How we are going to pay off over $175,000 in debt FAST
Sorry I know y’all missed me. Things have been crazy with me working extra hours so I didn’t make time for my blog….
I promise I won’t be doing that again. You all ask for this craziness so I am going to make sure you get it.
The important thing that you all must know is that we sat down and went through the first step of creating our budget as well as writing out our plan to pay off our debt. Do you want to know the most alarming part?
We have OVER $175,000 in debt!!!
We knew that we had some work to do….but $175k??? That was completely jaw dropping. But you know what it doesn’t matter….because we already know the best way to pay off debt fast! We have a system and I know once we start following it (notice I said once we do….stay with me here)…we are going to be out of debt in NO TIME!
According to our Spreadsheet (because y’all know I am an excel nerd) we can be out of debt entirely including our student loans no later than 2020! Do you think the banks are going to tell you what’s the best way to pay off your student loans in less than 3 years?
Go ahead I’ll wait……..
They won’t! But if you follow us long enough on this journey I am going to show you how we are going to do it. And if you’re in a position that you want to pay off your debt fast too don’t wait for us to finish…come on and join us!
If you haven’t seen our plan already go ahead and read it here and then come back!
But wait…Why did I say once we start?
I know I am the one who said don’t procrastinate….
However, we are having the HARDEST time getting this budget together. One of the first rules of thumb when getting started on a plan to pay off your debt fast is to make sure that all of your necessities are in order and your bills are current.
DO NOT start paying extra towards debt if your light bill or gas bill is behind. You have to keep a roof over your head first! Sallie Mae and Discover Card can wait. Trust me their balances aren’t going anywhere but ComEd (or whomever your utility company is) will cut your lights off!
Anywho….We had gone through so much the past year or so that it is taking us a little time to make sure that we are back on track with some major necessities. But we are getting there and things are looking better. We should be able to start making those additional debt payments within the next month.
But do I have to cut off my cable, stop dining out and drinking Starbucks to do this?
The simple answer to this is no. The better answer is how bad do you want it?
I told y’all I would be transparent with y’all through this journey so here is some more truth for you…
We could probably be out of debt about a year earlier OR even sooner if we were to cut back on some of these things. But we did not cut them all out of our budget.
That is what works for us right now. Once we start back up and get things rolling that may change. We may start to see that the opportunity cost of paying $100 extra on our debt instead of paying $100 towards the cable bill is much more beneficial to our goal.
But I wanted you all to see a realistic point of view as well. We hear so many success stories from people who were able to save up to buy a house because they ate ramen every day.
I know that is not a normal way of living….and to be honest I don’t want to live that way. I also know though that living paycheck to paycheck is normal, and that isn’t necessarily a good thing, and I also don’t want to live that way either.
So it is about balance.
We looked at what we were spending (A LOT) and started with what we felt we absolutely couldn’t live without. Then we looked at it again and trimmed that list even more. I’m sure there will be more trimming later (especially once we start seeing progress).
So Cris you’re saying I can pay off my student loans before I die?
BRUH! I know every adult expects that they will have to be paying their student loans forever. I’ve even heard some people say they will just have them until they die so that they will go away. But you do know some student loans aren’t even forgiven when you die right???
So what is the best way to pay off a student loan? The answer is….FAST
The bank is depending on you to make minimum payments for the rest of your term because they earn interest on your balance every month. That interest is compounding the longer you take to pay it off.
Here is a simple example:
If you owe $1,000 and pay 10% interest, then next month your balance is $1,100.
Now let’s assume you don’t make any payments (just for the sake of math, not factoring late payments or anything). The next month you aren’t paying the interest on that $1,000, you are paying interest on the full $1,100 balance PLUS another 10% interest so your balance is now $1,210. This amount continues to build because in the beginning your payments are usually only going toward interest so your principal is getting higher and higher.
The faster you pay off student loans the better. The power in the compounding payments you will be making is what is going to kill that compounding interest that you would have been paying if you planned to make the minimum payments for the next 30 years!
So how are we going to pay off over $175,000 in debt FAST
I know you are not going to believe this……but it is going to start with just $100
Yes that is it….$100 is going to help us in paying off debt faster than the paycheck to paycheck plan we have been on. Actually there was never a plan when we were paycheck to paycheck that is why we are in so much debt!
I know to some of you $100 may seem like nothing and to others it may be a HUGE deal. There were times that we couldn’t find $100 to pay a bill that needed to be paid and our household income seemingly should cover that.
This is why we are fake rich! Our paychecks may look big but our bills WERE bigger! However now we have a plan to tackle all of that.
It all starts with a plan.
$100 extra towards our first debt…LASER FOCUS on that debt until September and it will be PAID IN FULL! Then we will take that minimum payment that we paid off that balance with PLUS that extra $100 and get LASER FOCUSED on our next debt.
My SUPER focused face
We will continue to do that and in about 2 and a half years of PURE FOCUSED INTENSITY we will be DEBT FREE!
You heard it here first!
It is on the internet so it is true right? By the end of 2020 the Travis’ will be debt free and well on the way to building our wealth for our future, our children’s future, and their children’s future.
I look forward to you joining us on our journey.
Leave us a comment to give us a high five and come join us!
With Luv,
~Cris
Hi, first of all I really admire you positive way of thinking and writing that you have together with you debt. We are just about to have our debt soon from the bank, so I was very happy that I read your article. It sounds superb and I am really looking forward to reading every little step of your journey, so please keep us updated with everything 🙂
All the best to your debt free life 🙂
Hi Kisumu,
Your words are so inspiring. Thank you so much! So glad to hear you are so close to your goal as well. Please continue to follow our journey. I hope that it motivates you or you can share with someone who may need the motivation as well.
WOW,AMAZING.This is a very good example on how we could manage our debts.With your example i get something important” to do things on time because after time there will be consequences. With small amount of money we can do something bigger. Thank you really you got my attention on that.
Julienne
Hi Julienne,
You are so welcome. I like to share in hopes that it will help someone. Many people are stuck because they don’t realize that just starting off small can make a huge difference.
Wow, this is very interesting and in the same time very helpful article. We live in that time where we all are in some debts and it is really not easy to return the debt. Your idea is not bad at all and starting with just $100 is definitely affordable. Thanks God I am not in debt but there is people who will benefit from this.
Thank you Daniel! I am happy you are not in debt either. Whatever you’re doing stay out of bad debt!
We all want to be debt free. That is part of the dream. Unfortunately it is way to easy to lose track of what is important along the way. Sure the plan sounds fantastic. What happens on month three when your heating bill comes in higher than normal or your car breaks down? Have you set aside money in your budget to cover these extra expense or is this going to cut into you debt pay off plan?
It’s good that you didn’t cut all of your fun spending out of your budget. no one wants to live on ramen for two full years. It would be way too easy to get burned out with the plan if you had no money to spend on fun stuff. Even if buying some of the fun stuff is what got you to where you are in the first place. What I find most important is having a way to keep yourself to your budget. How will you maintain the will power to keep paying on your debt rather than buying a new item? It gets to feel like drudgery if you have no freedom whatso ever in your money. How do you plan to track how much of your budget you have left for items like groceries each month? Do you have an app or just using Excel?
Hi Maryann,
That is the great thing about having a plan, at least you can prepare for exceptions. Before we were without a plan so we were not able to adjust. Now we do have a budget and we are also building our emergency fund for those unexpected expenses.
I will be sharing more posts later that give a glimpse of how we stay on top of things like budgeting for the utilities, but those stay fairly similar for us throughout the year because of budget plans with the utility companies. We also make sure to keep the fun spend in our budget which helps keep us more disciplined when it does come to wanting to get something that is outside of the budget. That way, we don’t feel like we are punishing ourselves for doing something as cool as getting out of debt. It isn’t easy, but it is worth it.
I can’t even fathom that amount of debt, because I already feel like I am drowning with $30K of it. My first shop business failed and I have had no choice but to work at my day job. What great insight you provide! You showcase a discipline that I really need to get a grasp of. There was a lot of info and you can be sure that I will be reading this post again. Favorited!
Thank you so much for the support Reyhana. It was so overwhelming to see that huge number on paper. The great news is that we have a plan, and because of that plan we can see the light at the end of the tunnel and will hopefully get there much sooner than later.
I agree that having a budget is super important. My wife and I did this a few years ago, we paid off a lot of debt and it was really hard work. It’s hard to change your lifestyle, unless you really want it. Just like anything in life I suppose. Starting with $100 sounds crazy, but I believe you can crush it if you want it bad enough. Does this $175k include a mortgage? If so, that is even more impressive. I am very interested to see if you can pull this off by the end of 2020. I wish you the best in your journey.
Thanks Steve! It is amazing what that little $100 can snowball into. Surprisingly that 100k does not include a mortgage. The majority of it is student loans because of our multiple degrees. The mortgage will be a blast though once the other debt is gone.
Hi Cris! I applaud you! We are also working diligently on paying off all debt. It started about 3 years ago when I was frustrated that my husband and I made relatively decent money but I felt like we had nothing to show for it. I had heard of Dave Ramsey (your plan is very similar!) and at that time I started listening to his podcasts. I totaled up our debt–105k! I was shocked! This was roughly 78k on student loans (between both my husband and myself, 3 degrees), 24k on our vehicles, and 3k on a credit card. I felt hopeless. But all we could do was get started. We paid off the credit card in a month pretty much, and then started tackling the cars. Took about 13 months to pay them both off. Then we got sidelined for awhile–I had our second child, so there were hospital bills, plus he was born with a cleft lip, so more hospital bills….then he started daycare with his brother…that alone was 2000 a month just for the two of them! We just basically tread water for a year. The longer this started to take with no end in sight, the harder it was to be intense about it…so we were not as diligent as we should have been, though thankfully due to our commitment to our budget, we did not have to add any debt to this time. Finally, my husband was able to get a new job that paid more so I was able to leave mine (though I still work once a week), that cut out most of the daycare cost and now as a stay at home mom, I am able dedicate myself to finding was to cut the budget instead of relying on convenience, so we are much more intense now with a 9-month *every finger crossed* pay off plan to knock out the rest. Thanks for sharing your story!
Hi Holly,
What a wonderful story! I can’t wait to hear you do your DEBT FREE SCREAM! (I figure you’ve hear this before on the podcasts :D)
I know exactly how it feels to get side tracked with life. We went through something similar and are starting over AGAIN. The great thing is that you are not giving up. Looking forward to you success sotry in LESS THAN 9 months because I am believing it for you!
Hi
Wishing you all the best on clearing what you owe.
If you say you can then you can. So high five to you.
So this is you before your breakthrough success statement, so that you can look back and see where it all started.
This is a really good idea and would love updates on your journey.
Well done and keep up the good work
Jennifer
Thank you so much Jennifer! I truly appreciate the feedback and support. I look forward to keeping everyone updated and sharing our success story as it unravels.
Good tip for paying off debt! I got out by paying off the smallest debts first, and using the same concept you’re talking about here. I paid the minimum payment on everything except the smallest one (credit card or student loan or whatever it may be). On the smallest one I paid everything I had left after bills and necessities and a little spending cash. Then, when that small one is gone, take all that and add it on to the minumum you were paying for the next smallest one. It adds up quick!
Second tip – when I say spending cash, I mean you take out hard cash money each week, in whatever amount you decide is your budget, and once it’s gone it’s gone and you have to stay home like a good kid until the next week starts and you get more cash. I find it is way to easy to not pay attention to how much you’re spending when you pay on plastic.
Hi Kat!
This ia great feedback. Yes we are taking a very similar approach on the debt payoff method. We decided to start with the $100 because we wanted to show if you could just start with that small amount, you could make a huge difference. Our plan is to throw more at it than that, but the least we will push for is $100.
We are still working on the cash/envelope method. I know it would be so good for us because we are quick to swipe. I just have to get the hubby on board with it.