In June 2011, my husband (Dave) and I made our first payment toward my $30,000 of student loans. In March 2012, just nine months later, we made the last payment and celebrated becoming 100% debt free! Friends, family members, and my readers asked how we did it so quickly, so I thought I’d share some of the main contributors that helped us demolish our debt.
I attended Michigan State University to become a Registered Dietitian. My three sisters and I did not have to pay a penny for our first year of college since our parents committed to paying it for us. I didn’t think twice about taking out loans since they were just numbers on paper, so I racked up $30,000 to cover my last three years. It would have been $24k more but I was a mentor/RA in the dorms and saved $8,000 a year since I got housing and a meal plan for free- one of the best decisions I made in college! Dave’s parents had saved up and paid for his degree in mechanical engineering, so my student loans were our only debt when we got married after I graduated in May 2010.
How did we do it?
To put it simply- we kept living like broke college students. We read Dave Ramsey’s Total Money Makeover as part of our pre-marital counseling and set up a budget using Microsoft Excel. We made a goal to pay off my student loans in a year because we both agreed we wouldn’t be as motivated to tackle our debt if our goal was any longer than one year. As for the specifics…
We share a car
We chose the one-bedroom apartment we currently live in because it’s right next door to Dave’s work. He walks and I take the car for my job. Our apartment is also a short jog away from Dave’s gym and a grocery store, so that also cuts down on gas.
No TV means no cable bill. Our local library has a great selection of movies we rent for free and watch on the laptop. We can watch most TV shows on Hulu.com and occasionally mooch off of my parents’ Netflix account.
No air conditioning
It got over 100 degrees last week in Southeast Michigan! Our apartment also faces West so it turns into an oven just as we are getting home from work. We’ve dealt with the heat by keeping the blinds closed, not using the oven/stove during the day, and open the windows at night so our box fans pull in the cool air. Occasionally we bring our mattress in the living room and sleep on the floor! Our monthly electric bill has not been over $25.
We kept the dumb phones
We’ve never had smart phones, so I’m glad I didn’t have to feel the pain of downgrading even though it is annoying not having luxuries like a GPS at our fingertips. My dad’s employer provides a great discount through Verizon, so we added Dave to the family plan and write my parents a quarterly check to cover the upcoming 3 months.
Dave interviewed with companies all over the country but thankfully he got an offer from his top choice in Michigan! We now live 40 minutes from my parents and 2.5 hours from Dave’s. About once a month, we bring our loads of dirty laundry to my parents and spend the day with them. Sure it costs $10 in gas to drive to and from my parents but we end up bringing about 8 loads of laundry each time which would have cost $24 to do since the washer and dryer in our apartment building are both $1.50 per load. We do buy our own laundry detergent so we’re not complete moochers! On top of this, my mom loves to feed Dave so she always makes a delicious dinner and sends us home with plenty of leftovers.
So where’s the money going now?
Now that loans are paid off, we’ve reallocated that monthly payment to different categories. We increased our entertainment budget from $40 to $100 per month, bumped up our tithe to 15% of our gross income, added a budget for some new clothes, and put the rest of that monthly payment chunk toward a 6-month emergency fund. Our last two goals we’ll be working on in 2012 is saving for a new(ish) car and a home sweet home. We love being debt free and seeing our money work for us instead of flushing it away each month!
Do you have any debt you’re working on paying off? What tips and tricks do you use to demolish debt sooner?
This has been a guest post from Jessica. She is a Registered Dietitian and shares practical, useful tips on food, fitness, and finance. Be sure to subscribe to her blog, Budget For Health.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.