Hi, friends! Thanks for stopping by Families That Stick! I would like to introduce you to Dani, my niece. She and her husband are normal 20-somethings with the house, the baby, the cars and…the huge college loans. They also happen to be super awesome at budgeting, so I wanted Dani to share their debt-free journey with you. (This will totally inspire you!) You will love her and her family. (Note: CUTEST. BABY. EVER.) If you would like to read more about them, check out her blog at The Pennies We Saved.com
Hi, everyone! My name is Dani, I am so thrilled to be sharing my debt-free journey with all of you today!
Before my husband, J, and I set off on a mission to seek financial freedom, we were living comfortably and applying the minimum payments toward all of our debts. Our debts consisted of what most people would consider “normal” debt. Student loans, car loans, etc. – the usual. We were actually just fine with the way things were in terms of our finances.
However, in May of 2015, J had just finished his Bachelor’s degree and in six short months, we received his first student loan bill. I was shocked to see that we now had over $60,000 in student loan debt, combined. Altogether now, our total debt amounted to over $70,000.00! This was not a number that sat well with me, to say the least.
I knew something had to change.
Our Plan Of Action for our Debt-Free Journey:
Our plan was to pay off our debt as quickly as we could. I gave us the five-year plan (to be debt-free by 2020). I thought that this was a pretty realistic goal. So, we created a budget, monitored our variable and fixed expenses, and threw any extra cash we had on hand by the end of the month to our debts.
So how exactly did we make this happen?
The Method We Followed:
We started following a method (about midway through our debt-free journey) known as the Debt Snowball, implemented by Dave Ramsey. An influential Christian financial guru and radio show host, Dave Ramsey is also author of the book, The Total Money Makeover.
His method, which you can find in this book, instructs readers to pay off their debts in order from smallest to largest, despite the interest rate (which worked for us). Once you have paid off your smallest debt, then you roll the money you were once paying on the first smallest debt onto the next smallest debt.
Following his method has helped change our perspective in regard to how we manage our finances and how we spend our money. So, if you are looking to embark on your own debt-free journey, I encourage you to arm yourself with a better understanding of The Debt Snowball by reading his book, The Total Money Makeover.
Reason being, there are important steps that need to be followed, known as The 7 Baby Steps:
1) $1,000 Emergency Fund
2) Pay Off All Debt, But Your Home
3) Have 3 to 6 Months of Expenses in Savings
4) Invest 15% of Household Income into Retirement
5) College Funding for Children
6) Pay Off Home Early
7) Build Wealth and Give
Currently, we are on Baby Step # 2 of our debt-free journey, but we can finally see the light at the end of the tunnel.
How To Come Up With Extra Cash:
If you are looking for ways to make extra cash, take a look at the list below:
1) Sell, sell, sell
You know how the phrase goes, “your junk is someone else’s treasure.”?. Well, it’s true! If you want to make fast cash, sell your junk! Has your item in question been put to use in the last six to twelve months? If you have not used it in that time frame, sell it!
In 2016, we made around $3,000 after selling stuff that we no longer needed. We put all of that cash toward our debt.
Now, to some, the time and effort of selling unwanted items is hardly worth it, but trust me, it is when you’re on a mission to destroy your debt.
2) Cancel or Downgrade Services
Consider canceling your internet package, downgrading a cell phone plan, or even canceling one of those nifty subscription boxes.
By doing this, you will immediately begin to see how much you save each month. If you take this approach, all you have to do is apply the money you are now projected to save and put towards your debt.
3) Reassess Your “Must Haves”
What’s a “must have”?
I consider it to be a luxury that has become a part of your daily or monthly routine. Such as buying that much needed morning cup of coffee, a gym membership, and those biweekly massages. All of these are your personal “must haves”.
The truth is, you don’t need them to survive!
So, delay no longer my friend, and say goodbye to your beloved must haves, for now! Similar to the previous tip, simply take that money you now have left over from the elimination of your luxury(ies) and apply it to your debt!
That was a piece of cake, wasn’t it?
I am so happy to say that family’s financial future is looking extremely bright thanks to our hard work, extreme saving, and serious determination to pay off our debt.
In all, we were able to pay off a total of $40,075.03, and it only took us 21 months!
I am also excited to say that we are expected to be free of our debts (with the exception of our mortgage) by 2018. Two years ahead of my original scheduled debt pay off plan!
So if you are ready to leap into your own personal debt-free journey, I am behind you 100%!
Trust me when I say, you can do it and you won’t regret it.
If you want to read more about Dani & J’s story & learn how to begin budgeting like a boss, click here to go to her blog, The Pennies We Saved.
This post contains affiliate links. For more information, see my disclosures here.
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