How we paid off our debt in ONE YEAR!
You guys... we paid off ALL our school debt.
This whole thing started last January. We were at the Young Life 75 conference in Florida and Dave Ramsey spoke. He was hilarious and wise and I instantly fell in love with him. He gave us all a free copy of his book. I thought that was nice but unnecessary for us. We already "budgeted" and had a (looooong) plan to pay off our debt. But it turns out that Dan needed something to read on the airplane home. By the time we landed in Ohio, Dan had figured out that if we followed this plan, we could have all our student loans, which were our only debt, paid off in 14 months! This sounded a little crazy to me but Dan was sold, so we gave it a try and whataya know... 13 months later and we're already debt free!
Here's how we did it:
Preface: None of these are our original ideas. ZERO. We literally just did exactly what Dave says to do. So if you're serious about doing something similar to what we did, spend $15 and read his book. I promise it's worth it.
1. Right when we started, we put ALL our extra money towards loans. I think this was definitely the hardest part for me. Dave (I'm going to act like we're besties and just call him by his first name) says to keep $1000 in an emergency fund and to put all your other money towards debt. Which produced all sorts of anxiety in me. My mind couldn't stop imagining far-fetched scenarios of extremely expensive emergencies that were destined to happen to us if we depleted most of our savings. Dave says that most emergencies you encounter will cost less than $1000. But why would I listen to him? It's not like he's an expert or anything. Well we did listen to him and in our circumstances, he was right. Nothing catastrophically expensive happened and we were just fine. But it was hard to pull the trigger on that first payment and throw almost all of our savings towards student loans. But because we did, here we are! Debt free at 24 years old, just two years after graduating and after only one year of really making payments!
2. We switched to using cash. We weren't so drastic as to cut up all our cards or anything. We still have credit cards and we still have some bills that automatically get paid on them. But for every expense that wasn't "set" each month, we switched to cash. We became those crazy envelope people. At the beginning of each month we would withdraw a ton of cash and stick it a bunch of envelopes. We have envelopes for groceries, dining out, entertainment, home improvement projects, clothing, hair appointments, gifts, etc. Every time we intended to spend money we figured out which category it fell under, took money from our envelope and forbid ourselves to use our cards.
3. We were disciplined! Before we started this plan, we tried to budget in different categories and spend accordingly. But we always had extra money so if we went over on a certain category we didn't care and did it any way. But this time, we didn't. We stuck money in an envelope for groceries at the beginning of each month. Then if we ran out of money in that envelope, we stopped buying groceries and had to live off what we had in the house. Simple as that. And I'm telling you, spending cash is different than putting things on a card. Something different happens in your brain when you hand someone actual physical money that won't get back, versus just swiping a piece of plastic. It definitely made us more mindful of our spending and was so much easier to be disciplined.
4. We were on the same page. Dan and I were both 100% committed to sticking to this plan. If one of us wasn't, there's no way that we'd have been able to do it.
5. We held off on some things. We kept driving Dan's crappy car. His car is older than all of the young life students we drive around in it. But it somehow gets us from point A to point B. So we kept it, even though we would have preferred to buy something newer. Our dryer works but seems to be on its last leg. We kept using it, even when there was a sale on appliances at Sears. I know this isn't life-shattering stuff, but holding off on most big purchases for a year allowed us to throw a lot of money at our student loans.
That's basically it! This sounds nerdy but I loved getting to the end of each month and seeing how much money we could put towards our loans. We're excited to move toward our next financial goals, which are to build up our savings fund again and to buy a new car!
The craziest thing to me is that we somehow had an extra $30,000 laying around this past year. Dan and I don't make much money. Really, we don't. I work for a small, Christian university in small-town Ohio and Dan was a Staff Associate for 12 of the 13 months we were paying this off. And it's completely fine because we love our jobs, I'm just stating a fact. But the cool thing is, we really didn't say "no" to much. We still went out to eat, still went to the movies, still went out with friends, still went on vacation. We just became really disciplined. We started out each month by assigning a job to every single penny that we owned and followed that plan as closely as we could, which most months was exactly.
And now, to celebrate, we're going on a friendcation in two weeks to Florida (and back to Harry Potter World!!!) IMSOEXCITED
Feel free to reach out and ask any questions, but know that I don't really know what I'm talking about, I'm literally just repeating what Dave Ramsey says. #RamseyForLife
This whole thing started last January. We were at the Young Life 75 conference in Florida and Dave Ramsey spoke. He was hilarious and wise and I instantly fell in love with him. He gave us all a free copy of his book. I thought that was nice but unnecessary for us. We already "budgeted" and had a (looooong) plan to pay off our debt. But it turns out that Dan needed something to read on the airplane home. By the time we landed in Ohio, Dan had figured out that if we followed this plan, we could have all our student loans, which were our only debt, paid off in 14 months! This sounded a little crazy to me but Dan was sold, so we gave it a try and whataya know... 13 months later and we're already debt free!
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| Here's a picture from that trip last year where we heard Dave Ramsey... and went to Harry Potter World!!! |
Here's how we did it:
Preface: None of these are our original ideas. ZERO. We literally just did exactly what Dave says to do. So if you're serious about doing something similar to what we did, spend $15 and read his book. I promise it's worth it.
1. Right when we started, we put ALL our extra money towards loans. I think this was definitely the hardest part for me. Dave (I'm going to act like we're besties and just call him by his first name) says to keep $1000 in an emergency fund and to put all your other money towards debt. Which produced all sorts of anxiety in me. My mind couldn't stop imagining far-fetched scenarios of extremely expensive emergencies that were destined to happen to us if we depleted most of our savings. Dave says that most emergencies you encounter will cost less than $1000. But why would I listen to him? It's not like he's an expert or anything. Well we did listen to him and in our circumstances, he was right. Nothing catastrophically expensive happened and we were just fine. But it was hard to pull the trigger on that first payment and throw almost all of our savings towards student loans. But because we did, here we are! Debt free at 24 years old, just two years after graduating and after only one year of really making payments!
2. We switched to using cash. We weren't so drastic as to cut up all our cards or anything. We still have credit cards and we still have some bills that automatically get paid on them. But for every expense that wasn't "set" each month, we switched to cash. We became those crazy envelope people. At the beginning of each month we would withdraw a ton of cash and stick it a bunch of envelopes. We have envelopes for groceries, dining out, entertainment, home improvement projects, clothing, hair appointments, gifts, etc. Every time we intended to spend money we figured out which category it fell under, took money from our envelope and forbid ourselves to use our cards.
3. We were disciplined! Before we started this plan, we tried to budget in different categories and spend accordingly. But we always had extra money so if we went over on a certain category we didn't care and did it any way. But this time, we didn't. We stuck money in an envelope for groceries at the beginning of each month. Then if we ran out of money in that envelope, we stopped buying groceries and had to live off what we had in the house. Simple as that. And I'm telling you, spending cash is different than putting things on a card. Something different happens in your brain when you hand someone actual physical money that won't get back, versus just swiping a piece of plastic. It definitely made us more mindful of our spending and was so much easier to be disciplined.
4. We were on the same page. Dan and I were both 100% committed to sticking to this plan. If one of us wasn't, there's no way that we'd have been able to do it.
5. We held off on some things. We kept driving Dan's crappy car. His car is older than all of the young life students we drive around in it. But it somehow gets us from point A to point B. So we kept it, even though we would have preferred to buy something newer. Our dryer works but seems to be on its last leg. We kept using it, even when there was a sale on appliances at Sears. I know this isn't life-shattering stuff, but holding off on most big purchases for a year allowed us to throw a lot of money at our student loans.
That's basically it! This sounds nerdy but I loved getting to the end of each month and seeing how much money we could put towards our loans. We're excited to move toward our next financial goals, which are to build up our savings fund again and to buy a new car!
The craziest thing to me is that we somehow had an extra $30,000 laying around this past year. Dan and I don't make much money. Really, we don't. I work for a small, Christian university in small-town Ohio and Dan was a Staff Associate for 12 of the 13 months we were paying this off. And it's completely fine because we love our jobs, I'm just stating a fact. But the cool thing is, we really didn't say "no" to much. We still went out to eat, still went to the movies, still went out with friends, still went on vacation. We just became really disciplined. We started out each month by assigning a job to every single penny that we owned and followed that plan as closely as we could, which most months was exactly.
And now, to celebrate, we're going on a friendcation in two weeks to Florida (and back to Harry Potter World!!!) IMSOEXCITED
Feel free to reach out and ask any questions, but know that I don't really know what I'm talking about, I'm literally just repeating what Dave Ramsey says. #RamseyForLife
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