It’s still hard to believe that we are debt free. But, we are incredibly thankful to have reached this milestone. And since I’ve shared a bit about our journey out of debt on this blog of mine, I figured a final look at how we paid off over $100K in debt was in order.
So if you’re looking for some practical tips for cutting your debt, stick around and see how my family of 11 made it happen.
What Was the Debt?
My husband and I were pretty “typical” as far as debt was concerned. We took out loans for everything and mistakenly believed that debt was necessary to “make it.”
By the time we woke up to our financial mistakes back in 2009, when we were in our mid-twenties, we realized we’d dug a deep hole. In fact, we were over $100,000 in debt at that point!
Student loans for my master’s degree were the primary source – over $40,000. I also had accumulated some loans during the senior year of my bachelor’s, and Bryan’s first year of college. That was another $13,000 in student loan debt.
So over $53,000 of our total debt was in student loans. Ouch!
The rest of the debt was made up of us financing just about everything we needed/wanted in life. We had payments going to pay for:
- Snow tires
- A personal loan we used to remodel the kitchen and bathroom
- A computer
- 2 cars
Wow – it is crazy to open up all of our old financial records and see this. I can’t believe how often we took out loans!
Realizing Our Folly
It wasn’t until 2009 that we realized there was a better way to handle money. We started listening to this crazy guy named Dave Ramsey when our car trips corresponded with his time slot on the radio. 😀
We liked how he pointed out what the Bible said about debt. It was a topic we’d never really considered from a biblical perspective before.
So Bryan and I agreed to stop taking out loans and to start cleaning up our financial mess.
But, we both agreed that the complete Dave Ramsey plan wasn’t for us. After all – Dave didn’t live in the boonies or have a big family. So we started tweaking.
Dave Ramsey “Ishing It”
Partway through 2009 marked the beginning of our journey to get out of debt. We decided to modify the popular Baby Steps plan to work for us.
We sort of made a budget. And by that I mean that we sat down and figured out what bills we had to pay and all that. We had categories for everything in the budget, but we almost always went over them.
The budget didn’t really mean much to us back then. After the initial set up, it was there for years without us really adjusting it or touching it, unless a pay raise or something happened.
It was sort of like we both fell into the “Well, we checked make a budge off the to-do list” mode, and got very comfortable where we were. We paid off some debt. But looking back, we could have done this so much faster…
Then in 2012, I stepped away from teaching. The job I had, at a parent partnership program, was changing. Instead of working from home four days a week, it was switching to one day a week.
At this point, we realized that it’d cost us more in daycare than I brought home. So we punched the numbers.
By cashing out my retirement plan, we were able to pay off a huge chunk of our debt. We paid off as much as we could.
Then even though our income was cut by 2/3rds, we took the plunge and became a single-household family. I’ve so enjoyed being home and homeschooling the kids!
Just Squeaking By
But, as you can imagine, taking a loss in pay that large was substantial. Looking back, it probably would have been smarter for me to keep teaching and for my husband to stay home. But, I really wanted to be the one here!
So we squeaked by. At this point, Bryan was working at a chain fast lube place. And our annual income was just under $30,000.
Paying off debt didn’t happen. We made minimum payments. And anytime we got more money, we spent it on basic house stuff. Or clothes for the growing kids. 😀
We weren’t making progress, and honestly at times it felt like we were going to be in debt forever!
Starting a Side Hustle
In 2015, after praying for wisdom, the Lord showed me how I could make extra money online through freelance writing. So I took the plunge and launched my writing business side hustle in July of 2015.
Note: If you’re looking for a great way to earn money from home, I highly recommend freelance writing. Here’s the course I took at the beginning of my journey – it really offers a great foundation for building on! 30 Days or Less to Freelance Writing Success.
I’ve been contributing to the budget ever since (and also added income from doing virtual assistant work and blogging!)
And my business has been one of the biggest factors in our ability to wipe out this debt!
But, we still were making plenty of mistakes. Which is why it took us another four years to wipe out our debt for good!
More Mistakes in Paying Off Debt
Even after our income started moving a little bit, it took some time to recover from the financial pit we were in. Basic maintenance needed caught up before we could start making progress. It seems like every time we got a chunk of money, we came up with another way to spend it.
And, we still believed that student loan debt was “good” debt, so we weren’t that motivated to pay it off. We weren’t adding to our debt after all.
Then…our Pastor’s brother-in-law visited our church and presented the ministry of Missionary Acres.
A Reason to Quickly Lower Our Debt!
After learning about Missionary Acres, we were intrigued. When the ministry was presented a second time the following year, and it was announced that they were earnestly praying for more staff, we knew we had to pray about it.
It’s amazing how God opened the doors to this ministry for our family.
So after prayer, we started contacting Baptist Mid-Missions in the fall of 2016. Bryan took a survey trip to the Acres in December of that year.
And we knew it was where God would have us serve.
Except…there was a limit on the amount of debt we could have before starting out as missionaries. And we were over that amount.
At this point, we were still $26K in debt. We had to get it down to $18K before we could attend Candidate Seminar.
We didn’t make it in 2017.
But, God is good, and He orchestrated everything perfectly. With some help from family members and a dear lady in our church, we squeaked into the class of 2018 barely under the limit.
And now – not even a year after that – we are completely debt free.
So how did we do it? After struggling to pay off debt for so long, how did we manage to knock out $18,000 in less than a year?
Here are some changes we’ve made in the past few months:
Have a Reason
Realizing that our debt was a hindrance to the work God was calling us to do ignited a fire in us. We had a reason to get out of debt. It was no longer a “someday” goal, but something we needed to do.
We recognized that the lower our expenses are, the less support we have to raise, and the sooner we will be able to make it to our mission field.
Until you have a reason to drive you to do the work it takes to get out of debt, you probably won’t be motivated to actually do it.
Make a Budget – Together – Every Month
This has been huge! Bryan and I now sit down every month and review our budget. We look at what income we expect, what expenses we have, and what we should do with any extra money.
When we were paying off our debt, that’s where it went.
We made the decision to put off those extra purchases. Yes, there were a bazillion ways we could have spent the money. But, we both agreed that we would put the extra on the debt.
Have Some Money for Small Purchases
One of the downsides of taking ten years to pay off debt, and dealing with a tiny income, is that you begin to feel deprived. And then when you get money, you just really want to spend it.Even if it’s not really what you planned on spending it on.
We learned that we both stuck to the budget much more easily when we each had a small amount of money each month we could spend however we wanted.
We called it Fun Money in our budget. And it made a huge difference in our morale.
Get Your Budget Working
Our first month holding a budget meeting didn’t go too smoothly. We had to figure out everything. And we realized how much money had been “slipping through the cracks” in our last budget.
When we accounted for every dollar and created a zero based budget for the first time, it was incredibly empowering. We knew exactly where our money was going, and how much we could spend in each category.
We also started using an app to track purchases. Every Dollar has been a great tool in our journey to pay off debt.
Though we’d been Dave Ramsey ishing it for years, the only thing we were using as a guide was his book The Total Money Makeover, and the podcast.
But, in early 2019, we decided that our way hadn’t really worked. And we were ready to follow a plan to make it happen. So we signed up for the Financial Peace course. We haven’t yet watched all of the courses, but I will say this:
Both Bryan and I wish we had purchased the course earlier. It really explained things well and inspired us to keep going.
Our Flywheel Moment
We were making traction on our debt, but were also saving up money for a 15 passenger van. We’re traveling a lot on deputation now and since we sold our school bus (the engine was failing!), we have to take two cars.
We really wanted a new van so we could all fit together. And take only one car on the road.
And then we had a Flywheel moment.
If you haven’t seen that movie, I highly recommend it. There’s one scene where the used car lot owner is figuring out how much money he overcharged people over the years. It’s a big number. And even though he wants to pay it back, he feels defeated – knowing it’ll take years to do.
And then his wife, who is doing the bookkeeping, asks him what number he just said.
It was an exact match to the dollar amount they took in after a tremendous day on the lot.
Well…Bryan and I were calculating how much money we could spend on a van. We had some money in savings. And I took on a huge curriculum writing project in my business.
When we added everything up, we learned we had just over $16,000 we could spend. That would have been a beautiful van!
And then when we were working on our budget, something jumped out at us. We realized that the amount of debt we had left was almost an exact match to the amount we had saved for a van.
We weighed the options. We prayed for wisdom.
And we decided to pay off the debt. And become debt free.
We don’t regret it!
No, we don’t have a van yet. And yes, we’re taking two cars on deputation.
But, we are debt free!!!! And it was worth it.
Make Being Debt Free a Priority
You cannot pay off debt AND have everything you want in life right when you want it. It takes sacrifice.
And you must decide to make getting rid of debt a priority. Look at the numbers. Look at how much you’re paying in interest, even with a low interest rate.
And once you decide to get out of debt, don’t try to take the scenic route to get there. Jump in with both feet and work together to make it happen.
To get out of debt…
Make a budget and tell your money where to go.
Stick to the budget.
Work together as a team.
Decide to wait on purchases – even if you think you “need” them.
We are so thankful for all that the Lord has taught us about money. And Praise the Lord, we are debt free!!!
It’s been a long ten years. But we’re done.