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After last week's post I have had a ton of questions about one thing: how we paid off so much debt in so short a time. I decided to just dedicate a post to this.
Please note, I am simply sharing my experience. I'm no financial expert.
Darran and I did pay off about $80,000 in debt in just over 2 years. This included all of our debt except our mortgage. Credit cards, car loans, everything. How? How? How? Everyone wants to know.
Well, this is what we did...
Get ON-FIRE passionate about it. I cannot stress this one enough. This process was not easy. Not. At. All. Had we not been so passionate about it we would have caved long before we paid it all off. I was so on-fire passionate; I was going to KILL ALL THE DEBT and nothing was going to stop me. Debt was the enemy, it was the one thing keeping me from freedom and everything I wanted in life. Sound a bit intense? Maybe, but I believe it's necessary.
Draw a line in the sand. The first task we performed was to cut up our credit cards and agree to no more debt. None. Ever. From that point forward we were committed to never again use a credit card, take out a loan for a car, or incur any type of debt ever again. I realize this may sound extreme, but again I believe it a necessary part of how we got this done. (We then scrounged and put $1000 in a savings account before paying any debt to have a buffer from the little things that just tend to happen in life. It may seem controversial, but we put no other money in savings or retirement during the time we were paying debt.)
The Debt-Snowball. I didn't believe it in the beginning, but the debt-snowball is essential. Basically the debt-snowball is writing down all of your debts from smallest amount to largest, then pay every penny you can to KILL the smallest debt while only paying minimums on the others. Once you've killed that smallest debt take all the money you were putting toward that (and every spare penny) and pay that towards the next smallest debt. On and on until you pay them all off. It works.
Sell all the things. Ebay, Craig's List, garage sales, wherever. We sold everything we didn't absolutely need or absolutely love. Every penny went towards debt.
Become the Queen of Cheap. I became a master couponer and bargain shopper. If I bought anything (which I deemed absolutely necessary or I didn't buy it) I made sure to get the best deal I could. Shop around, use coupons, wait for sales, wait for a coupon AND a sale... Also, always pay cash. It keeps you mindful.
Be willing to forego luxuries now for freedom later. There was a lot of sacrifice involved in getting this done in 2 years. A lot. We cut our cable, we shut off our land-line phone, we didn't go out to eat, we saved electricity where we could, I made our laundry soap (which I enjoyed and still do), I was uber careful with gas in my car and didn't waste trips, we didn't buy anything we felt we could get along without.... We lived so, so, so lean. On what we were making we had to in order to free up enough money to get the debt paid. It may seem tough, but it's worth it more than I can tell you!
And that, in a nutshell, is what we did! Any more questions that I didn't answer? Feel free to leave them in the comments below. Again, I'm no expert and can only answer from our experience.
