My husband and I finally woke up, smelled the coffee and hustled out of debt. Now I’d like to share the ups and downs of paying off our $22,000 with these 4 steps.
Photo Credit: Mike Kline (Creative Commons)
Picture that couple that everyone knows is great with their money. They have this impenetrable compass that always steers them to financial safety.
Well, that wasn’t us.
When D and I got married, we ate Hot N’ Ready pizzas and went to the movies. Regularly. We dropped everything the minute someone mentioned eating out. In fact, the minute they said, “I’m hungry” we locked eyes on them and waited, with bated breath.
I’m painting a bleak picture because you need to see that we didn’t have all the answers when we got out of debt. We’re still not pros, but we learned some stuff that changed the game for us.
You can too.
In 2011, we got married with $22,000 in debt. At Financial Peace University we learned 7 baby steps to financial peace:
- $1000 saved for emergencies
- Pay off all debt (non-mortgage)
- Save 3-6 months expenses as emergency fund
- Invest 15% of household income
- College funds for children
- Pay off home early
- Build wealth and GIVE
Once D and I finished Baby Step #1, we took these 4 drastic steps to pay off debt:
- Switched from smart phones to “dumb phones”: Yep. We unplugged. Our phones were dilapidated. But they challenged us. Like saying, “Can you do without, if you have to?”
- NOTE: You probably don’t have to ditch your smart phone to save money. Ask your friends or ask around on Facebook. There are a lot of ways to reduce your phone bill.
- Paused our 401k contributions (TEMPORARILY): You’re giving me a funny look. I know. Both of our employers offered a 401k match. FREE money. Pausing these contributions truly held our feet to the fire. We got way more intense about paying off debt AND living on a budget.
- NOTE: If you’re paying off a large debt (i.e. student loans) that will take longer than 2 years, even while paying aggressively, I do NOT recommend pausing your 401k contributions.
- Lived on one income: We used my entire full-time paycheck to pay off debt. Pretty drastic? You better believe it! I worked hard for that. It showed us how awful it was to hand over OUR money to someone else.
- “…the borrower is slave to the lender.” – Proverbs 21:7.
- Didn’t buy a house: $22,000 in two years. That’s a hefty down payment. We wanted a house. Especially after we found out Baby #1 was on the way. But we continued our debt-free journey instead.
This is the best part.
We paid our last debt in November of 2012. It was two months before our daughter was born.
There is nothing I would change, not one thing, to give up how it felt to bring our baby into a debt-free home.
I wish that feeling for you.
And guess what?
Today we have smart phones.
Today D is contributing to his 401k.
We still overspend sometimes.
But, when you are intentional with your money long enough, awesomeness follows.
Stay the course.
Find your true grit. Like Jeff Bridges.
You’ve worked too hard to hand over your paycheck to someone else.
ACTION STEP: List 5 things that you could TEMPORARILY stop or reduce to pay off debt. For example, cable, magazine subscriptions, manicures, online shopping, etc.
Join the conversation: What’s one way you’ve sliced away at your debt?