First off, can I just say that I didn’t even realize I had $30,000 worth of debt?
I paid off my credit card balance two years ago, and I felt lighter and freer. It was only a $2,000 balance but knocking out any debt is cause for celebration.
It wasn’t until I sat down and looked at our monthly spending that I realized we paid more than $1,000 a month on debt (not including the mortgage). Bills, per month:
- $700 in car payments
- $99 in student loan payments (should be higher to pay it off sooner, but eh)
- $250 for financing our furnace/AC unit (0% interest, but still, it’s debt)
I showed my husband the numbers and we pulled out our calculators (on our phones). We decided to get aggressive. If we didn’t spend the money on car payments or student loans, we’d be able to do so much more and not feel like our income is stretched to the limit.
We used to have old, clunky cars with no car note, but in a two-week period, my car’s brakes went out while I was driving and my husband’s steering column gave out while we were pulling out of the Red Lobster parking lot (we couldn’t turn the wheel). We had a 3-year-old and a 1-year-old at the time—we needed newer and safer cars. Student loan debt is around $5,000, which I would have made a larger dent in paying if my loans hadn’t been in deferment while I was in grad school.
We have some big plans in the future, which include being able to do whatever we want with OUR money. We set a goal of knocking out this debt within the next two years. July 2015, the only debt we will owe is on our house.
How are we doing this? Welll….
- Our kids are going to public school. We paid about $500 a month for my daughter’s private school and $245 a month for my son’s 3-day a week program. I know her tuition may seem like a lot to some of you and for some, it may look affordable compared to what some of you are paying. But it was too much for us to pay, particularly since our public school system is tops in the state. With those two expenses gone, we’ll have about $750 a month to put together knocking out debt.
- We won’t be eating out as a family, like, ever. My daughter has to adhere to a strict gluten-, soy-, nut- and egg-free diet now after disappointing test results from the allergist. Since I don’t trust other people to prepare her food and I don’t feel like interrogating waitresses and chefs whenever we go out, whatever she eats comes from me. (Man, it’s almost like it was back when I was breastfeeding.) We’ll probably save about $50 a month, easily. We do spend more on groceries but…
- We’re adopting an “Eat all the food we buy” mentality. I already shop pretty smart, but it bothers me when I have to throw away food because I didn’t use it before it went bad. It’s literally throwing money away. Now I’m freezing everything and turning leftovers into new meals.
- We’re decluttering our house. You ever watch an episode of House Hunters and people complain the closets are too small? You might have too much junk instead. We’re joining our neighbors this summer and hosting a garage sale and selling bigger items on Craigslist along the way.
- We’re looking for “free” and “cheap” ways to entertain the kids. Of course, I still plan on taking them on one nice vacation this year but for the most part, we’re buckling down. I started taking the kids to the library every weekend to stock up on books for the upcoming week. We started getting our movies from the library instead of hitting up Redbox. (On those rare occasions we use Redbox, I find a coupon to get at least 50 cents off.) I deleted my HuluPlus account, but we kept Netflix.
- We got rid of the “fancy” cable and home phone. It took me a long time to be comfortable living without a home phone but now I just make sure my cell phone is always charged (a challenge). We didn’t need all 900 channels we had before. Truthfully, I’m trying to let go of cable altogether but my husband needs his 24-7 ESPN fix for some reason. Hmph.
- We’ll be using the snowball method to wipe out our debt quickly. Basically, we’ll be paying off our furnace loan (finished in June 2014) and then using that money to wipe out our car notes.
It’s going to take a LOT of discipline to get to this “debt-free” status but we’re willing to do it if it means we’ll be able to live more comfortably in the next two years.