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How We Paid Off $28,000 of Debt in Just 18 Months

Updated: Jan 31, 2023

If you live like no one else later you can live like no one else. – Dave Ramsey

Ever wonder what life would be like if you didn’t have student loans hanging over your head?  What you could accomplish if you didn’t have to make that car payment every month?  How you could change your life if you were debt free?

Here's my story of how our family decided we were sick and tired of being broke. And the steps we took to knock out our debt. And, yes, we did it on a low income!

Learn how this family paid off over $28,000 of debt in just 18 months and you can do the same!

How can I work so hard and still have no money?

I wondered the same thing back in January 2015.  I have always been a frugal person and chipped away at my debts here and there.  But I seemed to always be treading water, not really getting anywhere fast.  My husband & I made an ok income but where did all the money go?  I was sick & tired of just getting by.  Our family didn’t need financial wealth….. we needed financial freedom. 

A friend I knew was doing Dave Ramsey’s Financial Freedom program.  I invited her over for coffee.  After just an hour long conversation, I knew I needed to try it out too!

How to Begin a Debt-Free Program

I must admit, I didn’t not follow Dave Ramsey’s Financial Peace University to the letter of the law.  I did though incorporate many of the principles.  I started by making an financial inventory with my husband.  If you are married or have a partner, I highly recommend doing this together.  Accomplishing great things takes teamwork and the process will be difficult if both of you aren’t on board. 

What’s a financial inventory?  It is simply a list of all your debts and their details (interest rates, balances, due dates), a list of all your income revenues (paychecks, alimony, child support, side gigs), and never forget your dream date to have the debt paid off.  We set ourselves up for a two-year program.  This date may change but never pass up a chance to dream BIG!

STEP 1: Establish a $1,000 Emergency Fund

Dave Ramsey suggests first establishing a $1,000 rainy day fund.  Cars break down, appliance goes out, unexpected doctor’s bill.  This fund is to help with an unforeseen expenses that may come-up while you are in the process of paying off debt.  This fund should never be touched unless it is a true emergency! For our family, we actually had much more than the $1,000 in our savings.  It took a step out in faith to reduce our account to just $1,000.  It made me feel uneasy and a little scared but I choose to trust the program.  Remember this $1,000 is only temporary.  Once the debt is paid off, you will begin growing back up your rainy day fund in no time.

STEP 2: Print off the Monthly Budget Forms

You need to have a budget and now’s your chance to sit down and make a great one.  One thing that I loved was that Dave Ramsey suggests making a budget unique to the month ahead.  I use to make one budget I stuck with all year.  But months vary… there are birthdays, car registrations, taxes, quarterly water bills…. not every month is the same so don’t treat them the same.  Here’s is the free budget form I used from Dave Ramsey’s program:

I would suggest printing at least twelve of these off (12 months) and putting them in a binder.  That way you can quickly make your budget each month.  Make sure to include every expense on here.  Hair cuts, school yearbooks, vitamins, driver’s license renewals…. every expense matters!  Don’t use guesstimates.  If you aren’t sure how much your phone bill is, look it up.  You may need to make your best guess at food and gas expenses but, once you track a couple months, you will have a better idea.

I also used this yearly “dates” guide to keep track of birthdays, quarterly bills, and other things so I know when to add them to the budget.

Year Planner

STEP 3: Start Your Debt Snowball

After you establish your $1,000 emergency fund and get in the habit of a monthly budget, you can begin paying off those pesky debts.  Dave Ramsey calls this process "The Debt Snowball".  You list your debts from smallest to largest regardless of interest rate or type of loan.  You then begin paying off those debts in that order – smallest to largest. 

In our example, we paid off my student loan first.  Although it was only at a 1.8% interest rate, it helped jump start the process and gave my husband and I that much needed momentum to continue.  I used this calculator to fill in all our information.  If I made extra payments, I updated the document.  This helped me see how much “time” I shaved off our debt payoff plan.  Remember our two year plan?  We paid it off in 18 months instead of 24 months – 6 months ahead of schedule!

STEP 4: Time to Hustle

Now comes the fun part…. How quickly can you pay off those debts? How can you generate more income or reduce expenses to throw more money at those snowballs?  Here are a few strategies we used:

  1. I started selling eBay

  2. Our family cut out all trips to hotels or vacations

  3. I began cutting our grocery bills by trying once-a-month freezer cooking

  4. We cashed out term life insurance policies my husband & I had from when we were kids (we kept our term life insurances… very important especially if you have a family)

  5. My husband reduced his 401K contribution to the lowest amount to get the company match (remember this is only temporary)

  6. Cable was cut and we used Netflix and Hulu instead

  7. My husband & I stopped exchanging extravagant gifts

  8. When our microwave handle broke off, we glued it back on rather than replacing

  9. My husband began umpiring baseball games in the spring/summer months for extra income

Most importantly my husband and I sat down each month to have our “checkup” with each other.  We discussed what was coming up the next month, how we were doing, ways we overspent the month before.  It’s all a learning process and you don’t need to be perfect right away.

If you have no extra income to put towards your debts, you need to do one of the two things:

  1. Cut your monthly spending   OR

  2. Generate more income

STEP 5: Keep Your Eye on the Prize

You can quickly become fatigued especially when you have a lot of debt to deal with.  My husband’s student loan debt was over $28,000 and at a staggering 6.88% interest.  It seemed like we were getting no where but months of making extra payments got it under $20,000.  Then a big tax return got us under $15,000.  Once we hit $10,000 it seemed possible!  The end was so close and nothing was going to stop us. We actually picked up the pace as we got closer to the goal.

We also reminded ourselves throughout this period that there was no time better than now to do this!  Our kids were young.  Going on a Disney trip or to fancy water parks or having birthday parties at bowling alleys didn’t interest them and wouldn’t even be fun to do.  They would enjoy them so much more a couple years from now.  Why not pay off the debt so that we could pay for those trips in cash in a couple years and enjoy them guilt-free?

The Best Day Ever

By far, one of the best days of my life was being able to scream “We’re Debt FREE!” with my entire family.  We all worked hard to accomplish one goal.  My husband headed out to work at 6:30 am every single day.  My kids made sacrifices.  I busted my butt to keep us on track.  It was by far one of the greatest feelings in the world.  That day we truly gained financial freedom.

Check out our debt-free scream here!

I encourage anyone with debt to consider becoming financial free!  It does take dedication but the benefits are so worth it.  In just 18 months, we paid off over $28,000 in debt.  We weren’t making gobs of money. In fact, we lived on only 1 1/2 incomes.  We didn’t have inheritances we received to pour into it.  We were just average people sick of living paycheck to paycheck.  Paying interest to banks month after month.  Worrying about our financial future. 

Anyone can do this… I promise!  And I am always here to encourage and say that YOU CAN TOO!

POST UPDATE: It's six years later and how are we doing?

I am happy to report that six years later (it's now 2023) we are still debt-free! We haven't had a car payment or student loan payment or any other payment since then (except for a mortgage). And, yes, our family did finally get to Disney World in 2018. We also built a house in 2022..... a dream of ours.

Reflecting back I don't regret for a second all the sacrifices we made to become financial free. Those small things we gave up didn't mean that much to me and I don't really feel like we went without. And now we get to travel and do all sorts of fun things with our kids. And we can still scream "We're debt-free!"

With the economy being tougher right now and everything costing so much more, there's no time better than now to work on getting rid of the debt. It will actually help you manage the money you do have better. And you can always message me with any questions!

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