In this series, NerdWallet shines a light on people’s debt payoff journeys. This month, Jay Bratton recounts how she and her husband brought a laser focus to eliminating debt, inspired by the hope of starting a family.
My story of paying off over $53,046 in debt on two teachers’ salaries is one of pain, persistence, and support. But it’s also a lot about love. My husband and I started paying off the loan soon after we married in 2016, and we made the last payment three years later, just before our son was born.
I was adamant that we would not start a family until we reduced our debt to zero. Rumor has it that kids are expensive, so I wanted to clear room in my budget for the inevitable medical bills, child care, and college funds.
That rumor turned out to be the stone-cold truth.
Our four core strategies provide a roadmap for others working towards financial freedom.
1. Create a battle plan
The minus is an opponent, you have to kill a monster before you can move on to the next level. This requires a well thought out plan of attack.
First, we size up our competitor by identifying our debts and organizing them in a Google Sheet. We had seven loans, including student loans, two car loans, a home improvement loan, and the balance was on my engagement ring. As each loan was lost, I would cross it off the spreadsheet, and oh, the satisfaction.
We’ve chosen the debt snowball payoff method, where you focus all additional payment money on the smallest debt while continuing to make minimum payments on the others. I needed a few quick wins to keep me motivated before I made a bigger, more intimidating balance. We cleared our smallest debt, $926, in the first three months.
If you prefer the avalanche method, no sweat, tackle the largest debt first. The simple act of choosing one that suits your lifestyle and personality is more important than the approach. Snowball and avalanche are two different paths to the same result.
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2. Frequent Budgeting
After listing the debts and deciding on a strategy, we wrote a budget for each month. First, we figured out our combined income. At the beginning of our debt-free journey in August 2016, my husband and I brought home $4,694 a month. By subtracting mandatory expenses like mortgage and utilities, groceries and minimum loan payments, we knew how much money we had for additional loan payments.
In a few months, we made the minimum payments on the loans and that was it. Then, when money was more plentiful, we made additional payments, as much as $3,500 for a few months. In both cases, the budget dictates how we spend each dollar and keeps us disciplined. Do we stick to the budget every month? No way. But every month we tried. And when that month ended, we started again, aiming to do better than the last.
Many budgeting strategies, tools, and apps can help you create and stick to a budget. Pen and paper work well too. (My budget was on sticky notes and a dry-erase board.) Whether you prefer a 50/30/20 budget or stuffing cash envelopes, know that any budget is better than none. Without it, you risk forgetting about bills, running out of money before payday, and delaying your loan payoff date.
3. Create or find extra money to pay off debt faster
send extra money to the loan
Most of the big inflows of cash leave our bank accounts before we can be tempted to spend it: tax refunds, work bonuses and income from other jobs. For example, my husband received a stipend to coach basketball and I taught summer school. We both sacrificed time to make more money, but in a way, I got it back with interest: Now, I can be with my son after the end of my workday instead of going to another job Am. The time spent with him is truly priceless.
increase your income
I spent two years earning a professional certification that increased my salary by 12%, increasing my take home pay by $250. At the time, my car loan cost me $223 a month, so it was like an extra car payment.
Many jobs reward employees for adding certifications or certifications. If yours isn’t, consider negotiating a pay raise or looking for another higher paying job.
Adjust tax withholding, if necessary
If you get a refund after you file your taxes, that means a lot of your paycheck is going to the IRS, interest free. Sure, that money is eventually returned in a lump sum, but you get smaller paychecks throughout the year.
After I got married, I filed a new W-4 to change my filing status from “single” to “married filing jointly.” At the same time, I adjusted my withholding after using the IRS Tax Withholding Estimator tool. This increased my take-home pay by $269.
4. Cut down on expenses
“Just skip the daily trip to Starbucks.” That advice has become a cliché. But paying off thousands in debt requires bolder moves — and more painful sacrifices — than passing lettuces. So here’s what I did instead.
charitable giving stopped
Some will disagree with my decision to stop giving while paying off the loan. When to give, how much and to whom, are highly personal choices. For my husband and me, charitable giving worked for a while. You decide if it’s right for you.
used to be skinny
Reducing or eliminating expenses is imperative if you’re trying to pay off debt. The good news: There are a myriad of ways to do this. Look at your bank and credit card statements and look for opportunities to trim down. Here are some of the ways we’ve reduced our cost of living:
My husband got a job closer to home, reducing his commute from 31 miles to 6 miles and saving gas.
We waited a year to take our honeymoon, which was mostly paid for by cash wedding gifts.
We economised whenever possible: I started grocery shopping at a cheap supermarket. My husband, an avid bowler, suspended playing in a league to save about $20 a week in fees. He even adopted a cheap razor brand.
5. Save Strategically
I steadily built up an emergency fund for my family, over $1,000 which some say is sufficient for those who are taking out debt.
This decision actually delayed our debt-free date, but on the other hand, a healthy emergency fund gave me financial support and priceless peace of mind. I knew I could cover expenses in a financial emergency without going into debt.
Figure out your later life debt
Fuel yourself for the journey of paying off debt by imagining the afterlife.
When I submitted the final loan payment in 2019, I felt a light and deep sense of accomplishment. For three years, I was very focused on my journey. I alternated between regretting financial mistakes and lamenting about things I couldn’t afford. After paying off $53,000 in debt, I turned my gaze outward and began donating to causes and giving to others. Best of all, I was free to start a family.
Photo courtesy of Jay Bratton.