At age 28 my wife Brittany and I were sitting at the dinner table and decided we were sick and tired of living in debt.
We had started with over $40,000 out of college and slowly chipped away at it over five years getting it down to $25,000.
We knew our debt was holding us back from living a life of freedom and committed to attacking and destroying it with everything we had.
June 2018 we started our debt-free journey and by December 2018 right before Christmas, we became debt-free.
Below are the 10 strategies we used to pay off over $25,000 of debt in less than 5 months!
1) Organized Our Finances
The very first thing we did was get out a pen and paper to start to organize our entire financial picture.
We needed to visually see where we were at and come up with a plan to start to pay off our debt.
We wrote down the type of debt we had, amounts, interest rates, terms, etc
By simply organizing our finances visually and seeing the big picture we were able to see how we could attack our debt and become debt-free.
It not only gave us the confidence to really go after paying off our debt but in doing it together we become an unstoppable team.
2) Started a Monthly Budget
One thing that we always preach on The Savvy Couple is creating a plan for your money and sticking a monthly budget.
Without having a plan for your money it will make its own plan and disappear quickly.
In college, we started budgeting with a pen and paper. We have always treated our money very respectfully knowing how hard we work for it.
After getting married, we moved our budget electronically over to Mint. There are plenty of budgeting and money management apps for you to choose from. You just have to find one that works best for you.
If you look around at any financially successful couple, family, or business they all have a budget they use as a guide for their money.
Learning how to start a budget we can stick to and create good habits around was the key to paying off our debt.
3) Pick a Debt Payoff Method
There are a bunch of strategies for paying off your debt. You want to pick a debt payoff method that works best for you.
After going through this ourselves, we highly recommend using the Dave Ramsey Snowball Method.
Whether you have consumer debt, credit card debt, or student loan debt it really doesn’t matter.
Personal finance is just that, personal. You can’t ignore the deep feelings, internal battles, and emotions surrounding your finances.
We tried both methods during our debt-free journey and by far the snowball method was far more motivating and effective.
Snowball Method
- List your debts smallest to largest remaining balances and ignore interest rates.
- Make the minimum payment on all debts except the smallest one. Attack the smallest one with everything you have.
- After you pay off the smallest debt, take the money you were paying on that debt and roll it into the next lowest remaining balance debt. Boom it’s a debt snowball!
- Repeat this method until you cross off the very last debt.
Avalanche Method
- List your debts from the highest interest rate to lowest ignoring the remaining balance.
- Make the minimum payment on all debts except the one with the highest interest rate. Attack the highest interest rate debt with everything you have.
- After you pay off your highest-interest debt, take the money you were paying on that debt and roll it into the next highest interest debt on the list.
- Repeat this method until you cross off the very last debt.
4) Set Realistic Goals
This is a debt payoff tip that should be talked about more. When it comes to setting financial goals it is always best to set realistic goals you can actually achieve.
When we had $25,000 of student loan debt remaining we set a goal to have it paid off within a year. This was realistic for us at the time knowing our current income level and our monthly expenses.
We were able to pay it off much faster than we thought which made it even more special being able to beat the goal we set.
When you are making a plan to pay off your debt be realistic and set milestones you want to hit along the way.
One of the best ways to make sure you are setting realistic goals is by using a debt payoff calculator or using a debt payoff planner.
5) Learned How to Live Frugally
After you create a budget, next is going through it and finding where you can cut costs to free up extra money to go towards your debt.
The three biggest categories to look at first:
- Housing
- Transportation
- Food
This normally accounts for more than 50% of a family’s budget. So focus on saving money in these areas before moving to others.
Learning how to live a frugal and happy life is one of the best things you can do for your financial future.
Being frugal is much different than being cheap. Being frugal is always finding the best value for your money while being cheap is finding the lowest cost.
6) Cut Our Food Costs
One area we were able to save a bunch of money in was our food costs. We started to meal prep and make cheap family recipes more often and only ate out on very rare occasions.
We also used Ibotta to help us earn cashback on our grocery shopping.
We started to focus on our health more by intermittent fasting and counting calories. So not only were we saving money we were also losing weight and getting healthy.
One of the extreme ways we cut our food costs were playing a game we call “bottom of the barrel”.
When our food was getting low in the house we would try and go another couple of days to really eat our house dry.
This helped prevent food waste and let us get creative in making cheap meals.
7) Increased Our Income
You can only save so much money in your budget before you run out of areas to cut.
After you have your monthly expenses to the “bare bones,” it is time to start looking for ways to increase your income.
There are literally hundreds of ways to increase your income.
Some of our favorite ways were:
By increasing your income even a $100/month you will drastically increase your ability to pay off your debt quickly.
8) We Started an Online Business
One of the best decisions we made was starting our online business. It was really the spark and fire that allowed us to attack our debt and become debt-free so quickly.
A 9-5 job is great as it is a fixed steady reliable income, but it can only get you so far.
Starting your own business gives you the ability to set your own hours, do work that you are passionate about, and have no limit on the income you can make.
We started our blog in July 2016 and within two years we started making $10,000/month with it. By the end of our third year, we have made over $250,000 and were both able to quit our jobs.
Our success was not overnight but starting a business and putting in the work for a couple of years was worth every second.
Perfect online businesses to start:
Start a Money Making Blog – It takes a lot of effort upfront but once you start seeing the success the sky is the limit. Our blog brings in over $10,000 per month!
Start a Facebook Side Hustle – Want to make money using Facebook. There are plenty of small business owners in need of marketing help. The perfect flexible side hustle anyone can start.
Teach for VIPKID – If you love working with kids and have some teaching experience why not earn up to $22/hour teaching English online?
Become a Proofreader – Love to read? Why not get paid to read other’s work and find spelling/grammatical errors. You can easily earn a few hundred dollars a month in your spare time.
Flip Items on Ebay and Amazon – Love going thrift shopping and finding neat things to turn into cash? Start your own flipping business today!
9) Stuck to Our Plan
It’s not a matter of what but a matter of when things will get in your way on your debt-free journey.
Even if you have the perfect plan and have done an excellent job of creating new positive habits there will be hurdles thrown your way.
This is why it’s so important to have an emergency fund set up so you can easily handle things that get thrown your way.
The key is being flexible and keeping your eye on the prize. Know that you are capable of overcoming obstacles and getting right back on track.
When things came our way we found the best thing to do was pray and give it to God. We let him guide us and lead our journey.
10) Celebrated Our Wins
What’s the point of setting goals and achieving them if you are not going to celebrate?
Whether it’s making your first debt payment or your last you need to be celebrating all your wins.
By using the debt snowball method and celebrating each win along the way you will ensure you keep your motivation and drive at an all-time high.
You can celebrate by going out to dinner, opening a bottle of wine, or simply having a family dance party. The key is making sure you celebrate your victories and keep moving forward.
Head here to watch us celebrate making our final student loan payment on Facebook live.
Final Thoughts on Paying Off Debt
One of the best financial decisions we have made in our lives was paying off our debt as fast as we could.
It has allowed us the freedom to quit our jobs, work from home, and do more of the things that we love.
“The rich rule over the poor, and the borrower is a slave to the lender”. – Proverbs 22:7
Living in debt should not be the norm! You should not be a slave to your lenders.
Getting out of debt is not easy, but it starts with you saying enough is enough, changing your habits, and taking action.
By using these simple strategies we laid out, you will be able to pay off your debt much faster than you thought imaginable.
What would paying off your debt do to your life?
How would it make you feel?
What is holding you back from getting started?
Leave a Reply