How We Paid Off $25K in Debt Fast, in Less Than 9 Months!
Here’s the truth. We were bogged down with a ton of debt. Honestly, we still are, even after working hard and paying off $25,000 of that debt! How to pay off debt fast was the burning question that we had to answer!
You may be wondering how we amassed so much debt. I can say, without a doubt, that our money situation is 90% my fault!
First, I have lived pretty much my entire working life with the “You Only Live Once” attitude!
Second, managing and saving money weren’t things I learned growing up.
To be clear, my parents definitely tried teaching us money management. I didn’t get it or even care at that time and for a very long time. I liked buying stuff!
Anyways, about nine months ago, my wife and I decided our money habits needed to change, and we needed to get out of debt.
I think this wake-up call is way past due! Being 42 years old now, and working for roughly 26 years, and having nothing set aside for retirement is NOT okay!
Not only that, but there is still more we want from our lives. For example, I want a boat. Always have. But that dream has been on the back burner.
Later, you are going to think that I can afford a boat right now; however, I am still prioritizing paying off debt over that dream.
Please don’t misunderstand me: my wife and I are happy and have a very fulfilling life. Like most of us, though, we have a bucket list, and some of that list costs money. So, we set out on a journey towards financial freedom.
We Took the First Step
The very first thing we did was sit down and make a list of all our debt. This list was eye-opening! We had no idea how deep in debt we were.
The second piece of the puzzle was to develop a plan. We did some very complicated math, with the help of some awesome spreadsheets, to determine our best course of action.
In our case, we wanted the quickest wins, so instead of saving the most on interest, we wanted to pay off the smallest debts first. We ultimately settled on using the debt snowball method of debt repayment.
One thing I cannot stress enough is to have regular family meetings! We sat down weekly, with no distractions such as those pesky cell phones. We discussed everything debt, including our goals for the week, and reminded ourselves why we are doing this.
We also reviewed our plan at each meeting, not only to keep it fresh in our minds but also to enable us to make small tweaks to our strategy as necessary.
Next, We Needed a Budget
We decided to use the zero-based budget as the template for this journey. We put every dime into something, whether savings, bills, or extra debt payments.
For more info, you can read How To – Zero Based Budgeting.
After developing our plan, we needed to figure out where our money was going to develop an effective budget. We also needed to free up some of our money for our debt pay-off plan.
We started by examining our spending for one month. We discovered we were wasting a substantial amount of money on entirely unnecessary things!
Then, we split everything up into two categories: WANTS and NEEDS. Things like our mortgage, electricity, groceries, are all in the NEED category. We also put the minimum payments on all our debt in this category.
Guess what we stopped spending money on, for the most part? The WANT category! However, we decided when we started this that we wouldn’t make ourselves miserable the entire time.
In our budget, we allowed each of us $100 per month for whatever we wanted. We tried very hard not to go over that amount but didn’t always succeed.
How to pay off debt fast you ask? Stop buying those new fancy televisions. Keep your spending on that WANT category to a minimum.
We Also Cut Spending in Other Ways
Most important, we save roughly $500 a month because I quit smoking! I put cigarettes down about four months ago, so we didn’t have this money available to us the entire time.
I did this for two reasons. I would love to say that my health was the priority, but in reality, it wasn’t. Being debt-free was my primary motivation.
We save a substantial amount of money on groceries each month by switching brands. We started buying the store brand almost all the time. Did you know some of the store brand vegetables are the same exact vegetables as the name brand, even canned at the same facilities?
We also started meal planning and prepping. Meal prepping saves, usually, more than $200 a month. I used to eat fast food for lunch every day, and now I take my lunch with me from home.
Coincidentally, this is also helping my waistline! It also helps that one of my wife’s favorite hobbies is gardening. She grows some excellent vegetables!
Also, you can try out 5 dollar meal plan. I know, it goes against our goals here, but if you follow the meal plan they provide and follow the grocery list they also provide, you will still SAVE money for your debt pay off!
Don’t forget to read Save Money On Your Food Budget.
Further, we cut cable, and I strongly recommend that we ALL cut that cord! Talk about a colossal waste of money. With all the different streaming services, why do we need cable?
Small Things Add Up
We do a plethora of other little things to save as much money as possible.
We drive my wife’s car as much as possible. Honestly, the only time my truck leaves the driveway is for me to go to work. My wife’s car gets 39 MPG while mine is closer to 17, so this is a no-brainer.
If weather permits, we hang our laundry on the clothesline instead of using the clothes dryer.
Throughout the week we jot down a list of all the errands we need to run. Then on the weekend, we combine as many of those into one trip as we can.
I could go on. But the point is: if you put your mind to it, you can think of plenty of ways to save money.
We Make Some Extra Cash When We Can
Yes, I spend some serious time on Survey Junkie! In the meantime, we found plenty of other ways to make some extra cash.
We use Trim to save some money occasionally when it can find us some savings.
Also, Swagbucks is another excellent way to make some extra cash.
You have NOTHING to lose by signing up for these and trying them out. If you don’t like them, you stop using them.
Further, we had plenty of stuff around the house that we had already planned to sell. This journey motivated us finally make that happen. Overall, we made just over $1,000 selling those items.
We also spend some time delivering food with Door Dash. I did this occasionally on the weekends, while my wife did it quite a bit. Both of us could have spent more time doing this, and we plan on stepping this up.
At the end of the day, making more money is how to pay off debt fast and seeing the results thus far motivates us to do BETTER!
Use Every Tool Available
One thing that I believe a majority of us overlook is interest-free promotions!
I got a new credit card when we started, solely for the interest-free promotion period. By doing this, we saved hundreds of dollars per month. That card is now paid off, but I plan on moving more debt to it since we still have nine more months of interest-free.
Another option some of you may not know is that once your interest-free promotion expires, you can call the financial institution and sometimes they will renew it for another term.
We have also tried almost every money-saving app under the sun! Well, I’m exaggerating, but we have attempted to use more than I care to admit. Some of them are extremely good, while others leave something to be desired.
One of our favorites because of how much money it saves us is Ibotta. The amount of money we get back after grocery shopping is unbelievable.
The Most Important Thing We Do
During this entire process, we have been putting some money aside, in savings, for our emergency fund. Why? Because we didn’t have an emergency fund when we started and there have been several emergencies during this past nine months!
Our home air conditioning decided to break on us not once, but twice. Further, a transmission line in my truck broke, and I was not able to repair this myself, so that cost us some money at the dealership. On top of all that, our clothes washer broke, and we decided to replace it because the repair wasn’t worth the cost.
Also, I hadn’t seen my parents and siblings in about three years, so I wanted to visit them. I chose to fly, so we spent some money on a plane ticket. Was that an emergency, maybe not, but I felt it was necessary.
However, we only had to use a credit card for one of these situations! The first time our air conditioning broke, our emergency fund didn’t have enough funds. For all the other emergencies, we were able to use our emergency fund and not gain more credit card debt.
Today, we are sitting on a $2,000 emergency fund! I plan on growing this even larger; however, we are going to cut back on this temporarily and put more towards debt.
I cannot put a stronger recommendation on having an emergency fund. Placing a minimum of 1,000 dollars aside is imperative and will save you from using your credit card and piling on more debt. An emergency fund is a critical step in how to pay off debt fast.
You really should read Emergency Fund: First Step to Debt Free.
Also, don’t forget about Digit when you are trying to save up your emergency fund. Absolutely EFFORTLESS money-saving tool!
Putting it All Together
After all our planning, budgeting, cutting expenses, and making some extra cash on the side, how much were we able to put towards our debt each month?
We were able to free up a massive $2,100 per month, on average. We couldn’t believe how much money we were blowing on stuff we didn’t need. We frequently wonder what we even have to show for all that spending.
All of the extra income things we did, such as selling things, taking some online surveys here and there, and delivering food for Door Dash, we made, on average, an extra $1,200 per month.
We put ALL of this towards our debt and our emergency fund. The few emergencies we had set us back quite a bit, and while we were able to use our emergency fund for most of them, we did have to replenish our savings each time.
What Are Our Plans for the Future?
Our future looks brighter with plenty of plans! We are continuing this journey for the foreseeable future, so we want to keep getting better and better at it.
We want to make more side income and cut back expenses even more. We want to improve our budget and achieve perfection!
Why do we need to do all this? Let me tell you the WORST part of this whole story: we still have a substantial amount of debt, not even counting our mortgage!
I also want to put some money into this blog. I started my blog more or less as a hobby to keep me occupied when I wasn’t working. I also find it to be some extra motivation to keep going on our path.
Eventually, I would like to turn this blog into something more than just a hobby, so I need to invest some time and money into it. Also, if you’re wondering, I have made zero money from my blog for the debt pay-off that we have accomplished so far.
Lastly, make no mistake: I will buy myself a boat. Eventually.
YOUR TURN – What are your tips on how to pay extra money towards your debt?
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