Monday, February 2, 2015

How we became debt free in 3 years Part 2: the logistics

Click HERE to see Part 1

If you do the math, paying off $86,000 in debt in 3 years adds up to about $30,000 per year. I know, it seems a little crazy to have $30,000 extra just lying around. Let me tell you, though, that the "extra" $30,000 was not just sitting there. We had to work very hard to make and direct that money towards the debt instead of other things.

So let me talk about the logistics behind our getting out of debt. Here are some points that helped us get the money and direct it to where it needed to go. Some of these things will not be applicable to your lives, but I bet a good amount of them are and will allow you to make significant dents in your debt.

1) My husband's job
There's no getting around it. My husband is an electrical engineer for a car manufacturer, and he makes decent money. Living on his income alone is comfortable but not extravagant. We have always purposed to live completely off of his income and put any money I make towards debt. We also put a little from his paychecks every week towards debt too. His work gives us a profit-sharing bonus every November that we have put completely towards debt every year.

2) Dual income
I was working full-time until September 2012, so about 1.5 years into our marriage. I wasn't making big bucks, but my entire salary went to debt. This allowed us to pay off our car in 9 months and get a start on my student loans. Starting in October 2012, I was working part-time, and again all that money went to debt. It was only a few hundred dollars per month, but it made a difference.

3) Steady standard of living
My husband has received several pay raises and promotions over the course of the last few years, but we have not adjusted our standard of living to these increases. Instead, we pretend that he still makes what he did when he started working, and increase the amount which gets directed to debt or savings.

4) Budgeting system
We use an online system to budget our money. My husband is in charge of balancing it every week. This allowed us to see where our money was going and what cuts we should be making. It is amazing how much little things add up. This has allowed us to keep our cost of living down, as seeing the numbers allows us to really work together to accomplish our goals.

5) Bargain, bargain, bargain
Some people are actually embarrassed to drive a good deal. We lose a lot of money if we don't take the time to bargain better rates. This can be as simple as always going to the customer service desks in the stores and asking if they have any valid coupons (this almost always works), or remembering that the word "clearance" usually means the store manager has been ordered to move the product out of the store (hello, negotiable prices!). This also means calling every few months to negotiate better internet and phone service rates. My husband and I have unlimited calling, texting, and some data for $35 per month.... For BOTH of us. We then purchased refurbished unlocked phones online to use with our plans. We negotiate our car insurance every 6 months and pay in lump sums to save money. Bargaining a little here and there adds up to thousands of dollars every year, which we then drove directly to the debt.

6) Making extra cash when we can
My husband and I both signed up with a local company to do taste testing and other market research to make some extra money. We use eBay or Facebook buy sell trade groups to sell things we don't use anymore. We use to earn cash back on all our online purchases and we use our AAA membership discounts diligently.

7) Accountability
My husband and I are partners in every sense of the word, and that means we hold each other accountable. If one of us overspends, the other will ask about it. We both have learned to be humble in these situations because unsanctioned spending goes against promises and plans we make together. I find myself not buying things simply because I know my husband will see it on the bank statement and ask me about it.

8) Paying debt every paycheck
Even if it was just $20, we put something to the loans every paycheck. This meant we were putting through payments weekly, so it kept the debt on our minds. Plus we would be tempted to spend that $20 if it sat in our checking account to wait for a larger monthly payment.

9) Making visuals
I had an excel spreadsheet where I recorded the amounts we put to debt, the balance at the time of the payment, and how much was lost to interest. It was humbling to see that interest number, and really drove us to make progress. Being able to look back on that spreadsheet and see the progress was really motivating.

10) Debt Snowball
There are two main philosophies about paying off debt quickly: 1) Pay off smaller debts first and then use that money to pay off larger debts in the future (called the "debt snowball"), and 2) Pay off the debts with the largest interest rates first. We decided to go with the first philosophy and we found it very motivating, as we were paying off smaller student loans quickly and felt the accomplishment. It can be easy to feel like you are getting nowhere when paying off a lot of debt, so small accomplishments need to be had in order to stay motivated. We ended up paying off the largest and highest interest rate last, but we probably saved money in the long run since we paid off the entire debt quicker because we stayed motivated.

11) Cheerleaders
The biggest motivation I found for getting out of debt quickly was having cheerleaders. They say the best way to get yourself to run a marathon is to tell everyone that you are going to do it! So we told everyone our plans to get out of debt and stay out of debt, and when people scoffed, we took it as a challenge to prove them wrong. A few people thought we were so smart in our plans and became so motivating! They celebrated small victories with us, and that felt nice. Also, having like-minded friends is important. It is hard to save money when your friends are big spenders!

I'm sorry if you have reached the end of this list disappointed that I didn't tell you how to miraculously find extra money. It doesn't work like that. But God does provide, and I have found that these tips helped us to be mindful of the money God was giving us, and allowed us to use every dollar to its maximum potential.

Some of you may take longer than 3 years to pay off your debts, but that is perfectly fine! The idea is to develop a pattern of good stewardship in your finances, and I truly believe God honors that.

Our finances have been an open book on this blog, as we've hoped our story will help others. If you have any questions, simply comment below and I will answer :)



  1. We don't have any debt, but we are trying to save up for a house. Your posts about financing have been so encouraging and helpful, especially to know that we're not the only "crazys" out there avoiding debt like the plague :) Which online budgeting tool do you use?
    And wow! on the cell phones! What a deal!

  2. Debt can creep up on you in the most unexpected ways. It is not a rare issue, but it's hard to get our heads around how easily it can pile up. In any case, I'm glad you found 11 amazing solutions to solve your financial issues. I'm proud of you for materializing a stable financial goal. Thanks for sharing that, Amy Joy! All the best to you! :)

    Naomi Cruz @ 4 Pillars


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!