How We Paid off Over $75,000 of Debt in Under Two Years
Debt has a tendency to sneak up on people. Ours was no different. School loans, vehicles, house, wedding, kids. Our life changed faster than our bank accounts. And by the winter of 2018 we had accumulated $76,684.98 of debt (not including our mortgage).
Ummmm whaaatt?!
I remember the day it really sunk in. Out of nowhere it hit me. LIKE. A. BRICK. WALL. We had two kids under two and if anything happened to Scott and I, we had NOTHING to leave them. I panicked, cried (in public), called Scott, came up with a plan, and two years later our lives are completely transformed.
I could list 100 changes we made (maybe someday I will) but for now here are 8 things we did to pay off over $75,000 of debt in under TWO YEARS.
1. We Cut Our Expenses
No, for real, we cut them HaaaaaRD.
We had a budget when we started (if you don’t have one, make one!) but this was NOT the budget that was going to get us out of debt in this lifetime. SO….we moved numbers around until we could afford a decent monthly debt payment. This new budget looked TOTALLY different than how we’d been living. I wasn’t sure we could do it. But we had no choice….so we gave it a shot!
Our initial plan was to pay off the debt in five years. But as time passed we became laser focused – and we came reeeal good at finding ways to live on less (a lot less!). Every few months we tweaked the budget further and further – it is WILD what you can live without when you want something bad enough!
Some of the things we removed from our original budget: gym memberships, music memberships, ALL memberships, cable, gifts for each other, any non-essential house updates, (most) take-out, (most) new clothes and basically ANYTHING that we could put off indefinitely.
2. We Combined Finances
When we started, Scott and I had separate bank accounts, credit cards and loans. It was NOT working for us.
I TOTALLY get that this isn’t for everyone. But combining our bank accounts, budgets and incomes was LIFE CHANGING. We made wayyyy more progress as a team. And it removed any tension about money. Plus celebrating wins as a team is way more fun!
“We buy things we don’t need with money we don’t have to impress people we don’t know. ”
3. We Created Goals
We obviously had one major goal. To pay off $76,684.98. But that was too huge for my brain to compute. So along the way we created mini-goals.
For example:
Pay off our first loan (the smaller one) within a year.
A 30 day no-spend challenge. Nothing but essential spending for 30 days. It saved me money that month AND changed my spending forever.
One month we aimed to put $3,000 toward debt. At the start this was a huge reach for us!
JUST as important….we created *after-debt goals*. Dreaming about your future debt-free life (and bank account) is f*&%ing magical! And a GREAT way to motivate you on the days when you feel broke, bored and sorry for yourself. Picturing all four of us heading to the airport for our first family vacation would actually bring tears of joy to my eyes.
4. We Treated it like an Emergency
To reach our target we knew we had to light a fire under us. If we left it up to the bank we’d still be paying into retirement (no joke). Every time we lost motivation we envisioned what would happen to the kids if we both died in a fiery car crash. Morbid I know. But it worked!
Side note: We also got life insurance and had legal wills drawn up. We became soooo grown up.
5. We Kept our Plan REALISTIC
There is a fine line between aggressive and unrealistic. We knew this wasn’t going to be a quick fix so we allowed room in our budget for things we reeeeeally couldn’t live without. We left (a little) room for modest date nights, gifts and sports.
4. We Increased our Income
We both work in jobs with fixed salaries but we did everything in our power to increase our income even if it was only small amounts. This was primarily from small side jobs Scott picked up (he is an electrician); and selling our old stuff.
We sold anything. And everything. My 4 year old was lucky to survive our purging. Over two years we made several thousand dollars selling used items. Totally worth it!
Added Bonus: Decluttering our home has created a calmer and happier space. Which is great because with minimal entertainment budget (not to mention two toddlers!), home became our getaway. Also, selling our old stuff was a great distraction from buying more stuff! It also completely changed how we look at material things - i.e. we don’t give a s*%t about most of them anymore.
7. We Got Creative
“Creative” is the polite description. “Scrappy” feels more accurate. Creating an amazing life for my family *on zero dollars* became my MISSION.
Examples of scrappy Mary Ann…
Food: Eating meals at home was one of our top money-savers (by a long shot!). And our grocery bill was something we could easily control. I researched $5 meal ideas, meal planned like a pro, repurposed leftovers and price matched like I was in an episode of Extreme Couponing.
Hobbies: Scott loves to golf buuutt golf is expensive. We realized our insurance broker gives free passes on certain days. BOOM. (It’s also worth noting that although we made drastic changes to our spending, nobody noticed. So don’t worry that your friends are going to disown you or you’ll be shamed out of the neighbourhood.)
Kid Fun: We became the spokespeople for free community events, splash pads, local parks, and every free beach in a 50 mile radius. Remember - kids have the same amount of fun in the kitchen sink as they do at over-priced amusement parks. Another benefit to entertainment on a budget is that most free activities are good for your mental and physical health (and the planet!) - walking, reading, running, visiting family, drinking the free water in your tap - they’re all virtually free - and all make you happier and healthier.
Second-Hand: If there was an item we HAD to buy (usually something for the kids) we bought second-hand. Used everything…all the time. They say a brand new car looses 30% of it’s value when it leaves the lot. I argue kids’ clothes loose 100% of their value when they leave the store!!!!! (am I right?!?!)
Gift Cards: These puppies were GOLD. And luckily having two babies within 16 months we had been gifted a TON for kid’s stores. We didn’t use them frivolously. We used them strategically for gifts, school shoes, coats and everyday basics that we weren’t able to get second-hand.
8. We Learned to Wait. And Live Without.
Sounds simple. But it was scary (and embarrassing) how much we sucked at it!
Before we started this journey I thought of myself as a saver. Didn’t spend more than the average person and rarely splurged on anything. But when I started analyzing our spending I realized I bought basically everything I wanted. Even worse, I had convinced myself that all of those things were NEEDS.
Of COURSE I needed that dress, that new kitchen table, that gift for my mom, that vacation – everyone else does it so we must be able to afford it too right?!?
WRONG.
This realization was painful at first. But once we learned to live without (or at least wait a few months!) it was freeedommmmmm. The constant yearning for more was replaced with the satisfaction that what we were accomplishing was way bigger than another new living room chair. And in most cases after waiting a few months I realized I didn’t need whatever it was after all!
In turn….we naturally become so freaking grateful…for every moment, every dollar, every opportunity and every gift. This one just sort of happened. But I’m SO glad it did. When you are living on less, it’s impossible not to cherish every good thing that comes your way. Instead of seeing the chipping paint on our house, I saw a cozy family home that keeps us dry and warm. And that was absolutely amazing.
My final points (aka THE COLD HARD TRUTH):
Most of the time this totally sucked. I might sound cocky now but in the midst of it all I had doubts, self-pity and a major case of FOMO. Keep your eye on the prize and when you are overwhelmed message me and I will tell you how much you rock!
We are average. Like soooo average. Our incomes are average (some months nearly 50% of our income went towards debt!), our house is average, our town is average and our family is average. We weren’t gifted large chunks of money and we didn’t sell our house and live off the land. So don’t think that we have something you don’t. If we can do it, you ABSOLUTELY can too.
I hope (deep down in my heart) that this inspires you to become free from debt, pay off your mortgage early, save for your first home, your dream holiday or whatever it is your little heart desires. Most of all, I hope you make decisions based on YOUR priorities. Life is too damn short to be anything less than crazy excited about your future.
Mary Ann K. xo
