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How I paid off $20,000 in student loans and car debt in 18 months

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  • My wife and I had about $20,000 in student loans and auto debt when we got married.
  • We decided to use the debt snowball method to pay it all off, but realized we needed to earn more.
  • We got promotions and took side hustles, and celebrated every milestone.

$20,000. This is the amount of non-mortgage debt my wife and I accumulated in our marriage before we started getting serious with money. 15% of our take home pay went to student loans and car payments, and we only paid the bare minimum. We felt like we were stuck in debt until the terms of the loans were lifted, and by then we would probably have new debt to replace it since that’s exactly what people were doing.

My wife was, at the time, the more financially knowledgeable half of our partnership due to her family’s decent education in the fundamentals of money management. I was a little more naive about the whole money thing and was happy to let my wife control the financial direction of our new marriage.

Two big moments happened around the same time to change that. My wife encouraged me to learn more about money so we could be equally responsible for our family’s financial decisions, and the school where I was teaching asked me to teach a financial math class during of the next school year.

Both were signs that I needed to get on board and learn more about finance, which I did through many podcasts and books. The end result was a blazing fire to get us out of debt and onto a journey of financial independence that included the ability to early retirement.

We opted for a debt repayment strategy

Our debt was pretty straight forward and there were a lot of positives to build on. There was no credit card debt, we didn’t overbought our house, and when we did buy new cars, we bought some of the cheapest new cars on the market (a Corolla and a Civic). Our student loan debt was collective $12,000 and the rest was car debt.

Having seen the Snowball methods and debt avalanche set up, we opted for a snowball approach to take advantage of the first victories for motivation. This meant that we tackled our smallest debt first, then accumulated the largest, deferring the payment of the previous debt to the next as they were paid off.

Our refrigerator was adorned with a new poster showing each of our debts (three student loans and two cars), the total amount owed for each, and small fundraising thermometers to visually show our progress toward paying off each.

The chart made it a fun experience and kept us going when progress seemed small or insignificant each month. Walking by the board each day helped keep the fire burning to stay true to our plan and not give up until it was all gone.

We have reduced expenses as much as possible

Personal finance is really simple at its core. Earn more than you spend and put that extra money (“the spread”) to work on increasing your net worth.

In this case, paying off our debt was the best way to improve our net worth. The problem for us is that there was no gap at the start. We had inflated our lifestyles to the point of consuming our entire paychecks each month, with a minimal amount going to retirement accounts and nothing to savings.

We cut expenses where we could, but there wasn’t much else we could cut back then. We needed more revenue to fill the gap needed to aggressively pay down our debt.

We found ways to earn more

Over the next 18 months, my wife and I increased our income through eight different sources. These included improving our earnings in our full-time jobs through professional development and job changes, as well as finding part-time jobs, employment contracts and starting our own businesses.

As a teacher with summer leave and a therapist who sets her own schedule, one thing we had going for us was the time and flexibility to create these new sources of income and sustain them for a short period of time. My wife worked in a vineyard and took a part-time job as a school social worker. I wrote up the curriculum for my school district and started tutoring math in the evenings.

My favorite side activity was officiating girls’ lacrosse. While being the one in the center of the field with the whistle might not sound appealing to you, it was a way to earn a great hourly rate of around $1 per minute, plus it had exercise built in.

We identified milestones and celebrated them

At first it was easy. The first two student loans were only a few hundred dollars each, so they dropped pretty quickly. After that, progress was slow. The snowball of money we were throwing at the debt had grown, but it was still only making a small dent each month, which was super demoralizing at times.

We’ve found that if we break down big debt into smaller steps that we can celebrate, it keeps the small quick wins mentality alive.

Celebrating usually consisted of a little treat for ourselves. Nothing to derail our efforts, but something to reward us for our hard work and persistence. It could be as simple as a sweet treat or takeout instead of cooking.

We were smart about future debt

Once we made the last payment 18 months after starting, it was decided that future debts were going to be avoided as much as possible.

We continue to use credit cards, but they are still refunded in full each month for enjoy the rewards.

We immediately began funding an emergency fund to cover events that might force us into debt.

Instead of inflating our budget with all the money freed up through debt repayment, we kept making car payments to ourselves and saved it in a high yield savings account. This allowed us to pay for a used car in 2021 without having to take out a long-term car loan.

We’ve also used high-yield savings accounts for things like Christmas gifts, annual HOA expenses, and vacations. Everything we can now reasonably plan, we do.