Paying off $30,000 of debt in one year
A little update on our debt-free journey and how we plan to pay off our debts this year.
2019 was a HUGE progress year for paying off our debt. We were able to get the last of my medical bills paid off from having my daughter (thanks to CHM), we paid off our last (and biggest) credit card debt, and we paid off the Jeep I just purchased the summer prior. We still have about $39,000 to go, but we’re heading into this last leg of the race with some serious pride.
01 A Recap
We started this debt-free journey seriously in 2017 and that year paid off $5,384.32 of debt. That was a number we were extremely proud of. We went from not being sure if we could afford our home, to actually making a dent in our goals and fully funding an emergency fund.
The next year, we got pregnant! We cash flowed my entire pregnancy and still managed to pay off $18,539.88 in debt.
In 2019, we hit the ground running. We paid off $29,844.44. We used bonuses at work, tax refunds, grants from my husband's college and every bit of cash we were gifted. It was a bit of an unusual year, and we had some extra money come in that was not typical, but a few years ago we would've spent the money on new furniture or a bigger apartment. This year we stuck to our rules and it paid off big time.
That leaves us with $38,316.55 left to pay off. Our next goal is my husband's car loan and then we tackle the dreaded student loans.
02 CREDIT CARD DEBTS
When we started the Dave Ramsey journey, we had four credit cards all with INSANE interest rates. Our credit card debts were fairly small, so we decided to consolidate all of the debt to a shared credit card that we would open with USAA.
Quick note - this is NOT recommended by the Dave Ramsey plan, we just didn’t really understand money at this point. However, it did end up saving us around $400 in interest so we aren’t too upset about it.
My husband and I were trying to move everything from other banks we had prior to getting married and consolidate everything with USAA. At the time, USAA had a deal with a credit card with 0% APR for 18 months, so we signed up and were able to move 100% of our credit card debt to the new shared card.
From there, we started to chip away at the now $12,000 worth of credit card debt that we had bundled into one account. We had 18 months to pay it off before it would start to gain 17% interest again. It took 15 months, but in April of 2019, we paid off the last penny.
WHAT A GOOD FEELING.
At this point, we had $7,215 left to pay on my Jeep, around $17,000 on my husband’s car and a terrifying $28,000 in student loans.
03 THE JEEP
In June 2018, I was 12 weeks pregnant and my 2002 Ford F-150 was deemed totaled after a crazy hail storm. We had just put almost $2800 into repairs to get it ready for a baby so it was a serious punch in the gut. With a baby on the way, about $1800 in our “new car fund” and no way to get to work, my husband and I painfully decided we would suck it up and get a loan. Ugh.
After 3 weeks of hunting, we found a 2012 Jeep Patriot with 60,000 miles and in fantastic shape (minus some hail damage, only cosmetic, which was just enough to make it affordable - ironic, I know). We got a loan for $8,125 and in July 2018, we made the goal to get it paid off in one year.
A little late, but we paid off the Jeep on October 20th, 2019. It’s still holding its value around $9,000 and it’s been a seriously reliable and perfect car for our family. I do wish we had been a little better prepared for getting a new car, but in the end, it worked out and I’m happy to be free of the extra loan.
At this point, we had the same $28,000 in student loans (yay interest) but we owed around $14,000 on my husband’s car, so we wanted to jump in and finish off the year strong. We managed to knock down my husband’s car loan down to 10,000 before 2020 began, and now we’re on our last leg of the debt-free race.
04 NEXT STEPS
We're excited to see what this new year brings for us financially. My husband stopped working part-time and is going to school and watching our daughter for the majority of the days. We're beyond blessed to be able to bring my daughter into work with me on Tuesdays and Thursdays, so it saves us a ton of money to skip daycare costs.
I also (if you haven't noticed) revamped my business. I wasn't doing much with it at all last year, but with my husband helping me out, we have a year full of content and projects planned, and we hope that this could be a replacement for his part-time income. It's a work in progress, but something fun for us to work on either way.
As far as our journey goes - we still have a long way to go. Here's a breakdown of our timeline for some of the bigger financial & life goals we hope to accomplish in the next 6 years:
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2020 - pay off the last car loan and 25% of our student loans, move into a cheaper apartment in October, grow my business to replace DJ's part-time income
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2021 - pay off the last of our student loans, start stockpiling an emergency fund and down-payment fund, increase our tithe, think about another baby
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2022 - have 6 months of emergency funds built up, DJ graduates from school (and hopefully finds a job that he loves), have a 20% down payment ready to start looking at houses, hopefully, move into a house in October
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2023 - start saving 15% of our income for retirement, put aside money for our kid's college funds* and put any extra income into paying off the house early, I turn 30 this year!
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we don't plan on a typical college fund for our kids, we would like to put money into savings that they can use for a car, a home, a wedding, college or another alternative to education. When they are 18, we will give them the money to spend as they wish.
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2024 - continue to work on paying off the house and growing in our careers, look into adoption and/or foster care
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2025 - pay off our home and either start working toward our dream house and use the current home as a rental, or stay here for a few more years (depending on our savings, the housing market, and current jobs)
Our real-life finances and our dream life are finally starting to line up, and it’s such an awesome feeling to know that in 10 years, our lives will be our own because of one small decision a 24-year-old made while crying over her bills at the kitchen table.
