Let me share with you our story of paying off $450,000 in debt in about 18 months. The details are a little foggy at this point, because we’ve been debt free (except for our current mortgage) for nearly a decade but I have some core memories to highlight.
Even more importantly, I want to give you some pointers on how to make this your story too if you find yourself with a little – or a lot of debt…and a desire to get out of debt.
I’ve been blogging for over five years now, and somehow this story hasn’t made it to the internet – until now.
Count it all up
Well, part of that story is on the internet. The part where we figured out just how much debt we had. I won’t repeat it for you here, but for your reading pleasure here is that blog post.
Long story short; I was unpacking boxes listening to Dave Ramsey’s Financial Peace University on CD (remember those!?) and added up our total debt – mortgages plural, auto loans, student loans, and credit cards.
The number hit me in the gut; $700k.
No wonder I was feeling so much pressure, at that point we had just done the ‘monthly payment’ math. Can we handle a $350 car payment – looks like it, let’s do it. Can that house we just moved out of make it’s own rent? Barely, but okay, we’ll keep it.
Technically, we were very normal – and not necessarily struggling….as long as nothing broke down, or one of us lost our jobs, and life didn’t rear its ugly head at any point.
The one thing that really got to me was that I feel like we didn’t have any options. For example, our kids were in daycare at that time – and although I didn’t have the overwhelming desire to be a stay at home mom…I also didn’t have the option, because my salary was part of the equation we needed to make our payments like clockwork.
Getting ahead didn’t seem possible…getting by was more like it.
Okay back to the story that hasn’t yet been told.
So, how did we do it?
Here are the steps we took to pay off $450,000 in debt in 18 months.
1. Get yourself a goal.
Straight up, we just wanted to get out of debt. And when I say we, I mean me – until I could convince my husband that this was a good idea. We wanted to start with the easy stuff; credit card debts, lowest balances, etc.
We didn’t have a bigger goal at that point and I’m not sure we could see the forest through the trees in order to even consider one honestly. But we were staring at ‘work the rest of your life’ to pay for your past/current pleasures…and good luck with retiring.
2. Decide to go all in.
One of our sticky points early on was our Costco card, that points accruing from the cash back was a point of contention and ultimately we opted to use it for 2-3 key purchases (gas, travel as I recall) and that was it.
I have feelings about credit cards, and don’t recommend using them when you’re trying to get out of debt – slippery. But I’m also not one that will tell you to cut them up either; these are all personal decisions and you need to weigh and understand your options.
We started to use the envelope system with cash for a lot of discretionary purchases; groceries, entertainment, clothing, personal spending, gifts, etc.
No. We started saying it. To our kids, each other and ourselves. Painful, but necessary for a short season to get to our goal.
Boundaries with our spending were important; we transitioned from putting a bunch of random expenses on a credit card to saying we’re spending X on groceries or here’s $Y for your personal spending money this month. My husband calls this his allowance and I cringe when he says it…which is why I think he says it.
3. Make a plan.
Call it a spending plan, or more traditionally a budget. A zero-based budget was in order versus what we were doing – a bill tracking sheet. Sure, I knew our payments and when they were due…but I wasn’t “spending” every dollar on purpose in advance.
Having a reasonable and intentional budget is key to your plan. This is what allowed us to find margin and leftovers that could go towards our debt goal.
4. Decrease expenses.
As you may have expected, we decreased expenses in order to try to get more ‘leftovers’ to go towards that goal.
- I stopped coloring my hair for 18 months. Turns out I’m not blonde after all.
- I even made my own laundry detergent with borax and some other product from arm and hammer in a 5 gallon bucket. I’m not kidding, and my husband swears it ruined our clothes.
- We made some gifts and decreased gift spending at least one Christmas.
- Called our cable company, internet, cell phone, etc. and negotiated lower rates.
- I shopped around for insurance and once we had one of our cars paid off I decreased the insurance down to liability only…and then proceeded to get into an accident and had to cash flow $5k in repairs. Not recommended. Keep your full coverage if you have a decent car.
5. Increase income.
Neither of us had substantial income raises during this time; my husband was working as an entrepreneur in a partnership and I was in a salaried role.
- We did have the garage apartment ADU that was an income source for us. We spent some time prettying the place up and increased rents whenever we got a new tenant.
- We sold stuff. Some little things; think Facebook Marketplace and garage sales – and some big things.
- We sold our townhouse first, not making much profit; maybe $5-10k but decreasing our debt liability by $120k.
- Next up we sold our single family home, again not making much profit; maybe $15-$20k but decreasing our debt liability by $220k.
- We used those profits to put towards our debt in conjunction with the other efforts we were making.
6. Be flexible.
Stuff came up, and we needed to be flexible with our plan in order to keep our eyes on the prize. You can’t throw the baby out with the bathwater. I mean, you can – but then you’re without a baby. We had to find ways to stay on target with the overall plan when sometimes our budget had to be adjusted because we had a giant tree root infiltrate the water pipes and cause major repair needs. You know, life.
7. Celebrate.
Now, I don’t recall any specific celebrations that we had – there was no, “we paid the car off” date or a debt free scream anywhere. But we continued to go on vacation as a couple – a place where spending money was important to us, and celebrating our progress was certainly on the agenda.
Those celebrations/getaways were important to us, and kept us going – moving forward and ready to work on the next milestone.
Well, there you have it!
That’s how a couple in their early 30’s paid off $450k in debt in about 18 months.
Is it legit? There are times where I start to wonder if that $450k was legit, I mean it did include two mortgages…it wasn’t all consumer debt. But at the end of the day – it was debt. They were all obligations that we had to someone else. And the ability to ‘take it away’ or ‘lose it’ was always a possibility.
I don’t know about you, but I don’t want anyone, anything, or any company to have that kind of power over me.
What would we do differently?
We would have kept the townhouse and rolled it into our debt payoff plan. Yes, it would have taken longer – but that property was actually a decent rental, and was low cost considering…and it recently sold for 3x what we bought it for. Because investment property IS part of our long term planning, we wish we would have kept it for that reason.
And my husband says that he’d really put his foot down with that homemade laundry detergent.
What happened next?
Well, we continued the traditional Ramsey baby-step journey. We saved up an emergency fund of $20k, which ironically we haven’t touched in 10 years. Not that emergencies haven’t come up – car repairs, roof replacement, health bills, etc. but we’ve been able to cash flow them because we have margin and leftovers in our budget. We live on less than we make.
After that we amped up our retirement contributions to 15% of our income.
We occasionally add to our kids’ college fund – but this isn’t a huge priority for us. We’re planning to cash flow part of their further education; not all of it as a matter of principle for our family.
Living Intentionally
Now, I’d say that we’re living on purpose and using our money the same way. We’ve purchased our little vacation spot at the lake in cash. Long story, but I actually brought CASH to the sale…and they turned me away.
Our family vacations regularly, filling up our value of Adventure. We spend on things that are important to us and save in areas that aren’t. When we use money in line with our values it feels good!
We socked away close to 80k to purchase a tiny home (that plan has a pause right now) and that also gave us plenty of cushion if needed for me to step away from my salaried career back in 2021 and say hello to a full time coaching career.
“Being debt free bought us options.”
What a gift it was to be able to say, no thanks I’m not interested in a Director level role to say YES to being an entrepreneur and helping others with this money stuff week in and week out. Life-giving work, that allows me to focus on my why.
At some point along the journey we did more math – and figured out that we were ‘everyday millionaires’ that point when your net worth equals $1m. We just crept past $1.4m last month.
What’s next?
Next up, pay off our home. We owe just under 200k, we’re putting extra toward the principle each year and will certainly celebrate when it’s paid off. Then that tiny house will probably come back into the picture, and maybe another investment property. We’ll see.
By that time we’ll be cash-flowing college and throwing extra money in retirement so that we can again buy ourselves more options; the options to work less when we want to and maybe partially retire by our mid-fifties.
We’re not special.
I had one of my first hecklers in the DMs recently. He commented that it was an effing joke that I had paid off $450k – and not everyone has that kind of income. I politely responded with something like; hey a$$hole we paid this off all while grossing about $160k/year between the two of us.
You can get out of debt too.
- Get yourself a goal.
- Decide to go all in.
- Make a plan.
- Decrease expenses.
- Increase income.
- Be flexible.
- Celebrate your milestones!
These are the elements of the framework that I use with all of my clients: Journey to Thrive framework. Where we dream, prep, plan, flex and thrive.
Want help?
This is what I do now, 3-4 days a week I help people just like you create and implement these plans and walk beside you with encouraging accountability.
If you are unsure where to start, or overwhelmed and unorganized, I’ve got you. Book a free strategy call so that we can begin your plan of attack.
Thank you for joining me on my journey to influence.
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