How we paid off over $42,000 in debt in just 2 years!

Alright friends, this post is something I’ve wanted to write for a LONG time. Many of you know my family is on a serious mission to become debt-free this year. Let’s settle down together in my living room and talk about exactly HOW we paid off over $42,000 in debt in 2016 and 2017 combined, PLUS used cash for a cross-country move (CA to MI), furnished a home, purchased two vehicles, had a third baby, and fully paid for a surgery.

Does the title of this post shock you? BECAUSE IT SHOCKS US! We have been so diligent to transform our spending and debt payoff goals, and at times it was hard to stay focused on our goal because it felt so, so monumental. We had never accomplished something this grande before.

Because we track our progress through a Google spreadsheet I can say for certain we paid off more than $42,000 of debt in two calendar years. Friends, this is crazy exciting, and I really want to share more about how we are achieving our financial goals, because this plan is one you can adapt for your household, too!

Over a year ago I wrote a little about our family’s process to becoming debt-free. Our story is common, in fact I bet some of you can totally relate to our financial situation. In 2015, when we learned of a potential health condition with our then unborn child, we finally decided we were tired of chasing our bills and feeling the financial stress. We totaled our debt list and decided it was time to make a huge change with our finances.

Making that debt list felt like such a death sentence, but we powered through and agreed to “stay the course” together as a team.

On our debt list we saw many “traditional” debts: credit card, auto loan, student loans, and medical bills. In June this year, Zack and I will celebrate our 10th wedding anniversary, and we should be debt free around then as well :) It’s taken about seven years for us to decide together we are done (DONE!) with having debt. Especially because there is a really wonderful, encouraging way to assess our income, debts, and make a forward moving plan towards financial freedom.

SOME OF THE DEBT-RELATED QUESTIONS WE HAD IN THE BEGINNING:

• how do you actually spend less than you make?
• what do you mean, write a monthly budget? How does that work?
• how do you stick to your monthly budget? (What if something unexpected comes up?)
  

The minuscule details overwhelmed me in the beginning because I wanted to over-complicate things. (Hooray for my personality!) I’ll answer these three questions throughout this debt series.

But I quickly learned when you and your spouse are BOTH in agreement for debt freedom, your excitement and progress will multiply. Make sure you are on the same page, and use words like “we”, “us”, “our” when describing your plan of attack and goals.

What made Zack and I finally take action? We had reached a point where we couldn’t pay for all of our financial responsibilities. And we are parents! And we hold college degrees! And we know better than to spend more than we make. We know it’s OK to say “no” to unnecessary expenses (shopping, eating out, vacations), however we really struggled with following through.

HERE ARE SOME OF THE ISSUES WE FACED BECAUSE OF OUR DEBT:

• it was hard to focus on our creative and family goals because we were overwhelmed / drowning in debt
• we often felt stressed, angry, weary, and exhausted. Essentially, we were sick and tired of being broke
• we didn’t have any significant money saved in case of an emergency, and we were overspending in certain categories (like groceries) which made it hard to pay other categories (like car insurance, car gas and/or rent)

How we were living wasn’t at all how we wanted to be living, and it wasn’t the example we wanted to be teaching our children. These two things were our biggest advocates for why we wanted to get out of debt.

Here’s the secret: the best way to get out of debt is to spend less than your income so you can save more of your income.

We follow a lot of advice from Dave Ramsey, and this book was a huge kickstarter for us to understand and apply his principles. Each month we fill our spending envelopes with cash (see above photos) so we don’t overspend. We go to the bank, take out the exact number of bill denominations, and then have a “stuff the envelopes” party ;) This also gives us a firm visual when at the store with how much we have to work with, and it gives us a firm amount each month we can throw at our debt.

Once we’re debt-free, the money we were putting towards debt goes towards other things: house, kids college, retirement, giving generously.

And so, here we are on this great journey to becoming debt-free. And not just that, but we are genuinely, ridiculously excited about our journey because we are making GREAT progress! Like I shared above, in 2016 & 2017 combined we paid off over $42,000 in debt.

The only way we accomplished this was by writing a budget every single month, using cash to pay for 90% of all purchases (some things, like insurance policies & utilities, are paid online with a debit card), and listing all debts so we can SEE our progress.

Another necessary commitment was to cut out all unnecessary expenses which allows us to make large monthly debt payments. And once a debt is fully paid off, we apply that payment amount to our next-in-line payment (this is called the “snowball” effect).

Be sure to read this book, The Total Money Makeover, for a more detailed outline of the plan we’re following. This is NOT an endorsed post, by the way ;)

See you soon for part II where I explain even more tips & encouragement towards becoming debt-free…

PS. we had to make some HUGE lifestyle changes to make our progress, one which I mentioned above, was moving from California to Michigan. By doing this we paid off 73% of our debt in just two years. We partially moved because of this goal, and so to see that it is working in our favor is hugely encouraging!

What questions do you have? Leave a comment below so we can chat!

xx

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