Start Date: October 2013
Paid in full Date: March 2015
Total time: 18 months
Debt Paid Off: $25,000
Avg Monthly Income: $3,500
We kicked our debt free journey into high gear in October 2013 with the following approximate debt:
Credit Cards: $10,000
Car Loan: $15,000
During this time we were also taking major moves of faith. I was actively building my CPA accounting and tax business by day and teaching college night courses in the evenings to supplement our income and in August 2014 my husband quit his full time job to plant and build our now church, Believer’s Connection. In order to keep our household afloat he drove for Uber and another local delivery service. We were trusting fully in God that our business and ministry pursuits would be successful all while living on a bare bones budget to send left over funds toward debt. Whew! So how did we do it?
1. Cut Out All Unnecessary Expenses
Pretty much anything fun was kicked out of our budget - cable, eating out, elaborate dates, etc. We had the normal expenses of a mortgage, utilities, childcare, groceries, phone, health insurance, etc. on top of our debt payments and based on our income we had to cut back on our expenses if we really wanted to make ground in paying off debt. Even our personal allowances were cut to $25 per month!
I remember going to brunch with a few college friends during this time and I told them they were pretty important for me to spend my only $25 for the month. They thought I was crazy and offered to pay for my meal. I refused. I didn’t want sympathy, I just wanted our debt to be gone forever.
2. Redbox, Chicken & Rice Became Our New Date Nights
Instead of going to our favorite restaurants or participating in adventurous dates we settled for a $1 Redbox movie and a home cooked meal. This was our way of staying focused. The more money we could funnel to debt the quicker we could get out of this phase in life.
3. We Had a Roommate
One of our great friends was a student finishing up her last couple semesters and was in search for the cheapest living option so she could pay for her college expenses out of pocket. She lived with us for one year and the rent we charged her went directly toward debt.
4. We used a Spreadsheet to Track Everything
Excel became my best friend throughout this process. I tracked every dollar that came in and out of our account using a zero based budget using a spreadsheet titled ‘We are Wealthy’ that we still use this day. Any funds leftover went straight to debt even if it was only $5.
5. We Sold our Home and used Proceeds to Knock out Remaining Debt
In March 2015 we took yet another leap of faith and made an offer on a home that was not on the market. The owner accepted, we sold out current home in three days and closed on the new home within 30 days. The house was move in ready but definitely needed some updating. My initial thoughts were to use some of our sales proceeds to buy new furniture and complete light remodeling but the Lord constantly reminded me of all of the prayers and vows I made to him about getting out of debt. You know those prayers of “Lord, if you give me a large sum of money I promise to place it directly on debt”. Well here was an opportunity to do just that.
So after I cleared my spreadsheet of all the renovations I planned, I calculated our sales proceeds and final auto loan payoff balance. Of our $16,500 proceeds, $7,500 went towards the down payment and closing costs of the new home and the remaining $9,000 paid off the balance on our car loan. Due to the timing of the sale of our current home and first mortgage payment of the new home, we had one month free of mortgage payments. We used that freed up money to pay off our last credit card.
At last we were debt free! (outside of our mortgage). All of the mental and financial sacrifices made actually paid off! In my next post I will share getting in and out of debt AGAIN and lessons learned through the process that we still stick to this day.
If you are in the process of paying off debt I encourage you to keep pushing! It’s definitely not fun but totally worth it in the end.
Are you on a journey to paying off debt? How do you stay encouraged?