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How we paid off $52,000 of debt in 18 months

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Deacon Hayes

When my wife Kim and I got married, we combined our finances. For a few months we lived the “normal” life of getting up, going to work, collecting paychecks and making our minimum payments. However, this way of life began to take a toll on us. We were tired of paying so much of our cash to lenders every month, so we decided to put our entire financial picture down on paper. We were shocked to discover that between the two of us we had over $52,000 in consumer debt.

We didn’t want to live our entire lives struggling with debt and potentially fighting over money, so we decided to make a plan to pay the debt off and do it quickly. Although we both wanted to be debt-free, this wasn’t an easy decision. We knew that we’d have to change our spending habits and make some sacrifices if we were going to get out of debt. But we also knew that if we worked really hard at changing our habits, we’d only have to make those sacrifices for a short period of time, and that the end result would be worth our efforts.

Here are the steps that we took to pay off our debt so quickly.

We made a budget

We had to figure out our total monthly expenses so that we knew how much cash we had left over at the end of each month to put toward our debt. We decided to use a zero-based budget. The goal of this kind of budget is to account for every dollar that comes through your account.

We started by making a list of all of our fixed expenses that couldn’t be adjusted. Those were expenses such as our mortgage payment, Internet, insurance, etc. Then we added our variable expenses such as groceries, gas, entertainment, etc. The goal was to make sure no expense was left out so that we could get a clear picture of where we were at financially.

Cutting expenses

After we made our budget we decided to see how we could cut our expenses. In order to cut down on our variable expenses, we decided to use the cash envelope system. We created envelopes of cash for groceries, entertainment and what I like to call “girl/guy money” – this is money that each of us had to spend on whatever we wanted each month.

We didn’t eliminate miscellaneous and entertainment spending, but we did cut it significantly from what we were used to spending.

We also did things like cancel our gym membership and cancel our cable TV. Again, this was tough but we knew it would only be for a short period of time if we worked hard at eliminating our debt.

Increasing income

Along with cutting expenses, we got intense and worked to increase our income to have more money to put toward the debt. We sold a LOT of stuff. Kim sold her designer clothes and accessories on eBay, we sold our Nintendo Wii, and I even sold my new car which was upside-down. With the extra cash we were making on the side, we paid the difference to get out from under the car. Then we sold Kim’s car which was worth $5,000 and bought two quality used cars with that cash. It was tough giving up the newer cars at first but it was worth it because we were able to pay off thousands in debt with just that one decision. We still drive quality used cars that we pay for in cash to this day. I can’t explain how awesome it is to not have a car payment anymore.

I also decided to get a second job to increase our income. I worked two to three nights a week delivering pizzas for a local pizza shop. This wasn’t always fun work. Sometimes they had me scrubbing potatoes and cleaning fryers. It was definitely tough, but the extra money was exactly what we needed to keep the momentum going.

Refinancing to a lower interest rate

Since we had credit card debt, we wanted to figure out how we could get a lower the interest rate because the rates were so high. My grandma was kind enough to loan us the money at a much lower rate, which saved us a ton of money in interest in the long run. I am not a big fan of borrowing money from family members, so I decided to do everything I could to pay that loan off first so that there was no tension in the relationship.

By combining these three things, we were able to pay off all $52,000 in debt in just 18 months! Now that we have freed up hundreds of dollars each month, we used that money to build up a six-month emergency fund and are now putting that extra cash toward paying off our mortgage early. In just a few years we’ll be mortgage free as well.

Although it did take a lot of sacrifice and discipline to pay our debt off this fast, it was definitely worth it.

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