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3 Tips to Get Rid of Debt

Rejoice with us friends – we have paid off my husband’s student loans! The only remaining debt that we have is our mortgage. Whew! We have a modest combined income (about $4,500 net a month), but we have managed to pay about 25% of our monthly income towards this one debt. This post will share our story and 3 Tips to Get Rid of Debt.

3 tips to get rid of debt

Step Number 1 to Get Rid of Debt:

  1. Face the music and know your numbers!

We sat down with a friend in 2011 who helped give us a snapshot of our financial standing. We were actually shocked to see the total amount for his student loans when we gathered all the student loan documents at one time. The total was $39,601. I think that was about what we were making at the time when he was a full-time student and I was working part-time.

We only had one type of debt (aside from our mortgage) but we had 5 different student loans that we were paying.  You may have credit card debt, student loans, and car loans. It doesn’t matter what type of loan it is, just bring all the documents together and know what the current balances and interest rates are to start. Write it down.

Step Number 2 to get rid of debt:

2. Cut out any extras and simplify!

We have always been pretty good about eating at home, but this new goal really pushed us to cut out the pizza or Chinese take out nights that we fell into once or twice a week. Meal planning has been a lifesaver (budget saver) the past several months.

You may have cable, or memberships that you’re not using that you can cut out. Now is not the time to plan an extravagant vacation or over the top gifts. Get your family involved and talk about why you are not “living like the Joneses”.

Step Number 3 to get rid of debt:

3. Put everything extra towards the debt!

In 2011 we didn’t have a lot of extra money to put into payments, but we paid what we could. If we got any extra money, especially our tax refund, it went towards the student loan. When my husband started teaching, our income went up and we kept our expenses down.

Eventually we realized that it would make more sense for us to use our savings (which was earning less than 1%) to pay off the student loans which were at 6% interest. We kept $1,000 in our savings account, and put the rest toward paying down the debt.

I made a homemade thermometer that we could keep on our refrigerator. I wanted a visual reminder for all of us of what we were working towards together as a family. Here’s what it looks like:

3 tips to get rid of debt

At the beginning of 2014, the student loan debt was $21,790.42. We got laser focused and paid off $16,790.42 in one year. We kept our balance at $5,000.00 in case my husband taught for 5 consecutive years in the school district. At 5 years, there is a $5000.00 student loan payment/forgiveness. We just redirected the $1,000/month to our savings instead of the student loan. Instead of waiting another year and half, however, we finally paid the balance of $3,735.86 off last week. Current balance of student loan: $0!

How we paid off over $16,000 debt in one year! #debtfree Click To Tweet

It feels great to be debt free, aside from our mortgage. We will now have extra money each month that used to be applied to the minimum monthly student loan payments.

One of the steps that I didn’t explicitly write is to increase your monthly income. That was undoubtedly essential in us being able to pay the loan off as fast as we did on our income, however, for many years we didn’t have a large surplus every month. Work with where you are now and do what you can.

3 Tips to Get Rid of Debt. Read our story. #debtfree Click To Tweet

So, in summary, here are the 3 Tips to Get Rid of Debt:

  1. Face the Music.
  2. Cut Extraneous Spending and simplify.
  3. Put everything extra towards the debt. 

I’ll be sharing more in 2016 about budgeting and money as I try to establish the habit of budgeting! I hope you’ll join me!

This post shared at these fun link ups.

Comments

  2. That is AMAZING!!! Congratulations!! The only debt I’ve ever had is my mortgage and student loans but this year I incurred some medical bills as well which was disheartening. BUT I’ve spent so much of my income this year on medical expenses that I think I will get a hefty refund this year (everyone is allotted to spend up to 10% of their income on medical expenses and I’m over 20% I believe) so my silver lining is that I may be able to pay off my student loans with that since it’s under $3K at this point. I’m always SO happy to hear about people getting debt free! I also just refinanced my mortgage into a 15-year term so I may conceivably be free of all debt someday!

    • Thank you Liz! I hope that works out to pay it off this year. We refinanced to a 15 yr term a few years ago as well and I’m so glad we did!

  5. Congrats on getting your student loans all paid off! Getting extra income and keeping expenses as low as possible really helps. Thankfully, my husband worked in a field where it was easy to get overtime hours, he worked extra days each week till he got the loans paid off.

  9. That is awesome! I have been chiseling away at my debt for a couple years now. In a few months, I will be debt free too ( besides mortgage that is). I haven’t bought clothes for myself in a year! Christmas is usually hard for me too..but I haven’t charged anything. I can’t wait until my credit card says ZERO! Visiting from #Women with Intention

    • That’s so exciting Valerie! Keep up the great work! It sounds like you’ve been very disciplined which (let’s all admit) is really hard at times. Thanks for visiting and commenting!

  10. WOW! Congratulations! That has to feel so good! Our student loans are always looming overhead. Currently, we’re in serious “save” mode in order to renovate our kitchen. We just bought our first house and we’re jumping in on increasing our equity, apparently haha! I JUST did a post on budgeting tips and tricks over at my blog – I hope you check it out!

  11. Angela,
    You are spot on. I especially like your candid approach to how keeping up with the Joneses is not an option when you are debt ridden.
    Given my Indian background living in debt is highly frowned upon, we actively work towards mitigating debt of any kind. I know the ethos. I would rather skip the luxuries and take stock than try to keep on impressing people when I broke.
    A great post.
    Cheers!

  12. Somehow my comment never went through 2 days ago, here’s a new try.
    These are very valuable tips, debt is something so easy to get sucked into and so hard to get out of. It’s great sharing your own success stories to encourage others and show them that there is always a way.

  15. Hi Angela,

    You have no idea how much this post has helped me. I’ve been struggling with student loans and payments for a few years now. I usually just ignore them (I know the worse decision ever). Ever since the new year began I’ve vowed to make a commitment to getting this issue off my back. Putting everything extra towards the debit is a great tip. When I pay for things I love the reward aspect of what I payed for. If its food, I get back a yummy meal! If its fashion, I get to feel good about what I’m wearing. I feel when I pay for student loans…I get nothing back. I don’t see the reward right away. I have to remember its the long term reward of being debt free is what’s going to inspire me! I’ll look back on this post when I need an extra encouragement!!

    Thank You so much for this!
    Happy New Year
    -Shannon
    http://www.onthelists.com

    • Hi Shannon! I’m so glad it’s encouraged you. I know the payoff is not immediate, but you are going to feel so light and free when you pay it off. There is a bit of a reward when you keep track of the debt being paid off – like our homemade debt payoff thermometer. You can also plan bigger rewards for yourself when you hit certain markers! Good luck!

  16. This is AWESOME, Angela! We, too, only have my student loan debt (aside from our mortgage). I can’t wait to get it paid off. I can imagine how exciting this is and I’m so happy for y’all!

    Thanks for linking up with The Alder Collective! Your posts have been pinned to our group board. We hope you’ll join us again this Tuesday at 8 pm EST!

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