How We Paid Off $45,000 in 17 Months

paid off debt

How We Paid Off $45,000 in 17 Months

If you have been following my blog you know that we are debt free and how we paid off my student loans. Well there is more to the story and I feel like explaining a little more about how and why we decided to become debt free. Now when I say “debt free” that is all consumer debt, so everything but the mortgage. We followed the Dave Ramsey method of paying off debt after I read The Total Money Makeover book. I heard about Dave Ramsey through Money Saving Mom . I read about her journey and how they use cash for everything and wanted to learn more about it. So, I ordered the book and quickly became obsessed.

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The Dave Ramsey Plan

So what is the Dave Ramsey plan? Basically, his plan is broken down into 7 steps. Before you start step 1, you have a WRITTEN zero based budget, and get caught up on the “4 walls” (rent/mortgage, power, water, transportation etc). This is also the time to agree to not take on any new debt and cut up your credit cards. You will want to cut out retirement savings at this point and anything else you can think of. You will want to keep certain insurance plans.

Step 1: Save $1,000 emergency fund

The idea behind this is to not to go further into debt if you have a small emergency. If you know something that is going to cost more than that is coming up, you save more.

Step 2: Pay off Consumer debts

This is the step where you pay everything off but the mortgage. Everything extra in your budget goes toward your lowest debt first. Once one is paid off you move to the next lowest while making minimum payments on everything else.

Step 3: Save Fully Funded Emergency Fund

This is when you save 3-6 months of expenses as your emergency fund so that you don’t have to go back into debt if something happens.

Step 4: Save 15% in retirement accounts

Now you can start retirement savings again. You want 15% of your income to go into Roth IRA’s and 401(k)s. The 15% is on your gross income.

Step 5: Save for Kids College

There isn’t a set percentage and can be whatever you can afford. Just remember that you will retire one day and your kids may not go to college. Make sure to save for retirement before saving for kids college.

Step 6: Pay off mortgage early

Dave recommends only taking out a 15 yr loan and having a big down payment. If you only have a 15 yr loan this step should cut it nearly in half.

Step 7: Give generously

Dave is a big advocate of giving during all the steps but once you get to step 7, you don’t have any debt so you can really give like no one else.

Now back to what we did

Ok, I know that is a quick and dirty overview of his program but I could write all day about it:). So, back to our story, I learned about the baby steps and got right to work. I refined the budget to have a zero-based budget. and got to work on my spreadsheets. I used to like to write everything down on paper but with a zero-based budget, it was too in-depth to do that. Plus with my spreadsheets, I set up formulas and budgets for the whole year. It’s much easier to make changes that way also.

There were things that we did not do initially or at all. It took us 7 months to shut off our retirement contributions. I had a very hard time with it but once I figured out how much more debt we could have paid off in that time if I had done it already, I did it. I also adjusted our tax withholdings to get less of a refund and keep more each paycheck. It took us a while to start using cash. Cash was an adjustment for sure. I was afraid I would lose it, which I did once. I was afraid we would spend it on things we shouldn’t, which we did. But once we got in the hang of it, I preferred cash over debt. It was easier to stay on budget and not spend what was left on things that we didn’t need. We also never cut up our credit cards. We did cancel several that we never used. I kept one to order things online. I refuse to use my debit card online but I made sure I had the money and would transfer it right away.

The largest part of our debt was my student loans. That accounted for $25,000 of the $45,000. The rest was a Yukon Denali that we just had to have and taxes caused by a 401(k) loan that came due when my husband lost his job. I have another post about why 401(k) loans are bad which I learned from personal experience.

Related Posts

How We Paid Off $25,000 in Student Loans in 10 Months!

How One Couple Paid Off $130,000 in less than 2 YEARS!

How To Save Your First $1000!

Zero Based Budget

It is truly amazing how once you start doing a zero-based budget you find extra money. It also caused me to scrutinize our expenses more. I cut lots of extras and scaled down our TV service and phone service. Once you pay attention to where your money is going, it is harder to let it go. The same goes for our food budget, I cut it in half once I realized we were spending so much. My husband likes steaks and hamburgers but we had to sacrifice all those things during this process. We ate a lot of chicken or pork tacos and breakfast food for dinner. We also quit eating out several times a day. My husband and I would go out for lunch almost everyday plus sometimes breakfast and dinner. We cut out almost all of that. I started to meal plan which made it easier not to eat out. When you have something to make, it makes it harder to justify running to fast food.

Sold Everything

We also SOLD EVERYTHING! I sold a ton of my  kids junk and my husband even sold some things. Anyone who knows my husband, knows what a feat it was getting him to sell anything but once he saw the progress we were making, it was easier for him. My husband also worked like crazy to have extra money to put towards our debt.

Debt Snowball

We paid everything we could on the credit card that we put our owed taxes on. It amazed me one night that when I put it on a 0% interest card to save interest and penalties from the IRS, I didn’t actually have a plan to pay it off. That was part of what got me looking for debt payoff plans. I have never been one to “like” debt and we typically paid everything off early but I didn’t not like it enough to not go in to debt until I found Dave Ramsey.

The next debt was my car. You know, the one we had to have since I was going to have our first baby and wanted her to be safe. It was “only” $300 more a month than my car payment at the time (note the sarcasm). So, I had already been paying a little extra every month on it before starting this plan. We already had the car 4 years out of a 5 year 0% interest loan when we paid it off. If it had been any newer, I would have had to sell it. We paid it off a year early thanks to my husband getting a bonus at work and his overtime.

Next came my dreaded student loans. This is where we really kicked it in to high gear. I shut off our retirement contributions and made visuals to keep me motivated. We started on this one on January 1st and I wanted to have it gone by the end of the year. We managed to pay them off by October! We kept doing a lot of the same things we were doing during the other loans but this one took longer and we started to get burned out halfway through. Once we could see the light at the end of the tunnel though, it helped motivate us to get there even faster. We went without a lot things toward the end and kept telling ourselves we would get it when we were debt free. My husband even asked me one time if we could buy shaving cream again when we were debt free.

We started dreaming about all the stuff we would buy once we were debt free. It’s funny because it was things like our favorite products. Once we were debt free, we splurged a little bit but had to get back to it to save up our emergency fund. We are currently halfway there for that. We should be back to saving for retirement come May this year and we have a big trip to DISNEY planned for December. Our trip will be paid in full before we even get there, how cool is that?

For more tips on how to pay off debt quick, check out my article here.

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158 comments on “How We Paid Off $45,000 in 17 Months

  1. Very inspiring read and just shows you that it CAN be done! Well done! I keep saying I’m going to start using cash but I haven’t gotten around to it yet, definitely think that would make budgeting easier! 🙂

  2. Congratulations! I love reading about people who take control of their finances and win big and I love Dave Ramsey’s program. I am 62, a bit older, but now have a debt, mortgage, and car payment free life.even though I started late. I feel financially secure but still want to save more for my future. To protect my money I have purchased long term care insurance. I have lived with money fear most of my life and can tell you this feels so good. You are younger and have even longer to enjoy this debt free life. Have fun!

  3. First – congratulations! Second – THANK YOU for this! My best friend and I are looking to get out of debt to buy a house next year. I’m working on a budget and ways to cut frivolous bills — you have given me great ideas and examples here. Ill pick up the book too!

  4. Congratulations. This was so good to read. You are living proof that this big mountains can be moved if you apply the necessary focus and discipline. It takes willpower not to blindly follow what everyone else is doing and simply live for today. You certainly rose above that, achieved something really good and now are sharing the story for the benefit of others. Thank you.

  5. This is amazing. I love all the tips. We could definitely do with selling some of our stuff. I love the idea of clearing out the house and making a little money.

  6. Cool story. It’s definitely doable to save money and get rid of debt. There are sacrifices that need to be taken and a lot of people aren’t willing to do them and that’s how they stay in debt. Also, cutting things out like eating out can help you save a lot as well. It’s hard to do for some but cooking at home and making awesome food can help with that. Thanks for sharing your story. It’s motivating.

  7. This is really awesome. I need to follow this plan, Lord knows I do. I was just thinking about my debt before I clicked the think to your post. I guess this is God’s way of telling me to get my money, and my life, together. Thanks for the inspiration. Congrats!

  8. Wow, this is so cool! I really need to start following this plan. We aren’t in debt, but I would like to build our savings.

  9. This is a great inspiration to people who feel their debt is weighing them down. I was told to have a much larger emergency fund though just in case. We also did not save for college tuition opting to fund our retirement accounts instead and both our kids went into the military earning full tuition for school. Other ways to save is to lower insurance premiums and we live based on one income, so that a second income is never factored in.

  10. This is awesome. I watch so many people who follow Dave Ramsey and I am even more inspired. I have used this envelope method since I started working, I didn’t even know it was a thing back then.

  11. Congratulations! We have begun our minimalistic journey and have started selling off things and working towards paying off our debts! It feels amazing!!! 🙂

  12. 15 yr loans are such the way to go. You have to adjust your spending to accommodate it, but in the long run it is so worth it.

  13. First off, congratulations on paying off your debt. I cannot even imagine how happy you’d be at this moment. I definitely need to look into the Gordon Ramsey plan. Your post is one amazing motivation 🙂

  14. Way to go on cutting that debt. I know it’s a huge relief, I personally had nearly $50k in student loans…HAD. I started following Dave Ramsey about 6 years ago and the first thing I did was cut up the credit cards. I didn’t carry around cash, I used and use debit cards for everything. I may miss out on those frequent flier miles but I’m okay with that.

  15. Way to go! Congrats on this great relief. Working on my student loans now and I must say I’m quite proud of the incredible dent I’ve made so far.

  16. This gives me hope that one day I’ll have my own finances in better order. I’m taking steps now to repair the damage of a bad relationship, but sometimes I just need to be reminded that what I want to achieve IS possible.

  17. I know that I really should work to pay off debt. It’s been very difficult with many different forms of debt especially student loans. But I agree that it lifts a burden.

  18. Very impressive! I am saving for an emergency too. I also do not eat at fast-food restaurants because they have cost me a lot. I am eating healthy foods. It is the best choice so far because I am able to save and my sweet cravings have decreased. I used to buy a lot of junk foods which were not helpful and costly too.

  19. Congratulations on being debt free! I am attempting to work through Dave’s program, but unfortunately I married a “Spender” who thinks saving is some foreign word. I’m trying to get him to see why these steps are important. Thank you so much for this motivating post. *Hugs*

  20. My husband and I are HUGE Dave Ramsey follows! Currently on step 6. 15 yr morgage, big down payment and hopefully paying it off within a few years!

    I loved the post. Being on a budget is much like being on a diet. So easy to fall off. So needed this post right now as I’m reworking the budget!

  21. Good for you! I followed Dave Ramsey’s plan as well. Debt Free is pretty darn great. It felt like such a sacrifice in the beginning, now I cannot imagine living with Debt every again!

  22. Congratulations! It feels so good paying off so much debt! I have also recently paid a lot of debt but only semi follow Dave Ramsey’s plan. I don’t agree with everything he says, but his plan helps so many people! Thanks for sharing!

  23. As someone who is in debt because of university this is really inspiring to hear about your journey. I like the idea of creating an emergency fund to be prepared for any financial storm x

  24. If you can do $45K in 17 months, I think I can do $15K! Thank you for the motivation to get my butt in gear. I have a pile of stuff I want to sell that’s been sitting on my living floor for the last week that I just haven’t done anything with yet. Now off to do that…Thank you!

  25. Dave Ramsey is amazing. I try to find his information everywhere. Your post is inspiring. I started laying off debts this year with tax money and some cut backs. It definitely feels like weight is being lifted.

  26. That’s great that you were able to get debt free with everything. Congrats on that and on taking care of the student loans. I’m sure that was a big burden. I’ve heard of Dave Ramsay’s plan. It is an adjustment but it seems like it would help long term establish better habits.

  27. These are great tips. It’s giving me hope that we can be debt free sooner rather than later. We needed the emergency fund last week when a pipe in the wall exploded – caused water damage and we ended up with a very expensive plumber bill. 🙁

  28. That’s really amazing. I think it’s awesome that you finally paid off your debt and in that fast too! It definitely helps to have a budget and a financial plan to keep you on track.

  29. Congrats and wonderful tips! I just started the debt snowball method to pay off my current debts, and it has been great so far! The most progress I’ve made getting those numbers down!

    | diaryofasouthernmillennial.com

  30. Amazing! I’ve been toying with the idea of cutting off my retirement savings until I can knock out a good portion of my debt. Your post just confirmed that that is the next move!

  31. I’ve never heard of the Dave Ramsey plan but it’s really nice that you have a financial plan intact. It’s good to know what your goals are and how you’re going to achieve them. Good job in paying off that debt! Thanks for the tips too.

  32. I loved reading all about how you did this! I have heard of the Dave Ramsey plan but did not really understand the process of it. Thanks for helping the rest of us to help ourselves. 🙂 – Amy

  33. Congratulations on becoming debt free and being able to pay that large amount off! My dad started listening to Dave Ramsey so I’ve learned a couple of things through the years from his program. Although I don’t follow his plan entirely in terms of the bigger emergency fund, I still have some money put away for any emergencies. The good thing is, I learned to never be in debt besides the mortgage so that’s the only debt I have! Thank you for sharing your experience!

  34. I’v heard of the Dave Ramsey plan but every time I see a blog post about it I click anyway, because I always find it so inspiring that there are people out there who really don’t have debt, haha! I’ll be drowning in student loans for a very long time, but this post reminded me that there’s a light at the end of the tunnel, so thanks 🙂

  35. Congrats! That’s awesome that you got all of your debt paid off, especially your student loans. I need to do that too but I’m not married, nor do I have a full time (it’s tough) so that will definitely take time. However, I do have a savings account and I want to continue to save money – and keep adding MORE money when I make more.

    -Lauren
    http://www.shootingstarsmag.net

  36. Your story is pretty inspiring, even though I highly dislike Dave Ramsey (I think he gives bad advice) ~ for instance, my husband and I intentionally did not save for our child’s college education, and instead socked more money into our 401(k). (We followed the “skin in the game” principle — and made them get student loans.)

  37. Great work!! My husband and I are very well on our way to paying off $73K in about 3 years! I cannot wait to become debt free! Life is going to be totally different! Budgeting is KEY!

  38. Hi there,
    I so agree on the 401K loans! A terrible idea! Thank you for the useful post and congrats on paying off your debt!
    Best,
    Melanie

  39. I’m always amazed at how people can pay off so much money in a few months. Honestly, skeptical. But only because I’m envious! lol. Some great tips!!

  40. Congratulations on your amazing progress! We have some smaller debts that we’re working on and it’s great to see them tick down!

  41. Congrats on paying it off! It’s such a relief to get it paid off. I don’t know about you, but it was definitely a relationship strain for my husband and I. Now, things are great because we don’t have that stress anymore.

  42. Awesome post and full of loads of tips! I’m working to pay off my uni debt currently but need to get more disciplined with my budget!

  43. It’s amazing how much money you can raise from just selling the items you don’t need anymore!

  44. This is incredible, thanks for sharing your story of how you got there! it was so much hard work but it really paid off! 🙂

    I’m trying to sell things we don’t use to declutter – would be good to make a bit of money from it too but we will see haha!

    Hope you are having a great week! I just published my first eBook so I’m having a pretty good week! 🙂

    Away From The Blue Blog

  45. I love hearing stories like this! We’re reading through the same book and just started using cash. It’s a huge eye opener! We’re spending so much less already! Hopefully we’re as successful as you were. 🙂

  46. That’s amazing! Sounds like you and your husband definitely became “gazelle intense,” as Dave puts it! Congrats on becoming debt-free. Dave Ramsey inspired my family to become debt-free as well and changed my entire lifestyle. I still haven’t lost that intensity even after paying off the debt, and it sounds like you haven’t either!

  47. We have a similar size loan to pay off but ours is for the double wide we installed on our property. When we get rid of that loan it will free us for to do other things we want. But we haven’t made a lot of progress in it yet.

  48. This is a great plan. It definitely takes facing the reality of your situation, making different choices, and being disciplined.

  49. Congratulations on becoming debt free! What an accomplishment! I love Dave Ramsey , his baby steps have made such a big impact on my life. I wish everyone would follow his advice.

  50. Well done!!! You should be seriously so proud of yourselves! I love reading debt pay off stories, I find them so inspiring!

    Also loved the sarcasm about the car payment being only $300 more hahaha!

  51. Congrats on paying off such a massive amount in a short time! I am exhausted just reading about it, but really, being in control of your money and realizing how much you can save is such an amazing feeling! I had never heard of the zero-based budget before, but I can see immediately why it works. Having $300 left over each month for “fun” allows way more flexibility than a strict commitment to spend that $300 in specific amounts, over specific categories!

  52. I graduated college last year and want to save money but had no idea how. This goes to show how much you can accomplish with the right mindset! Thanks for sharing/

  53. Very enlightening article! Congratulations on paying off that debt, that’s fantastic! We only have my student debt and we started paying it off before we got married. It was $48K and we’re down to $17K now. I’d LOVE to pay that off right away.

  54. Very, very encouraging indeed. This shows that we should never give up on debt. The key to it all though is Step 7, remembering to give generously. A cheerful giver is always rewarded.

  55. we are on a similar journey to getting debt free – so far we have just paid off my credit card in full, but still have my husbands to pay off. i do find have a clear understanding of what your expenses are each month and working with cash are the two major reasons we have been able to cut down our debt so far. thanks for offering even more steps to getting debt free!

  56. This is amazing! Great article on how you were able to accomplish it all! I am going to show my husband so we can both get on a similar plan. So motivating!

  57. Wow! My husband and I are working on following Dave Ramsey’s Total money makeover as well and I know first hand how crazy it can be to try and get everything paid off. Thank you for the great info about your debt free journey!

  58. This is such a lovely post to read. Now we know somethings are not just fairytales but they actually happen. That gives us hope. All the very best.

  59. so happy for you, and I esp feel your pain of those student loan debts since we had what amounted to a mortgage sized combined loan debt! thanks for helping a lot of people feel hopeful. 🙂

  60. Hi Ashley, thank you for sharing your journey! It’s very inspiring to hear of such great success! Congrats!

  61. Thank you for sharing this, Ashley! I have such a hard time sticking to a budget, and it’s nice to know there are success stories out there and it can actually be done.

  62. It feels great to pay off debt! Right now I’m in debt a bit, that being with my car and student loan. Nothing unmanageable, but working towards being debt free!

  63. Congratulations! That is absolutely amazing! I have recently discovered Dave Ramsey and love his tips. Your story just proves they work!

  64. My husband and I often slip back and forth off and on Dave’s plan. SInce January, we’ve accumulated more than 100k worth of debt. This comes after paying most of it off the year before. SMH!!! I was just telling him we need to hit it hard again and get all of this mess paid down/off. I think our problem is figuring out how not to get pulled back into the cycle once the debt is gone. Congrats on your accomplishments. This is major!!!

  65. Love the point about prioritizing your retirement savings over your kids’ college savings – it’ll be pretty difficult to take care of them if you haven’t even saved enough to take care of yourself! Step 7 is my favorite though 🙂

  66. Great job! It’s wonderful to live debt free. My husband and I are both lucky that we were raised by Dave Ramsey-esque parents who taught us well.

  67. Wow!! Great job! This is definitely something that we are working towards! My husband came into the marriage with a lot of student loans, and he has been unemployed for a while, so we have some credit card debt that we have accrued. But this is definitely a long term goal!

  68. Wow! That’s impressive, congratulations! Success stories like this make me think that anything is possible no matter how deep in trouble you think you are. Congrats again! 🙂

  69. Such a great and inspiring post. I am also on the Dave Ramsey plan. Unfortunately it is just me and my two kids, but I am working on my debt with a vengeance, lol! It will take me longer, but I will get it done!

  70. Great article! Will definitely come in handy, since my boyfriend and I. Will soon build a house and need to save as mich as possible asap and then pay off the loan asap.

  71. I would love to pay that much off in so little time. Thanks for sharing your tips. I know I like to sell things I don’t use anymore if I can!

  72. I love reading post about people achieving something so big in such little time. It motivates me to work hard to pay off our home sooner….. you for sharing.

  73. I love this post! I am also using the Dave Ramsey method to pay off debt. It’s such a smart way to approach the debt and easily done by following his steps.

  74. Oh, wow! That’s really amazing. Good for you. I love your comment, “Once you pay attention to where your money is going, it is harder to let it go.” That is so true – I was just talking to a friend about that. Thanks so much for sharing this!

  75. This is great! My husband and I are working on this. We are down to 2 consumer debts: my student loan and our vehicle. We already took the amount from his student loan and are putting it towards mine now. Thanks for the explanation!

  76. I’m currently on step #3 and hope to have my last credit card paid off by the end of the year! Congrats on paying off such a huge amount!

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