I’m currently looking at the title of this blog sitting in disbelief that I am actually the one writing it. Over the year 2017 my husband and I paid off $31,914.14 in debt, and it was not easy! We paid off both of our cars, several student loans, some medical debt, and of course some house debt. This post will be all about how we did it and I will link you to some other posts from my ongoing series Living Debt Free to help you and your family change your financial situation just like we did.
So how did we make this crazy number a reality? I’m going to be brutally honest here. Dedication is 95% of being able to pay off this much debt in a year. It was by no means an easy year for us either. Unfortunately, we don’t have the best health insurance and a daughter with many food allergy issues so we’ve gained medical debt as well. But with dedication, we were able to still make a huge dent in our debt over the year.
What do you need to be dedicated to exactly? First things first, your budget. Setting your budget the right way, and staying dedicated to it will make ALL the difference in your journey to being debt free.
How to set your budget up for success.
When you are attempting to pay off debt, you are going to have to make a lot of sacrifices. Do not try and do it all at one time. If you eat out every day of the week, try to take it down to four days, then three then two and so on so that you don’t burn yourself out too fast. Apply this concept just about everywhere. Do not expect that you will be able to make these changes overnight! It will take practice and discipline.
Also, I cannot emphasize enough how important it is for you to really keep track of your money while you are doing this. If you set a budget and never look at it again you will not succeed. We currently use You Need A Budget to track all of our expenses. It really helps you to be mindful of where you are at in your spending and turns a lovely red color when you go over.
How do you set your budget up? First things first, what do you have to pay each month no matter what. These are things that don’t change much like:
- Car payment
- Student Loans
Next, decide a reasonable budget on things you can control but still have to buy like:
- Eating out
The above items are things that you can, for the most part, control how much you are spending on. You’ll have to find what works for your family best, but for us, there were a plethora of things we changed to make our budget work:
- Drastically cut down eating out.
- Implemented meal planning and eating healthy but frugally (see more on my meal planning post)
- Started driving an electric car (more on that later in the post)
- Did not have cable at all
- Did not buy any new clothing unless absolutely necessary, then we shopped sales.
- Made DIY gifts for most occasions
- Opted for free entertainment like the park and waiting to watch movies until they were available on streaming services
Want a more in-depth guide to setting up your budget? Check out my post here.
So after all our budgeting was said and done at first we only had a small portion to dedicate towards paying off debt. We were using the snowball method. Basically, any money we made that didn’t go towards something in our budget went toward paying off the smallest loan that we had. At first, this was a student loan that was a little over $1,000. Then it just built from there.
After searching high and low for a tool to map out our snowball progress, Josh finally found an excellent tool called Undebt.it that you can put all your info into and it will compare different debt repayment methods to help you decide on which way is right for your family.
Using the snowball method kept me sane because it really did feel like we were making progress and kept us motivated. We did instate our own twist by doing a reward system, every time we paid off a loan we got to do something that we’d been wanting to do. After our first loan was paid off we went to eat seafood, and it was GREAT.
While dedication is really the most important part of this process, I can’t stress enough how you have to give yourself periodic breaks so that you don’t burn out.
Making extra money
One of the last things that made all the difference in our efforts was making extra money anywhere we could. Josh’s career is in the computer industry and luckily he had a great relationship with a previous employer who let him come work Saturday mornings and random nights to make some extra cash. Along with that, he fixed up old computers to resell and even got into Bitcoin for a while. At this point Bitcoin is not something we would really recommend, he made great money but the landscape of that has drastically changed since then.
Another big thing we did was after paying off Josh’s car he sold it and bought an all-electric car for about $1,000 in profit. This is something Josh is super passionate about, and he never drives the car out of town because it only goes for about 70ish miles on a charge, but that’s all we need it for. This also allowed us to save money on gas each month (about $40 per month savings).
While Josh was doing a lot of things to make extra money, I did some freelance work on the side, but mostly I stayed home with our daughter. I could have probably found something to do make more money as well, but with Josh working so much the family time we did have became very precious.
Side note- remember, when you make money on the side you do have to claim it on your taxes. Always put back enough money to pay off the taxes you will owe later.
You can be debt free too!
You may be looking through this article and say I can’t implement any of this into my life. I’m not skilled at computers, I don’t have extra money in my budget.
The first thing I will say to you is to stop doubting! You can absolutely do this. Just taking small steps at first will get you far. Every little bit helps when you are paying off debt.
- Set your budget realistically and roll with the punches.
- Meal plan (I can’t emphasize this enough)
- Use a skill to make extra money, or just pick up an odd job
- Get your whole family on board, and be dedicated.
- Treat yourself after achieving a goal to give you that extra incentive to keep going for your next reward.
I hope this knowledge dump of the last year was helpful for you. Make sure to leave any of your own suggestions or questions in the comments below!