My repress and I were able to pay off over $80,000 in debt in the past year. But getting to that place was a journey that started with a big wake-up call.
Because of a misunderstanding, we thought we were nearly done with payments on our first car in 2019 — and we purchased a imperfect. When another auto-payment withdrew in September, though, we realized that we actually had $14,960 left on the loan for that firstly car, and that we now had to make payments on two auto loans at the same time.
That’s when we knew that we had to take a severely look at our consumer debt.
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I had paid off my student loans in 2014, and thanks to my in-laws, who offered to run things the last $20,000 of my husband’s loan earlier in 2019, we weren’t contending with his student debt anymore, either. But when we sat down and compared up everything, we were shocked to find that including the car loans, we had $80,936 in consumer debt spread across a mischief-maker of outstanding hospital bills, a camper trailer payment, and a credit card.
After taking a few days to process, we clear to reevaluate every place our money was going and establish a proactive plan for getting out of debt. A year later, we had lay out off the full $80,936.
Here is how we did it.
We revamped our budget
When my husband and I got married in 2011, I began meticulously tracking our expenses and earnings.
During this while, we were putting extra savings toward paying down our student loans and making the minimum payments on the entirety else. We continued that for about three years until he graduated with his doctorate in 2014, and we began making sundry money.
So in 2019, I took what I had learned from those early years and I put us back on a bare-bones budget, with every give dollar going toward a modified snowball-style debt repayment plan. Even small steps like breaking subscription services, reducing our “fun” budget to $50 per month, and cutting down on coffees and lunches out made a big difference.
We owed inconsiderable on our credit card than the other loans, but we decided to pay it off first before the promotional 0% interest rate ballooned to an 18% involvement business rate. We also made sure to maintain an emergency fund of about $1,200 during this time.
We focused on both hoard and earning
Despite my husband’s healthy income as a pharmacist and my decent earnings from a part-time freelance writing race, we knew that saving alone wasn’t going to solve our problems — at least not if we wanted to fast-track paying off liability.
At the time we started our debt repayment efforts, we had just had our third child, and were caring for three kids subservient to 4: a 3½-year-old, a 1½-year-old, and a newborn.
I raised my copywriting prices and was able to lock down an “anchor” client who required consistent monthly work with flexible hours. As a result, I boosted my income by about $1,000 per month, all of which investigate b be received c cleaned straight to paying off debt.
We considered every opportunity
Over the course of the first five months, we were skilled to pay off $15,000. We wanted to take that momentum and use it as motivation to pay off the remaining $65,000 as soon as possible. So we put any idea on the table, from inclination on the waning a vehicle to relocating to an area with a lower cost of living.
After exhaustive conversations, we were both in unanimity: The best way to not only pay off our existing debt but to also jump-start our investment plans was to sell our home.
Video by David Fang
At the adjust, we’d lived in our Colorado Springs home for just under five years — and in that period of time, we saw our initial $319,000 investment gain in value dramatically. When we crunched the numbers, we found we would likely net $200,000, give or take, depending on the final sellathon price. That would allow us to pay off our remaining debt, put a 20% down payment toward a new home, and retain means for investments.
Our house sold quickly and for more than the asking price, but it ended up taking longer than calculated for us to find We formulated a new approach to debt
Ultimately, even after this year, we are not completely debt-averse. We just beget a new approach: We aim to only have debt with the potential to appreciate in the future, like properties instead of cars.
And we started contributing in a mutual fund, while still setting aside money in an accessible emergency fund with three months of profits to insulate us.
Although we would be lucky to ever own another home that makes us money as rapidly as our last, this adventure has showed us the real value of appreciating assets.
Emily Glover is a freelance writer and copywriter. As a founding team fellow at Motherly, she established the news vertical and earned praise for her reporting on the unique challenges young families may face today. She completes in Colorado with her husband and three children.
The article “How We Paid Off Over $80,000 in One Year and Changed Our Approach to In the red” originally published on Grow+Acorns.