When people hear that my husband and I paid off all of our debt — including $30,000 in student loans — we get a few different reactions.
Hearing our story gives others hope that they, too, can be free of student loan debt and other types of debt. Others sometimes scoff and tell us we’ve “hurt our financial future because some debt is good.” Others assume we make outrageous incomes (we don’t) to be able to do such a thing. But regardless of the initial reaction, everyone wants to hear just how we were able to do this.
If you are facing a mountain of debt or just want to get a better grasp of your finances, it can be helpful to hear the stories of how others achieved financial freedom. So I’ll share our story here with the hope that it will be encouraging and enlightening.
In the beginning…
I will be completely transparent and say that I was clueless on most financial matters when Jesse and I got married. I graduated without any student loans (thank you mom and dad) and had no idea how debt worked. After getting married, we signed up for an income-based repayment plan for Jesse’s loans and for awhile were perfectly content with paying just $60 per month for his $30,000 student loan balance. Out of sight, out of mind, right?
At that point, we had no real plan for our finances other than trying to not spend more than we made, and saving as much as we could. But it was hard to keep with those two priorities, even though we didn’t spend much on extras. I later learned we were struggling because we had no real clear, actionable plan — just a vague, faint idea of one.
The wake-up call
After about a year-and-a-half of marriage, we were happy to see that both our incomes had gradually increased. That sense of satisfaction was quickly rained on when we received a letter in the mail from Navient stating we no longer qualified for an income-based repayment plan. Rather, our minimum required monthly payment would now be $300. Our payoff date was the year 2030.
We had a rather upsetting panic attack realizing that we were staring at 10 YEARS of $300 a month — at minimum — for these student loans. We really felt the weight of that reality when we thought of how that would tighten our monthly budget and all the ways we would rather spend $300 each month. That’s when we started exploring ways to get out from under the mountain of debt as fast as possible.
The debt snowball
We started reading articles and blogs about debt reduction. There are lots of opinions when it comes to finance, but the source that resonated with us the most was Dave Ramsey’s approach in Financial Peace University. We watched dozens of videos on his YouTube channel and began to pick up on the key principles of his approach to finances.
He advocates for the debt snowball: listing your debts from smallest to largest, and paying off each one as quickly as possible. Begin with saving a small emergency fund, paying off all your debt, then saving a larger emergency fund of several months expenses, followed by other financial goals like saving for a house, investing, etc.
This strategy made sense to us on a number of levels. To that point, we’d been trying to do everything at once — pay off debt, save, and invest — and we were getting nowhere fast. We liked the idea of prioritizing our financial goals to be able to devote all our energy to getting out of debt as fast as we could, and then tackling other financial goals like saving and investing.
We started crunching numbers and estimated we could pay off all of our debt in 12-14 months if we were aggressive. We started with about $31,000 in federal student loans. In seven months — from January to June — we cleared it all and reached a balance of $0. Here’s how we did it.
Saying goodbye to (much of) our savings
We had a little over $15,000 in savings in the face of our $30,000 of debt. The hardest piece of financial advice to swallow was Dave Ramsey’s recommendation to throw a lot of your savings at debt in order to clear it as fast as possible. It had taken us a long time to save up that much money, and it was definitely painful to see so much of it gone so fast.
But it also felt incredible to see the student loan balance drop so much when we drew from our savings. It gave us a boost of energy to press forward and get even more aggressive about throwing as much money as we could at the balance.
Financial Peace University recommends a $1,000 savings fund while you’re paying off debt, but I understand how many people may not be comfortable with this margin. We didn’t have kids at the time and had stable jobs, so we were okay with a smaller savings account while we tackled debt. You must decide what you’re comfortable with. But note that the point of a smaller savings fund than you’d like is to encourage you to work hard and fast to get out of debt so you can begin building an emergency fund with that same energy and intensity.
In order to pay off our debt so quickly, we said “no” to fun extra expenses constantly over those seven months. We ate out maybe once or twice during that period — and only as small rewards for reaching major student loan balance milestones. Even though it was painful at times, I loved this aspect of working the debt snowball because it conditioned us to ask ourselves whether we really need to buy whatever it is we’re wanting to buy. This skill formed us well — we continue to be intentional and prudent about how we spend our money even though we’re now debt free.
Paying off this much debt so fast required a great deal of discipline. Truthfully, we often complained and expressed our frustration with the situation! But when we felt frustrated about having to put so much toward the balance each month, we remembered our goal of financial freedom and talked about all the reasons we were working so hard to accomplish this goal.
We learned to find joy in the simple and free things in life, like taking walks and hikes together, cooking together instead of eating out, appreciating what we have instead of spending on extras. In general, the experience has taught us to be good and grateful stewards of the financial gifts we have been given.
Becoming completely debt-free
We hit “submit” on our final student loan payment in January of 2020. It is hard to put into words the amount of freedom we felt that day! In addition to our student loans, we also paid off a small credit card debt, and paid for both of our vehicles in full, making us completely debt-free: no credit cards, no student loans, no car payments.
Thanks to this journey, we have a completely new and confident view of managing our money. One of the biggest differences between where we are now and where we started is that we now do not use debt as an option, aside from eventually buying a house — if we don’t have the money to buy something outright, then we’ve determined that we can’t afford it. And most importantly, we have a clear, specific, measurable, actionable plan for our finances, instead of bumbling about with a vague, generic idea of what we should be working toward.
The task felt impossible when we started, but now that we’re on the other side of our journey to become debt-free, we’re so grateful for all the lessons we learned, even the ones that weren’t financial in nature. There have been so many things we couldn’t have done over the past year if we were still paying upwards of $700 per month on student loan minimums and car payments.
If you are facing a mountain of debt and want to be free, I want to encourage you that it IS possible! It won’t be easy, but financial freedom is totally worth the hard work, sacrifice, and self-denial that it requires.