temporary. Dave says “Live now like no one else, so later on you can live like no one else.”
Keep repeating that quote over and over again in times of frustration. It will help. Remember this is a journey, not a race. Just stay consistent and you will see big results.
One thing I did that worked amazing for me is to keep a journal during our journey. In this journal, I’d start by writing down my visions for my life and where I wanted it to go. I’d write down my 5 year plan and write all of the details of what I pictured it being. I asked these questions:
Where do I want to be in 5 years?
How will I get there?
What are my dreams?
What is my dream house look like? My dream car?
What do I want my marriage to look like?
Do I have kids? What will that look like?
Who will I be in 5 years?
This helped me reflect on life and helped me to see this journey of paying off debt as a sacrifice to get to where I wanted to be. I DESPERATELY am dreaming of having a big home on a nice plot of land with a big wrap-around porch facing the mountains. And now that we are debt-free, I am one step closer to achieving my dreams. Keep your journal and try to write daily, it’s a great way to release some stress you may be having, to ask yourself difficult questions and to keep your dreams alive.
”Continuous improvement is better than delayed perfection” - Mark Twain
Once I learned these steps to paying off debt and implemented them into my daily life, I finally become debt-free and the burden I had been struggling with for years disappeared and I haven’t looked back. I finally stopped overspending, stopped feeling like a failure all the time and I stopped constantly worrying about my finances. Life is so much better being debt free, and I hope you can get there soon too!
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