In October, 2011, my husband and I embarked on a journey to begin to pay down our seemingly enormous debt of $57,966.01. This debt was made up of three credit cards and four student loans. All of the debt except my own student loan was incurred while my husband completed the last few years of his Ph.D. and I worked from home while caring for our three small children.
At the time we began to pay down our debt, our annual salary was in the mid thirties, over $20,000 less than our total debt. Did I mention we live in the suburbs of Chicago where the cost of living is quite high and we have three kids?
It was a scary time.
The 19 months since haven’t been easy, but with hard work, we’ve managed to drop the debt down to $44,982.24. We’ve paid off $12,983.77. Consider our income is just now equal to what our total debt was at the start of our journey, I’m happy that we’ve been able to pay off what we have.
It’s impossible to pay down debt without changing your mindset about spending. Here’s some lessons we’ve learned while we’ve been paying down debt:
1. Relationships are most important.
Early on we wanted the debt gone RIGHT NOW! Of course, with such a large debt load and such a small salary, that wasn’t going to happen. Still, inspired by Dave Ramsey, we went gazelle intense. And within a few months my husband and I were arguing frequently. The lack of sleep and stress got to us. My health was also affected.
After that, we decided to treat gazelle intensity like interval training, and that’s worked for us. After several months of taking care of other expenses, we’re once more in gazelle intensity mode. It doesn’t matter if you’re debt free if in the process you’ve ruined your marriage or you haven’t been a good parent to your children.
2. You don’t need as much as you think to survive.
Cooking is one way I show love to my family, and I like to have a stocked pantry to draw from. When the shelves are bare, I get nervous. May has been a very tight month for us, and as the month winds down, we’re making meals out of odds and ends. Even though it doesn’t feel like we have much in the house, the family is still eating well.
3. There are so many ways to make beans and rice.
Dave Ramsey always talks about beans and rice, rice and beans. We’ve relied on these staples to help lower our grocery budget, and with the help of Pinterest, we’ve found many ways to serve this frugal meal. Just last week I made rice and bean cakes (think crab cakes but with pinto beans and brown rice) and was surprised to see my three kids eat them with very little complaint.
4. You can’t do everything for your kids that you’d like to do when you have debt.
My oldest took tap dance for three years, but last year, we decided that was something we could no longer afford. It was a hard decision to make, but we know that once our debt is gone, our kids can enroll in more activities.
5. Goodwill is awesome.
In the last year, I’ve lost a significant amount of weight. I’ve dropped several sizes, so rather than shopping for new clothes, I go to Goodwill every time I fit in a new size. I can buy two pairs of jeans and a few tops to see me through until I fit into the next size. Buying clothes for each size has only cost $20 to $25 each time.
6. There are many ways to cut expenses without sacrificing quality.
There are always more ways to cut expenses than you think. We switched our phone service from AT & T to Ooma and haven’t noticed a difference except in the amount we pay each month. We also cut our cable down to the bare minimum and haven’t really missed any shows. When I buy online, I always look for a promo code. I just ordered checks, and the total was $20.24 until I found a promo code that reduced the cost to $6.94.
7. You’ll likely feel poorer when paying down debt.
When we were incurring debt, we knew we didn’t have money, but the debt let us live a lie. We kept living our old lifestyle even though we no longer had the money for that lifestyle. Now, we are living the lifestyle our salary allows us to live. We know that the next few years will continue to be tight as we continue to dig out of debt. However, after the debt is paid off, we plan to continue to live this way so we can get ahead financially.
If you’re paying down debt, what lessons have you learned throughout the process?
My girlfriend has 200k of debt and I am so nervous about out future together because of her loans. I do well as a software developer but if she doesn’t find work, it could be years before we can buy a house/start a family.
Peter Anderson says
200k of debt? Wow.. does that include a mortgage?
“but the debt let us live a lie”
I love this line. Debt has the propensity to do just that — let you live a lie…
Robert Jacobs says
Seeing my net worth increase as my liabilities went down on the balance sheet was a confirmation that paying down my debt was the right thing to do.
This was such a powerful article. Debt does allow you to live a life style that you clearly cannot afford. “but the debt let us live a lie should be on a t-shirt. I am going to try to live within my means and set aside as much savings as possible. Being in debt is very stressful and it does not allow you to live your best life or truth. All of the comments on this board are right on the money! thank you everyone for your comments. My biggest problem is on line shopping and I think it has become an addiction of sorts and I need to get ahandle on it because it’s out of control and way too easy to spend money with out thinking.
Gotta tell you Goodwill is awesome. This is terrible, but in the past my wife would hire a professional buyer who would pick out designer suits for her and then she’d go in every few months and pick the ones she wanted. She did this because she’s a professional and she hates to shop. Boy did we pay dearly for her work clothes (really stupid!). However, she has since discovered goodwill online. She buys designer clothes (seriously – in great condition) and then has them tailored to fit her perfectly. She makes a game out of it and loves it! Too bad she didn’t do this 25 years ago. But if your job requires “professional” clothes – check out goodwil – either in person or online.
I’m in a similar situation. Husband is getting a PhD from a private school. By the time we leave we will probably have 100K in student loans. No credit card debt, thank God, but still 100K is enough to panic over. We’ve planned to put off having kids (I’m still only 25) until after he graduates and is well employed. I want to find ways to start paying the debt now. I’d rather live skimpy now rather than when we have kids.
I like the rice and beans idea. I like what you said, that “you’ll likely feel poor when getting out of debt.” True, I need to get used to that. The satisfaction of paying the debt will keep me moving forward.