We have made a goal to pay off all of our student loans in two and a half years. We currently have a little over $40,000 in loans. When we first started looking at that number and how we would possibly be able to pay it off in 2.5 years, we were EXTREMELY overwhelmed and pretty sure it was impossible. BUT. We want those loans paid off before we buy a house. We want to be completely out of debt before we add mountains of debt from a mortgage.
So, we started looking at numbers and doing some math. Right now, my husband makes a little less than $40,0o0, so being able to pay off as much as his yearly income in 2.5 years seems a little hard, right? But guess what. WE ARE GOING TO DO IT. When my husband started his job in November, we had be struggling to make ends meet while he was in school. We had relied a bit on credit cards. So on his first day of work, we realized that not only did we have student loans, but we also have about $5,000 in credit card debt. Plus, we only had one car. We found a house to rent that was a cheap as we could possibly find and still be able to meet our needs, but it’s kind of out in the sticks, so I wasn’t really okay going without a car for long. When we found the perfect car (we waited three or four months), it was an old suburban and was $2000. So we added that on to our $5000 credit card debt and $40,000 student loans. We started realizing it was a problem around December and decided to buckle down and start taking care of things. So, we made some changes in our budget and our mindset.
And guess what? In 3 months, we paid off the car and the credit card debt. $7000 in three months. In that same time, my husband was only scheduled to make around $10,000. I was and am determined NOT to work away from the home, so I wasn’t bringing in an income of any kind. So! How did we do it? And how do I plan on doing it during the next 2.5 years to pay off the rest of our debt? I’ll tell you 🙂
1. We wrote down our financial goal, and looked at it often. Out of sight out of mind, right? Before, I would get a credit card bill in the mail, pay the minimum without really looking at the statement, and throw that danged piece of paper away. When we wanted to get serious about paying off our debt, we looked at the numbers. We looked at exactly how much we had been spending on different things and we wrote down specific goals for a bunch of different areas that needed improvement. At least once a week, if not more, we remind each other of our goals. This has helped us to think twice before we purchase unnecessary items.
2. We implemented the “snowball” method. Dave Ramsey talks about this method often. What it means is you take whatever your smallest debt is and pay it off first. Ours was the suburban. We put any extra money we had towards paying off that loan. We just made the minimum payments on all the other debts. When that one was paid off, we started on the next smallest debt, the credit cards. Now that those are paid off, we are working on my student loans, since they are smaller than my husband’s. In fact, we changed my husband’s repayment schedule to be a graduated plan, meaning that the payments start out small and get larger over time. We did this so we would be able to put as much money as possible into paying off my loan first. Then, after mine is paid off, we will be paying much more than the minimum on my husband’s loan to have it paid off in 2.5 years instead of the 25 years that the repayment plan allows us.
3. We made some smart decisions earlier in our marriage that help us pay down our debt now. Obviously this isn’t something everyone can implement right now, but it is something I strongly encourage new married couples to do. Instead of paying for an apartment for four years of college, my husband and I bought a trailer. It was a pretty nasty piece of work, but it was sufficient for our needs. We paid $3000 for it. We fixed up a couple things in it, including completely remodeling the bathroom (cost us around $700), and we sold it for $6000. We chose to carry a contract on that and we are still getting payments from that. So every month we get around $300 that we put straight to our debts.
4. We make sacrifices. My kids don’t always have new clothes. When they do, it’s because someone happened to donate some new clothes to the Good Will or there was an AMAZING deal at Old Navy or something like that. I also shopped around a LOT for Christmas and kept to a strict budget of $50/child. I didn’t want to go overboard on the spending and the kids were PLENTY happy with what they got for that $50. Another sacrifice we make is we have a renter in our house. My husband’s brother rents out one of our rooms and pays us $350/month in rent. We get along great with him, but it is still a sacrifice for me and my family to have an extra guest in our house all the time. But, we’re willing to sacrifice now for financial freedom later.
5. We don’t pay for entertainment. We don’t go to movies or anything like that. Once in a great while we’ll take the kids to a children’s museum or something like that. We found free activities around town for the kids to do and take advantage of those. Instead of a movie, we’ll go to a park and have a picnic. The kids like that better anyway.
6. We don’t go out to eat hardly ever. Once in awhile, we’ll be traveling or errands will run long and we’ll grab something at a fast food restaurant. But, when we do that, we stick with water and skip the french fries for the most part. The few times a year that my husband and I go to a nice restaurant is a SPECIAL occasion and it is that much more fun because it doesn’t happen often. In fact, most of our date nights are at home, after the kids go to bed.
7. I only go shopping every other week. I buy enough stuff every other week so that I don’t need to run to the store for ANYTHING. Because if I have to go to the store for milk, you know I’ll come out with bread and butter and soap and paper towels and whatever else. But if I just don’t go INTO the store, I can’t come out with anything I didn’t really want. When I do go shopping every other week, I plan out my menu before hand to make sure I only buy the things I need. I take a list and I stick to it.
8. Along that same note, we utilize left overs. This was a hard habit to get into for me, but it has saved us a lot of money by doing it.
9. We use cloth diapers. I paid about $150 for the diaper system we have. I don’t have to buy any diapers for my next baby. Yes, it is a little more of an inconvenience, but it saves me SO MUCH MONEY. We also try to use cloth towels instead of paper towels to cut back on having to buy those.
10. We cut back on the services we receive. We already don’t pay for cable, but we decided to cancel our netflix account and hulu plus account. We also looked into a cheaper cell phone plan and realized that we were able to get on the Sprint Framily plan and it saved us about $80/month! We don’t have unlimited data anymore, but we weren’t using that much anyway, so it’s not a huge sacrifice. We also shopped around for cheaper insurance and realized that the insurance my husband’s employer was offering was not our cheapest option. Yes, we had to deal with the marketplace to find new insurance, but for the savings each month, it’s worth the 75 minute hold times each time I have to be on the phone to ask a question about the website that isn’t working. It just is.
11. I work hard to make a little extra money. Some months I bring in an extra $1000 through my various only jobs and my blog. I’m a Beachbody coach and that brings in some money, I make a couple hundred off my blog, I do some crowdsourcing, I’m a digital assistant for another blogger, just to name a few. I have to prioritize my time well to make sure I’m still spending time with my children, but all that extra money goes straight to debts for now.
12. Our tax return went right into paying back debts. Easy way to get a good part of it paid off.
13. When my computer died, instead of buying a new $900 computer, I bought a $200 chromebook. No, it doesn’t do all the super fancy things a normal computer does, and there are a lot of times when I have to struggle a little with it to get it to do what I want, but I saved a lot of money by going this route. You don’t always need the BEST of everything.
14. Once our credit cards were paid off, we got rid of all but one. The one we kept was our Costco card. We kept it because it gives us rewards for shopping at Costco, plus it allows us to buy gas from them, which is the cheapest place around here to buy gas. BUT! We pay it off every month.
15. We aren’t going to buy anything on time. If we need another car, we’ll save up for it. We aren’t going to go into debt for toys or anything else. The only other thing we’re planning on buying on credit is a house. And that won’t be for a couple years.
16. We remind ourselves constantly of our goals. I know I said this in #1, but it’s important. Saying “no” to fun purchases can be so hard, but small sacrifices now will make a big difference later.
17. We pay our tithing. This should probably be at the top of the list, because I know it’s the reason we are able to have any money at all. The Lord is so great to us and I know that when we give back a tenth of what He has given us, He gives us more blessings than we have room to receive.
Those are my 17 tips to help pay down debt faster. My number one piece of advice is to write down your goals and constantly be looking at them. At LEAST twice a day. And for sure before you walk into any store. Remind yourself of why you don’t want to buy things that you don’t need, remind yourself of your LONG TERM goals so you don’t trade what you want most for what you want right then.Share