How We Paid Off Debt: $45,000 in 17 months.

This guest post is written by Ashley Patrick from Budgets Made Easy and The Money Mindset Podcast. Ashley helps families use simple strategies to reach the ultimate goal… paid off debt so they can have less stress and live the life they want. 

Jon and I were extremely motivated by other success stories during our own journey to financial freedom and found that these stories were the driving force behind our ability to reduce our spending by over $23,000 a year, pay off over $35,000 of debt, and make up my old salary from home.

Today’s success story talks about a pretty common problem in today’s society. A mom working crazy hours as a police officer who wanted desperately to stay home with her kids.  The only possible way that would happen was if all of their debt was paid in full.

Ashley is a great example of how simple changes can make a HUGE impact on the big picture.

Several of the routines she mentions were outlined in the 90-day Budget Bootcamp (Which is free right now! You can grab it here). 

This has become her mission since she paid off debt to the tune of $45,000 (in just 17 months)!

Here is what Ashley had to say…

Since paying off my debt, I now have the freedom to do what I want in my life. Which is exactly what I want for you. 

Paid off debt, gives you so many options that you don’t have when you are worried about a ton of bills. 

My husband and I were able to make the choice for me to stay at home with my 3 kids and build my business. If we still had debt, we literally wouldn’t have been able to afford to do that. 

I would still be stuck at a stressful job that I was completely burned out on. 

In this post, you will learn the actionable steps I took when I paid off debt totaling $45,000 while working as a detective.  

Why We Paid Off Debt

My paid off debt story actually begins about 2.5 years before I decided to start on this journey. 

I was working as a police officer and was the mother to an 18-month-old when my husband and I decided to buy our dream home in the country. 

It’s a beautiful brick home on 10 acres and has a HUGE 40’x60’ shop. So you can imagine why my husband wanted the house. 

We thought we were doing well, we had great credit scores and “not that much debt” and had just bought the home we plan on staying in forever. 

However, there was a major issue with the layout of the house. It was a small two-bedroom house with a separate in-law suite. The in-law suite had a bedroom, living room, kitchen, and bathroom and was only connected to the garage. 

To get to this area of the house you had to go outside or into the garage which wasn’t practical for our family. 

About 2 months after we bought the house we found out I was pregnant with our 2nd child. Now we were pressed for time to fix this situation. 

The 2nd bedroom in the main house was tiny, it literally barely fit a twin bed and that’s it. It would not fit a crib and a twin let alone a dresser or changing table. 

Our only option was to connect the in-law suite to the rest of the living space. We could do that fairly easily by enclosing a covered porch area and opening it up into the laundry room. 

We got a couple of estimates and it would still cost around $25,000! That’s without doing any major structural changes. The roof and foundation were already there. 

Major Renovations

We didn’t know how to pay for this but we knew we really needed to do it. We talked to some people we thought were financially savvy and they suggested a 401(k) loan. 

They said it was a low-interest rate and you are really paying yourself back, so it’s not a big deal. 

At the time, that seemed like the best option for us. So in the summer of 2013, we renovated our house just in time for the arrival of our second child. 

All was well and our house was way more functional for our family. 

Life went on for a few months and in January of 2014, I returned to work from maternity leave. I came home one cold night from work and thought it was strange that my husband was home already. I could tell by the look on his face, something was wrong. 

He then told me “I lost my job today”. 

We were blindsided, It was completely unexpected. He was laid off during budget cuts. 

Shortly after that happened, we received a letter in the mail about the 401(k) loan. We had 60 days to pay back $20,000! 

What no one told us was that if you quit or lose your job, you have to quickly pay the 401(k) loan back. Well, my husband, the breadwinner, didn’t have a job. We couldn’t even qualify for another loan and the money was already spent. 

There wasn’t anything we could do about it, so in 2015, it counted as a withdrawal for our taxes. 

We went from getting a refund of $4,000 to owing $6000 in taxes!!! 

This was the moment that changed how we started thinking about money and debt. 

Taking Control of This

We decided to put what we owed on a 0% interest credit card for 18 months. The problem was I didn’t know how the heck we could pay it off in 18 months. 

I started searching for paid off debt plans and discovered Dave Ramsey and the debt snowball. 

This was the beginning of our journey to making real changes with our finances and becoming debt-free. 

I changed the way I did our budget. Before this, I had always written down our income and expenses and just spent what was leftover. 

Now, I started doing a zero-based budget and became intentional with the money that was leftover. This was THE game-changer. 

I now had a plan for every dollar  which is crucial for paying off debt fast. 

Once we had the plan, we worked to cut expenses, save money and were able to do it faster and faster as we gained momentum. 

The first debt was the 0% interest credit card at $6,000. I didn’t know how we would pay it off in 18 months but, we paid it off within 3 months! 

Next up was the car. You know the brand new fully loaded SUV we HAD to have when I was pregnant with our first child. My husband didn’t want to sell it, so we compromised and paid it off and are still driving it around today. 

It was over $14,000 and we paid it off in 4 months. We got an end of the year bonus and that helped us knock out some more.

Finally, was my student loan of $25,000 for a degree I never used. We started on it in January of 2016 and were able to pay it off in October 2016. 

We paid off a total of $45,000 in just 17 months!! I didn’t know how we would pay off $6,000 in 18 months and we paid off all of our debt in 17 months. 

How We Paid Off Debt

It is so important to find ways to speed up the process so that you aren’t paying off debt forever. The faster you can do it, the more likely you are to finish. 

These are a few of our best tricks to make this happen.

• Zero-based Budget
• Debt Snowball 
• Cash Envelopes
• Cut Expenses
• Found Ways to Stay Motivated
• Visuals of Progress
• Sold Everything 
• Shut off Retirement Contributions (last 10 months only)

Keep in mind we didn’t do all of these things at once or even the first month. It took small changes over time to build momentum and make more changes. 

Making a Zero-Based Budget

This was the foundation for everything else we did to pay off the debt. 

Instead of spending what was left after expenses, we planned what to do with every dollar. 

This was also where we started tracking where our money had been going and were shocked to find out how much we were spending on eating out fast food, and groceries! It was insane! 

We were spending $1200 for a family of 4 with one toddler and an infant that was nursing. I mean c’mon, lol! 

So we cut that down to $600 a month and then started sending what was “extra” to the smallest debt. 

Using the Debt Snowball

The next thing we did was use the debt snowball to make faster progress. 

We already had money in savings, so we didn’t have to save first. If you don’t have money in savings, you should save at least $1000 before doing the debt snowball. 

The debt snowball method is listing out all of your debt from the smallest balance to the largest balance. For this step, don’t include your mortgage but you should include a 2nd mortgage or Home Equity Line Of Credit, 401(k) loan, and anything else you owe. 

There is no “good debt”, so this would include your car payment, credit cards, student loans, medical bills, everything. 

The only debt you don’t include is your primary mortgage. 

Make Extra Money

We found solid ways to make extra money including working overtime, side jobs, and selling everything. 

This really sped up the process. We were able to be done with our paid off debt about a year early by finding extra money. 

I even sold all of my decor and lamps, making it look like I had just moved into my house lol! 

Cut Expenses

In addition to making extra money, we also found ways to save money. I am not an extremely frugal person in general but the closer we got to fully paid off debt, the more I wanted to speed it up. 

I cut back our cable package, cell phone plan, and didn’t buy anything unless it was absolutely necessary. 

With about a month left of debt to pay off, my husband asked me “when we are debt-free, can we buy shaving cream again”. LOL! 

If it could wait until we were debt-free it waited. We got really good at deciphering what we NEEDED and what we WANTED. 

Now that we are debt-free we bought some things to celebrate and I am no longer that frugal. I like to save when I can, but I am not an extreme couponer or a total tightwad. And yes, I do buy my husband shaving cream now. 

Final Tips

Other things we did to keep going fast so we could reach our goal of paid off debt was…

Calculating how much we were paying daily on my student loans.  That was the last and largest debt we had.  (We when got to it, we were paying $4.62 every single day in interest. The original amount that I borrowed was $28,000. After 10 years, I had only paid off $3,000!!)   

We also listened to podcasts, made visuals, and joined like-minded Facebook groups.  It’s important to find ways to stay motivated so that you will finish and keep going. 

We cut off our retirement contributions for the last 10 months. We realized how much faster we could do it if we diverted that money to debt. Now keep in mind, I still had a mandatory pension and my employer automatically contributed to my 401(k), so we weren’t completely out of the market. 

I only recommend taking the retirement step if you are CERTAIN you will spend the money paying off debt and not spend it. It’s so easy to think of it as extra money and then spend it here and there on things that do not further your goals. 

When It’s All Paid Off

Once we were debt-free, like everyone else, we had a lot of things come up that really slowed us down when saving our emergency fund.  Because we were determined, we didn’t go back into debt. We were able to save and cashflow things when they came up. 

Having paid off debt in full gave us options that we wouldn’t have had otherwise. 

I was able to stay at home with my kids, quit a job that was really stressful, and build my business. 

If we still had the debt, I would still be working there struggling through and totally burned out.   

We now view debt totally differently and work really hard to avoid it. 

We have shifted from wanting new cars to keeping ones we can maintain or pay for in cash.   Repairing a car is still cheaper than a car payment. 

Keep in Mind

It’s important to stay focused and motivated and make small changes along the way. You don’t have to jump all in and do everything at once. Make one change every month and you will still head in the right direction. 

We didn’t do all of this right away. We made small changes over the course of months and picked up the pace as we went. 

Paid off debt is a marathon, not a sprint. As long as you are moving in the right direction, you will get there. 

P.S. If you’re trying to get your budget under control and just need a step by step guide that tells you what to do and in what order,  you can sign up for the 90-day Budget Bootcamp for free here (it’s free for a limited time,  so don’t wait on that!). It walks you through every step of getting your money under control… even if you’re starting from a place of utter chaos.

You can sign up here… 

Ashley Patrick is a personal finance expert, and founder of Budgets Made Easy and The Money Mindset Podcast. She helps families eliminate debt using simple strategies so they can stress less and live the life they want. Her family was able to pay off $45,000 in just 17 months including $25,000 in student loans in just 10 months. She is a Ramsey Solutions Master Financial Coach and helps people like you manage their budgets so they can live the life they want. Ashley has a bachelor’s degree in psychology and helps you get to the root of your money problems. She has been featured on Fox Business, Yahoo! Finance, USA TODAY, MSN, CNBC, NerdWallet, and many others.