Two years ago, my husband and I were sitting down trying to figure out how we were going to pay off our debt. The payments were eating away at our savings with what seemed like no end in sight.
We were more than $90,000 in the hole.
We had tools we were paying on, a tractor with attachments, a vehicle loan, a personal loan, and several student loans. Most of our money was going toward these debts. If you’re feeling overwhelmed just reading that list, trust me, we were too.
It was time to take control and get out of debt to build a simpler, more intentional life for ourselves. We just needed somewhere to start.
Where We Started First
We were searching for anything that could help us get out of debt. Googling about ways to pay off our debt led us to Dave Ramsey’s book, The Total Money Makeover, which gave us a straight-forward, no-nonsense plan to attack that $90K debt aggressively. His book is extremely motivating and I highly recommend it. Even reading a sample of it was motivation enough to purchase it. We did, however, make our own adjustments to the plan to fit our situation.
One piece of advice we followed from Dave Ramsey’s approach was keeping a small emergency fund. We made sure to keep at least $1,000 in savings while we were paying off debt. That helped us when unexpected things came up, like vehicle repairs, so we didn’t have to rely on credit cards and go further into debt.
If we ever had to use that money, we made it a priority to build it back up to $1,000 as soon as possible.
We came across the snowball method approach from Dave Ramsey. If you’re not familiar with the snowball method, don’t worry- you don’t need snowballs. The idea is to put as much money as possible toward your smallest debt first while paying minimums on everything else. Once that’s paid off, you move to the next smallest, and so on. It’s like a snowball effect. See, now you get it. There’s also the avalanche method (paying highest interest debt first), and honestly, that can work too. But paying off smaller debts first gave us momentum.. or snowballs.
Honestly, paying off each debt felt like knocking down a bowling pin.
Bam, there goes one debt. Then another!
We also made a change to our student loans early on. We signed up for a standard 10-year repayment plan, which moved them out of deferment so we could start making minimum payments.
If you have student loan debt, I definitely recommend looking into your repayment options and choosing what works best for your situation.
Let’s Talk About Interest (The Silent Killer)
Interest will keep adding to your debt as long as you owe money. But when you throw extra money at a debt, you start cutting into the principal, which reduces how much interest builds over time.
The faster you attack one debt, the less it costs you in the long run.
Before We Get Into the Steps
Now your situation may look very different from ours. We paid this off over about 2 years while both working full-time, and we had to make a lot of adjustments along the way. This isn’t about doing it exactly how we did. It’s about showing you what worked for us and what might help you get started.
The Steps that Helped Us Get Out of Debt
Step 1: Write This Sh*t Down (Debt Breakdown)
We broke down each debt (yes, with old-fashioned pen and paper) by:
- total debt left
- interest percentage
- monthly payment cost
I’ll be honest, we didn’t have all this information to start. We had to do a bit of hunting, whether it was through physical paperwork or looking at our online accounts to get what we needed. Then, we scheduled an appointment with our banker to go through it all.
He looked at our hand-written debt list and said, “That’s over $90,000 in debt.”
I said, “I know.”
Then he pointed at our tool loans and said: “18% interest… that one worries me.” Yeah, it worried us too.
That ended up being the first debt we tackled. Plus, it was the smallest one we had at the time. SNOWBALL INCOMING!
So, do this step: Write it ALL down. You can’t fix what you’re avoiding.
Step 2: Create a Budget & Apply Extra Money to Debts
Another tip from our banker and Dave Ramsey was to start a budget. Now, it was time to put that advice to work.
So, we wrote everything down (the good, the bad, and the ugly). We started our monthly budget by writing what date of the month each debt and bill was due. From there, we wrote out what other expenses we had that weren’t tied to a specific date, some examples being groceries, gas, and, in our case, cattle. Since these other expenses can vary from month to month, it was better for us to overestimate the costs. That way, if we didn’t end up maxing out the budget in these categories, we would then put that extra money toward debt. Win, win!
From there, we were able to gauge how much extra money we would end up with once all bills and minimum debt payments were paid based on our monthly income. That extra money was planned to be applied to the current debt we were targeting. That’s where the magic happened. We could see a dent in the pile.
Write (or type up) a budget. Just be honest and transparent with yourself. Separate things into categories. Use previous bank/card statements to get an idea on how much you typically spend in these areas. You might be surprised by how much you spend in certain areas without batting an eye.
Step 3: Make a Plan & Change Your Lifestyle
We had to change how we lived. No more going out to eat like we were doing multiple times a week.
While friends and family headed out for weekends of eating and drinking, we stayed in. Yes, we got the comments: ‘You guys never go anywhere. Can’t you just come out for one night?’ We knew it looked lame to some, but every dollar we didn’t spend brought us closer to being completely debt-free. That freedom felt a whole lot better than any night out.
We started cooking most of our meals. More work, but so worth it. Plus, making our own food was much healthier than what we were eating when we were going out, trust me.
Now, we weren’t perfect. We still had the occasional fast food run or date night. Guilty. But it was nothing like before.
It’s not about being miserable. It’s about being intentional with your choices.
You will have to make some sacrifices and change your habits and lifestyle, regardless of what others say. This is your life to take control of.
Step 4: Cancel Subscriptions & Cut Back
This was something that took me by surprise. These days, it seems like subscriptions pile up like dishes in the sink. One thing that helped us see exactly what we were paying for was using Rocket Money. It’s free, and you don’t have to sign up for the premium version. It does link to your bank information to track everything, so if you’re not comfortable with that, that’s cool. You can always go through your bank/card statements manually to find the same information.
Here was the breakdown:
- we had Amazon Prime
- we had Netflix
- and TWO separate Disney+/Hulu accounts (whyyyyy?)
Plus, we were sharing these subscriptions with extended family. We canceled both Disney+/Hulu subscriptions and kept just what we actually used. We also changed our Netflix plan to the least expensive one.
And yes… that meant family had to figure out their own subscriptions.
Don’t feel bad for taking control of your finances. Cancel subscriptions that you don’t use or need.
Step 5: Stay on Top of Your Budget (Even When You Mess Up)
This was one of the hardest parts. We slipped up sometimes. Things flew under the radar. But when we noticed these extra little “spendies”, we cringed but we didn’t ignore it. We corrected it. We’d say: “Okay, we can’t keep doing that. Let’s get back on track.”
And honestly, life still happened. We had unexpected expenses come up like vehicle repairs that threw everything off. That’s where the emergency fund came into play. Just remember to replenish it ASAP if you have to use it.
Track everything. Every dollar. And before buying something, ask yourself: “Do I actually need this right now?” If not, it can wait. Staying in debt shouldn’t.
Step 6: Once One Debt is Paid Off, Roll That Money to the Next
This is where things really started to “snowball”.
Once one debt was paid off, we rolled that amount into the next debt. Every dollar went to work, and it made a huge difference in our progress.
There were times during our “Getting Debt-Free” journey that we had to call a lender or go to our online account to retrieve a Pay-Off Quote. I highly recommend retrieving this information, however often you want, so you know exactly how much you need to pay each debt off.
Put every extra dollar to work. Once one debt is paid off, roll that payment onto the next one. SNOWBALL.
The Simple Version (If You Just Want the Steps)
- Break Down Every Debt You Have
- Create a Realistic Budget
- Change Your Spending Habits
- Cut Unnecessary Expenses
- Track Every Expense
- Roll Payments Into the Next Debt
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Final Thoughts
This wasn’t easy. There were times we felt discouraged. Times we slipped up. But over time, things started to change. Little by little, the weight got lighter. I remember checking our loan accounts even after they were paid off just to make sure they were really gone. Was I a little paranoid? Maybe.
Now, all that extra money is now going toward soil, seeds, and building our future homestead instead.
If you’re in a place where this feels overwhelming, we’ve been there.
You don’t have to do everything perfectly. You just have to start.
Let me know how you’re tackling your debt (or how you became debt-free). I’d love to hear your story!