Paying off all your debt is always impressive, especially when it runs up to six figures. Reddit user Biking posted about his and his wife's recent success of paying off $210,500 worth of debt, which includes their $127,500 home, $34,500 in car loans, and $48,500 in student loans. Further, they were also raising a kid, currently 3 years old, while trying to reach their goals.
The couple had initially bought their home when they were 24 and had been working toward paying of all their debt for five years. Biking says their combined income when they began was $77,000 and their income now is $127,800. Here's how they did it:
- Doing research and finding what works. They both read The Total Money Makeover by debt guru Dave Ramsey and modified his plan to suit their situation.
- Sticking to a strategy. They decided to prioritize paying off debt instead of investing, although they were still contributing a good amount to their retirement accounts. They paid off high-interest loans first and avoided carrying balances on credit cards.
- Keeping track and automating. He automated as much as he could and kept track of everything on an Excel sheet.
- Increasing their income. Both he and his wife worked full-time jobs to contribute toward debt repayment. They increased their income over the years. His wife got a master's (which accounted for their student loan debt) and had a $15,000 salary increase as a result of a higher position, while Biking's average pay raise each year totaled to $3,500. To add to their income, he started a sports photography side business that generated an extra $10,000 a year.
- Tightening belts in various ways. For example, they saved on groceries by coupon-cutting. Biker says, "[My wife] would routinely knock $50 off a $125 grocery bill with coupons from the Sunday paper. She would plan meals by the week and we would save the left overs for lunch the next day or dinner the next night."
The main advice the Reddit user has for others is to create a debt repayment plan and stick to it, which for most people is easier said than done.
Are you inspired by their example?