• Gabri T

How I got out of debt

How much debt did I start with


To start off this post, it will be useful to know that both my husband and I followed the same method and got out of debt together! for the sake of keeping this post short, I will only be talking about my debt.


My debt looked something like:

  • College: $25,000

  • Car: $15,000

  • Credit Card: $5,000

  • Real Estate Class: $20,000

TOTAL Debt: ~$65,000


I also want to note that my husband and I were not married when we decided that we needed to pay off our debts, so I will only be using my income amount for this post.


Process to paying off debt


I didn't take my debt serious for a long time because it was "manageable." College was about 300 a month, my car payment was about 200 a month, my credit card was about 130 a month, and my class was put on a separate card that was also only about $100 a month. Like most people, my journey started when I got sucked into Dave Ramsey videos on YouTube. I started really thinking about the interest I was paying and how much of my money that would be eating up in the end. I decided to follow his debt snowball method to get all my debts paid off ASAP!


The Debt Snowball

  • Take all your debts and put them into an excel sheet

  • Line them up from least owed, to most owed (for me that would be credit card, car, real estate class, college)

  • Keep paying the minimum on all the bills, but if you have extra money each month, put it towards that top debt (my credit card).

  • Once you pay off that smallest debt, take what you were paying each month and start paying the next debt. (Ex: if I paid $130 a month on my credit card, I would now roll that $130 a month to my next bill, my car, and now be paying the 130+300 to the car).

  • Keep the system going until all debt is paid off.

Here is a link to the Dave Ramsey debt snowball page that I used: How the Debt Snowball Method Works | RamseySolutions.com


Budgeting

  • Calculated monthly income

  • Wrote down re-occurring bills that were non-negotiable (cell phone, car insurance, groceries, gas, etc.)

  • Calculated how much I had after those bills

  • Created a list of savings accounts that would benefit me (house savings, car savings, emergency funds) - My husband's list looked much different than mine, as his priorities had to do more with hunting and buying land haha.

  • After prioritizing what was important to me, I decided to determine how much of my funds after bills would go to each category. I wanted to save a down payment for a house, so I started with 60% of my extra money going to my house savings, 20% to a car, 10% to emergency funds and 10% to fun things like eating out, clothes shopping, etc.

Note: Since Ventura and I weren't married, we were both living at our parents' house at this point, so we didn't have many other bills beyond phone, car insurance, etc.


How long did it take


Here were my stats to pay off debt:

  • Income: 75,000/year (~4,000/month after health insurance and 401k)

  • Monthly payments to debt snowball: 730/month

  • Other bills/ month: ~600/month

  • Had ~1,330 extra/ month to put towards my debt snowball (I did not use this 1.3k for anything other than the debt snowball, we didn't go out to eat, we didn't get ourselves anything fancy, we didn't get more groceries or more expensive groceries. IT ALL WENT TO THE DEBT SNOWBALL!

The short answer is it took me about 3 years to pay off my debt completely. Also, since I paid so much extra each month, I saved myself A TON of money in interest.


Life After Debt


It's been about 5 years since we've paid off our debt and have saved enough for a down payment on a house, we've been trying to travel at least once a year and we have the kids in anything that their hearts desire.


We still budget for everything we do, and we have stopped using credit. If we can't purchase something in full, we can't afford it at the moment and save for it (minus a house payment.)


The plan is to never get into debt again so we will never have to feel like we are living paycheck to paycheck. No credit cards, no loans, no payment plans.


My Current Excel Sheets

For our bills:



The highlighted bills come out automatically. I ensure I have enough to cover my bills in my account and when the money comes out, I use red highlight to fill in the appropriate cell for the appropriate month.


For our savings:



For everything else:




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