Debt Free Journey | July Update
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Welcome to our debt free journey!
We have done some serious work to go from totally broke, to paying off 10K of debt in only six weeks!
How were we able to do this?!
We are working Dave Ramsey’s Baby Step Plan, and telling our money where to go!
My husband and I are both doctors, and starting our debt free journey with over half a million dollars in debt.
As physicians, we are told often that debt is normal and just a part of life.
We were told that it’s totally normal to take out massive loans for our education, finance a practice in order to jump in feet first to business ownership.
Everything looked great from the outside, but we were drowning!
We were deeply in debt, living in a home we could not afford, with cars that owned us instead of the other way around.
It was time to do something drastic.
Thomas J. Stanley’s “The Millionaire Next Door”, says that doctors are among the largest “under accumulators of wealth” out of any profession.
I went to medical school to help people, but I also thought I would be able to make a comfortable living.
Instead our young family was totally broke.
I would stay up until the wee hours of the night, crunching numbers, and trying to figure out how to pay the next week’s bills.
We were so deeply in debt, that we could barely make our minimum payments, much less save extra money or pay off debt!
In January 2019, I convinced my husband to attend Dave Ramsey’s Financial Peace University at a local church.
It was life changing.
My husband finally realized why I was sinking into a deep depression about our financial situation.
I needed help. We needed help…and we found it!
We were 100% all in with the Dave Ramsey Plan, but change didn’t necessarily happen over night.
We were so behind on our bills, and underneath debt, that we would have to completely change our lifestyle.
After cutting our monthly expenses by well over $8,000 per month, we were finally ready to start paying off debt.
The entire process of drastically reducing our monthly expenses took about six months and included selling cars, downsizing our home, and selling a LOT of stuff.
On June 22nd, 2019 we made our first “debt snowball” payment and as of today (July 31), we have paid off $10,884.08!
Our income has not increased at all (YET!), but we will be working on that next!
The ability to pay off this much debt in such a short time, all amounts to putting the income we already have to WORK for us!
6 Things that Helped Us Pay Off 10K of Debt in Six Weeks
Stick to the Budget
- It took several months of trial and error, but we are finally able to stick to our monthly budget.
- Because of this essential life skill, we are able to avoid surprises when it comes to our finances.
- This allows us to cash flow all of our monthly expenses, without turning to a credit card or loan in an “emergency”.
- Learning to budget will instantly feel like you gave yourself a raise!
Related: How to Make a Budget for Beginners
Get Rid of Car Payments
- We were leasing a car with a monthly payment of $455.
- A lease is the most expensive way to operate a vehicle.
- We paid $455/month for 3 years, just to turn the car in at the end.
- This was definitely a mistake we will not make again.
- Instead of financing another lease or new car (or even a used one), we sold my husband’s car and used the cash to purchase two cheap cash cars.
- No more car payments, and more money in our monthly budget!
Related: How to Cut Expenses from the Budget
Sell ALL the Things
- We had a garage sale and made almost $2,000!
- It was a great way to declutter our home and make extra cash to build our starter emergency fund.
- You can also sell pretty much anything using the free apps Poshmark and Mercari.
Related: How to Have a Successful Garage Sale
Live on Less Than You Make
- Although we make a healthy six figure income, we live on far less than that!
- As business owners, we pay ourselves a salary every month of only what we need to cover basic expenses (and maybe a little extra for fun!)
- Everything else goes to debt. Everything.
Related: 50+ Frugal Living Tips & Ideas
Practice an Attitude of Gratitude
- I used to think that because I went to school for millions of years, that I deserved all the nice things.
- A big doctor house, a nice car, and a cute bag…these all seemed like things a doctor should have.
- However, this thought process was actually stealing away the promise of our future.
- We now practice gratitude for the things that we have, and appreciate when we are able to save up money and pay cash for the things that we want.
- We quickly began to realize that we were happier with less.
- My husband and I never mentioned money to one another in almost 7 years of marriage. Never, once.
- I tried to work on a “budget”, and pay our bills, by myself.
- When things went wrong with money, I felt shame because I was the one working on our finances.
- Now, we talk about our budget every day. Not in an obsessive way, but instead in a confident and casual way.
- Our budget, and the expectation that we are on the same page, is simply a part of our life now and it totally works!
Related: How to Budget with Your Spouse
June/July 2019 Debt Free Journey Update
We are doing the debt snowball method of paying the smallest debts first. However, we have IRS debt that we are tackling first! If you have IRS debt you should pay that off first due to the power of the IRS to garnish your wages and make your life a little tough!
Starting Debt: $625,074.03
Paid Off: $10,884.08
Debt Snowball Progress
IRS 1: $
$8259.70 $3,759.70 left!
Next Up: IRS 3!
Once we are done with our IRS debt, we will start our debt snowball from smallest to largest, starting with a few little hospital bills, and rolling right in to our student loans.
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Anyone can do this! You don’t need a large income, and you don’t have to be a doctor! You just need a little guidance and a LOT of motivation to stay the course.