Tiny House, Tiny Living, The Tiny Life.

How We Paid Off $59,000 in 24 Months

There’s no easy, fast way to pay off your debt. It takes a lot of hard work, sacrifice, and focus. The good news is that it is possible, no matter how overwhelming it may seem, and the end goal is worth it.

March 17, 2014: I was sitting at my dining room table surrounded by bills, sick and tired of making a decent income, but having nothing to show for it. The stress of juggling payments and the fear that there was going to be more month than money had gotten the best of me, and in that moment I knew we had to make a change.

You may look at the title and think to yourself, “Well if you paid off $59,000 in 24 months that must mean that, on average, you were putting just over $2,400 towards your debt each month.” Putting that amount (37% of our take home pay) wouldn’t have been possible if we hadn’t been willing to change our behavior as well.

Getting Real With Your Spending Behavior:

I added up the debt and had no idea where that money had been spent or what it had been spent on. We didn’t have any fancy clothing, we don’t have a home filled with the latest and greatest technology, our furniture was mostly purchased second-hand, and our car was certainly not the fanciest (not unless you consider a well-loved Honda Odyssey fancy).

So in order to see where the money had  gone and where the leaks were in our spending, I decided to do a six-month spending analysis. I grabbed six months worth of credit card statements and bank transactions and got to work. I quickly realized that we were the “death by $20” types, meaning we would spend $20 here or $20 there. Although that amount doesn’t seem like much at the time, it quickly added up.

Take Responsibility:

overspendingWhen married, in debt, and stressed, it was easy to blame the other person and their spending behavior for getting us into the mess that we were in. Completing the spending analysis put both my husband and I in the position where we had to take responsibility for our part in the problem.

We could see exactly what we had spent over the last 6 months. The truth hurt but it was in front of us and the numbers didn’t lie. Once we saw the holes in our spending, and took responsibility, we were now able to come up with a plan to get out of the mess that we each had a part in creating.

Develop a Budget Where Every Dollar has a Name:

The biggest part for us in our journey of becoming debt free was to get on a monthly budget where every dollar was given a name. We started at the top with our income and worked our way down through our expenses until we got to the end. Any money left over each month was then thrown at the debt.

We preferred the debt snowball when determining which debt we wanted to attack first. In the debt snowball, you list your debts from the smallest balance to the largest balance and then start paying them off in that order. We loved the traction we felt as those smallest debts got paid off quickly.

Cut, Slash, and Free Up Your Income:

In order to be able to put an even larger amount on our debt, we looked for ways that we could cut our spending. We slashed our average monthly grocery budget by $200 a month by meal planning, shopping with a list, and making as much as we could from scratch. We cut our clothing budget by shopping at the thrift stores and the clearance racks. We only bought what we needed and skipped the things that we wanted.

Stick With The Budget

budget moneyOK…This was a hard one at first. We really needed to get into a routine and pattern that worked for us when it came time to checking in with the budget. When first getting started, I had a budgeting app that was on my phone that I checked in with at least once a day (sometimes, several times a day…I’m a bit of a numbers geek).

Writing a budget is one thing, but checking in with the budget is the important part. We had written budgets before, but as the debt rose, it became clear that a budget isn’t a set it and forget it tool. Your money will not magically behave just because you put some numbers down on paper.

Get the Biggest Shovel Possible:

Aside from getting on a budget and sticking with the budget, finding extra work and making extra money was hugely important in us becoming debt free as quickly as we did. When you want to get out of debt so bad you can taste it, sacrificing some free time to work extra hours or a get a second job in the short term is a great way to put your debt pay-off into overdrive.

Stay Focused on the End Goal:

During our debt free journey, it was tempting to take a break, and enjoy some of the extra money that we now had by working extra jobs. We knew though that if we stopped, getting back on track was going to be even harder, so we had to stay focused on the end goal.

We reminded ourselves of our “Why?” Why we wanted to get out of debt. What a debt free life would look like and feel like. We tracked our progress and made every purchase intentionally by asking ourselves, “Do we want this item more than we want to be debt free?” When you know where you’re going and why, getting there becomes much easier.

Your Turn!

  • What does financial freedom look like to you?

Leave a Reply

[data-image-id='gourmet_bg']
[data-image-id='gourmet_bg']
[data-image-id='gourmet_bg']
[data-image-id='gourmet_bg']
[data-image-id='gourmet_bg']
[data-image-id='gourmet_bg']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[class*="-body"]
[class*="-body"]
[class*="-body"]
[class*="-body"]
[class*="-slide-open-holder"]
[class*="-slide-open-holder"]
[data-image-id='gourmet_bg']
[data-image-id='gourmet_bg']
[data-image-id='gourmet_bg']
[data-image-id='gourmet_bg']
[data-image-id='gourmet_bg']
[data-image-id='gourmet_bg']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[class*="-body"]
[class*="-body"]
[class*="-body"]
[class*="-body"]
[class*="-slide-open-holder"]
[class*="-slide-open-holder"]