Thursday, December 12, 2013

How to get out of debt

My husband and I purposed after getting married in 2011 to get out of debt and stay out. Sure we didn't have a mortgage, and we were only 24 years old, but we were already $85,000 in debt. We completed the Jim Sammon's Financial Freedom Seminar, and learned about the importance of being smart with the provisions that God provides us with.  We realized how irresponsible we had been and purposed to stay on our new debt-free course.
So in love, and so in debt! We used all of our wedding present money to pay off debt
I have been quite transparent about our journey to get out of debt, because I want to show you all that one bite at a time, it is possible to eat your debt elephant. (To see our past debt updates, check out the posts in the Post Directory tab at the top of this blog).  I'll be giving a big update after January 1st, but let me give you a preview. This year has been BIG for us and we have seen our debt dwindle into numbers we thought were impossible to reach. God is great!

I want to take a moment to share with you the tricks and habits we use to keep on track with paying down our debt. I hope you will pass these on to people you know who may be struggling under the weight of debt and feel helpless to get out. And for those of you who have enough debt of your own to struggle with, I hope you will be able to take something away from the journey my husband and I have taken.

Our habits for getting out of debt quickly:

Set a goal and track it.

I keep a spreadsheet where I keep track of how much we pay to our debt every month, and the balance of the debt every time I put through a new payment. This allows me to see and celebrate the progress in hard, concrete numbers. My husband and I both celebrate every time I text him a new, smaller number.
Have a small savings cushion
This cushion might look different for everyone, but it is very important to have something of a cushion while you are paying off debt. Dave Ramsey suggests $1000, but I personally think that is a little low for me to feel comfortable. Come up with the number you feel comfortable with and set up automatic deposits into your savings account on pay day until you reach that amount. Even if you are only adding $20 at a time, do it. 
Keep your checking account balance low
It might seem counter-intuitive, but if you are keeping track of your monthly expenses and obligations, and you have a slight savings cushion to absorb any unexpected events, you should have a low checking account balance. Why? Because money in the checking account all has a purpose and a place to go. If it isn’t going to groceries, rent, utilities, it is going to debt. Keep your cushion in your savings account, not here.
Pay your debt as soon as the money hits your account.
Even if you are putting through 10 payments a month of $20, do it! I often put through one large payment at the beginning of the month and then again once a week after that as we review our budget and spending. If you say "I’ll save this $100 to put towards the debt later when we have more to put toward it" you will end up losing the $100 somewhere in your budget. Get it out of your account as soon as it hits so you don't end up accidentally spending it.
Don’t go along with payment plans.
We owe money to our midwife for the birth of our child next year. We are to pay that amount in monthly installments up until the birth. But if you start thinking of your obligations or debt as "I only owe $__, so I can spend this extra money elsewhere" you are setting yourself up for problems. You might end up fooling yourself into thinking you are in a better financial position than you actually are. Instead, pay off your obligations as soon as you have the money, and don’t go along with payment plans. When you do this you end up wasting less as you use every dollar to its fullest advantage.
Set a reward.
This is by far the biggest motivator for sticking to the above points and getting out of debt quickly. Think of something big that you want or would like to do, and promise yourself that something when the debt is gone. Perhaps a new washer and dryer, or a big family vacation, or some new furniture. By having something to work toward, you will be able to fight off impulse buys and be more motivated to get out of debt quickly. The reward my husband and I set for ourselves is a trip to Brazil. I was an exchange student there for a year several years ago and have been dying to get back and visit my friends and host families there. When they ask me when I am coming to visit, it gives me motivation to work harder to be as frugal as possible. As we get closer and closer, and I see the reward also nearing, I get even more motivation to push through this last bit. 
Pray for provision.

God is such a good God, and you will be surprised what he will do to help you achieve a debt-free life. We are consistently seeing God provide us with extra money, extra work, or items we need but can't afford. All of this, we are sure, are the results of our prayers for God to be our partner in this. We pray daily for his provision, and he has been faithful to provide. 
Have a little fun, too
While you have your nose to the grindstone, don’t forget to have a little fun every once in a while. The trick is to actually put this fun into your budget. For example, my husband and I each have a small amount of money we are allowed to spend on "non-necessities" each month. We also go on the occasional date (we’ve become experts at $20 or less dates) or go on the occasional short trip. The trick here is to make sure these splurges are small, controlled (budgeted), and infrequent, so you aren’t spending tons of extra money.


  1. Great to hear you are getting closer to your debt free goal! My husband and I have paid off all our miscellaneous debts except my student loan and our mortgage. The student loan is so tough to pay off for some reason. Probably because we are saving money every month for replacement vehicles and daycare for two children isn't cheap either, so there just isn't that much extra to put towards the debt.

    THanks for the suggestions, I am going to have to use them to grind away at the student loan debt!

  2. I just wanted to tell you that after working for a year after school, I had only been paying off the minimum on my student loans. I saw nothing going down- the principal was the same month after month! I was so stressed and kept thinking "I will never get this paid off!" In the spring of 2012, I discovered your blog and was impressed by how open you were with your debt. You were determined to get out of debt together as a couple, through hard work and dedication! I took out my trusty calculator and discovered how, in 18 months, I could pay off every cent of my loans if I stuck to a strict budget and followed some guidelines and trusted in God! My husband was all for me paying it off and let me take the reigns to implement some changes. It wasn't easy, and thankfully the amount I owed could be paid off in the 18 months- and we did it! Just this month I paid off the last of my loans! So, thank you Amy Joy! Without your encouragement through this blog, I never would have taken the first baby step!

    1. WOW! Congratulations! I am doing a happy dance for you! What a wonderful feeling it must be to be out from under that burden. I am so thankful that my journey has been able to bring some encouragement to you in this. God bless!

  3. Excellent post! I love that your tips are very real and acheivable! We live debt free and stick to a very strict budget in order to do so. You're very right about God providing, He always does! Above & beyond!!

  4. I am so happy for you, Amy! I've so appreciated your openness about this issue, because it's something I think about a lot as I am getting ready to get married. My future husband is bringing debt into our marriage and I've never been in debt in my life. Needless to say, it was a hard for me to think about, but I've come to terms with it, and it has given me so much hope to see other couples conquer debt together. God has recently given us a huge blessing,and relieved a lot of my fears and worries, in that He provided me a promotion at work which will probably allow us to pay off the debt in a matter of months. It's a much more grueling schedule but it is worth it to have it paid off. It's neat to get your updates and see you get closer to your goal, because I am in the same boat and I know how exciting it is to be making progress!


I love to fellowship with others and hear what they have to say. I would ask, however, that you be mindful of what you write and try to be uplifting and respectful. Thank you for sharing!