Our Debt Free Journey: How We Paid Off $40,000 in Debt within 12 Months

If you had asked me in 2021 if I was good with money, I would have hit you back with a confident absolutely. Looking back now, I know that this confidence was so misplaced. The only reason my husband, Ben, and I weren’t in financial crisis is because he has a good job with really good income.

There are so many things I would do differently if I could go back in time. Honestly, all the way back to my thoughts and decisions around going to college a decade ago. Ouch, that hurt to type up.

At the same time, all of that lead Ben and I to where we are now: A month away from being consumer debt free with a years worth of “paying it off” knowledge and experience under our belt. So I can’t and won’t be sorry for the journey as a whole.

If you are new here, Hi! I’m Kayla, in the last year or so my husband and I have paid off over $40,000 in consumer debt. We did this following Dave Ramsey’s teachings and conquering the Debt Snowball method month in and month out. And now, on the other side of all of this fun stuff, I have found a real passion for budgeting and the financial freedom that being debt free has given us. I am no financial expert, by any means, but if I can inspire other families to throw out the status quo of debt just being a part of life, well I am going to try.

So today, as the starting line, I am going to share our story. From realizing we needed to make a change, to defeating our financial Goliath in just over 12 months.

The Wake Up Call

It’s November 2022 and I am going over our “budget” from October. As I went through each category I just wanted to scream. As fast as our money was coming in, it was going out. And then I got to my food categories. In October of 2022 we spent $900 on groceries and $600 eating out. That is nearly $2,000 on food alone for the month! Unnecessary is putting it kindly. As I stared at those numbers, my jaw on the ground, I knew I needed to do a comprehensive look at our finances. Ben makes good money, great money honestly, and somehow we were stuck in this cycle of breaking even when we should be getting ahead.

After finishing the October budget and “planning” the November budget, I started pulling everything up. And I mean everything. Every credit card. Every checking account, savings account, car loans, mortgage, retirement accounts. Somehow over the first year in our new house we had accumulated $17,000 in credit card debt. And we thought we were responsible with money! HA!

When you read that number there one of three reactions.

  1. That’s way less than my credit card balances
  2. Eh, that seems normal
  3. Woah, that’s a lot!

For me, that number was a lot and I just wanted to cry. How had we amassed such balances? We were not that bad with our money…or were we?

The follow up question is this: where did the balances come from?

The short answer is this: us not paying attention to our spending all around.

The long answer can be broken up into 2 categories. New House and Trying to beat the system.

New House

In the summer of 2021 we sold our first house, a fixer upper that we net profited $107,000. We bought our next house with those profits and were sitting happily with no debt beyond our cars and the minuscule amount of my student loans. But, with a new house comes new wants. This house is more than double the square footage of our old house. From July-December of 2020 we bought new living room furniture and guest bedroom furniture. We bought these items on a credit card with 0% interest for 6-12 months depending on purchase price, telling ourselves we would just pay it off in two months so we weren’t too strapped for cash. During this time we also painted almost every room in the house (cheap) painted our kitchen cabinets and installed quartz countertops.

None of these projects or purchases were HUGE, but it was all financed with that glorious 0% interest. Could we have done this and had no issues with interest – yes. The problem is that we did these thing too fast and stopped paying attention once the card was swiped. When you don’t have a plan or a goal, it is so easy to just keep on keeping on and suddenly that 0% interest is 24% OR MORE.

Trying to Beat the System

The next piece to this puzzle was the illogical idea that we would play the credit card game. We had a few cards with guaranteed cash back between 2-5%. With our then $0 balances on credit cards we decided we would play this game for those few dollars back a month.

Again, could we have done this smartly? Sure! But once again, we were not spending wisely or paying enough attention to our spending day in and day out to successfully make this worth it. Within two months we had accrued balances we couldn’t pay off right away and the interest started piling on.

Suddenly it is November of 2022 and we have $17,000 sitting on credit cards when we didn’t have a dollar balance only a year prior. It really is THAT easy.

We Are Done With Debt

That November, Ben and I felt really defeated. Again, Ben makes too much money for us to be so tight by the end of each month. There is no reason for us to hold money stress on our shoulders. So we decided then and there, we are done.

Now, I grew up knowing about Dave Ramsey and even had listened and read some of his teachings on living debt free and using the debt snowball. I had even started and never finished his book, Total Money Makeover, two or three times in my adult life. This time was different. During Black Friday sales I bought Financial Peace University as a Christmas present for me and Ben and got to work.

I started digesting all the Ramsey content I could. I watched the FPU classes, listened to the radio show and finally finished Total Money Makeover. I downloaded the Every Dollar app and we got to work.

For Christmas we made a no present rule for Ben and I (besides FPU) and I shopped second hand for the kids. We ate out at a restaurant ONCE from November 2022 through February 2023. And we really shut down spending as a whole.

We worked the debt snowball card by card. At first this was super quick because we had LOW balances on quite a few cards. By March of 2023 we had already paid off $15,000 of our consumer debt! We were putting about $1500 on our debt each month but by June that number was at or over $2,000! So, the big question how did we do it?

Budgeting & Cutting Expenses

My first piece of advice, and I will die on this hill, download the Every Dollar budgeting app. I have used so many other apps but this one takes the CAKE if you are trying to pay off debt and get more control over your own spending. And I am not being paid to say that. We were very successful in getting control over our finances over this last year and I give all the credit to this app. Honestly. If it weren’t for Every Dollar I do not think we would have gotten to the point of putting $2k a month on debt. And, there is a free version that I do think is sufficient for anyone starting this journey. Ben and I do pay for the annual subscription for the premium version because he gets paid monthly. Access to the paycheck planning tool within Every Dollar has been a huge help for us because we don’t have an every other week pay schedule.

The next part of this equation is cutting expenses. If you listen to the Ramsey Show you will hear them say this over and over, cut expenses and raise your income. We did half of this, cutting our expenses. Ben and I got rid of EVERY streaming services except Spotify and Paramount+ (because our Walmart+ subscription pays for it). We switched cell phone providers to cut our phone bill in half. I started shopping almost exclusively at Aldi to stay on top of our grocery budget. And every other month or so, I would challenge myself to cut the grocery bill even further. And, we stopped eating out. Some months this was cold turkey we are not eating out once. Other months it was sticking to a budget of $100 or $200 for the whole month.

I am not exaggerating when I say our food budget was the biggest change in our line items. If you feel like you make too much to be this broke, I challenge you to look at what you are spending on groceries and at restaurants. No, $5 a week on Starbucks isn’t enough for a down payment on a house, but it probably is a signifier of other bad spending habits that can make a bigger dent in your goals.

This Does Take Sacrifice & Prioritization

With that being said, the last piece of this equation is simple. Sacrifice goes a long way. If you want to change something in your life, you have to change your habits. For us, that meant impulse spending. Saying no to not only ourselves but holding each other accountable.

I am not going to lie. At times, this was challenging. And we were not as “gazelle intense” as good ole Dave probably would have wanted us to be. But now, as we are just about to cross the finish line, I know that every sacrifice we did make was beyond worth it. With all of our consumer debt paid off, and only one car loan to go, we are planning on putting just under $4,000 a month on that last car. That is $4,000 A MONTH that this time last year was going towards debts and minimum payments. Now, come April, that $4,000 is all ours to save, to invest, to put on the house, to give, to spend.

Talk. About. Freedom.

I hope, at the very least, reading this quick overview of our financial journey of the last twelve months has given you some hope. No matter where you are financially, it is possible to stop running the “rat race.” BUT, it does take sacrifice. It means saying no; to your friends, to your family, to your spouse, and, most importantly, to yourself.

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