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It’s been 18 months since my husband and I first started our journey to pay off debt. When we first decided to get serious about paying off debt we had a total of $116,000! Mind you, our combined yearly income is $120,000-$130,000 gross. Basically, we had almost ONE YEAR’s worth of gross earnings worth of DEBT! It’s mind boggling how far in debt we were and we just didn’t want to face the reality of it all.

Read More: How to Get Out of Debt With These 5 Tips

September of 2018

September of 2018 is when we finally snapped out of it. Prior to this month, we tried to find ways to save money here and there also tried to pay off debt our own way. Months and months, years and years went by and our debt was piling up to our necks and we continued to turn a blind eye and just kept telling ourselves to keep using credit (because you can buy whatever you want and just pay the minimum). So obviously our way was not working. So September was a turning point for us. My husband had a co-worker who mentioned  Dave Ramsey and how she ended up paying off her house listening to him. We were inspired and got hooked. We also started listening to Dave Ramsey’s podcast which also kept us motivated.

For those who are familiar with Dave Ramsey’s principle steps of paying off debt knows that there are something he teaches called the ‘Baby Steps’.

Are Dave Ramsey’s Baby Steps In The Right Order?

So here’s the deal, we didn’t follow Dave Ramsey’s baby steps to the tee and still managed to pay off over $77K of debt in 18 months. I am SO glad we didn’t follow his steps because look at what happened these past few months- COVID-19!! Seriously, who the heck would’ve ever thought a pandemic would cause economic destruction resulting in millions of people not being able to work. Step 1 of the baby step is to have an emergency fund, which we had starting in September of 2018. Step 2 of the baby step is to pay off ALL DEBT besides the home. Then, the 3rd step is to save for 3-6 months worth of expenses for an addition to the emergency fund. Can you imagine if we listened to those steps and spent all our money paying off $116,000 off debt? We would’ve been stuck during this time with no 3-6 months of savings. This is where we deviated from his plan. We had a couple months expenses saved prior to starting this debt paying journey and just held on to that. Now, it serves as a cushion because currently I cannot work!

Save For Emergencies Before Throwing All Money At Debt

COVID-19 serves as a bleak reminder that we can NEVER predict the future! The most important lesson I have learned is that it is always better to be safe than sorry. The smartest thing you can do is to always save for emergencies. The savings can either be 2-6 months of expenses in case something unexpected happens because you just never really know what tomorrow will bring. When we first started the debt paying journey in September 2018, we had about 2-5 months worth of expenses put away in a high interest savings account just in case. So it was easy for us to start throwing money at our debt because we had the cushion to fall back on just in case either of us lost our jobs.

One thing that did help us tremendously was taking out a Personal Loan of over $20,000 a few years back. We used that money to move out of a really expensive city and get settled in the new area. That was actually the best thing that we did to help propel us forward to live better. We used part of the personal loan for moving costs and a year later we used half of it for a down payment of a house. We put about $10,000 down for a new home because we wanted a place to call our own. Read below on how you can save money from buying your first home, learn from our first time home buying mistakes!

Read more: Home Buying Tips to Save Thousands

The remainder of the personal loan was applied towards debt and also put away into a savings account where it accrues close to 2%. It’s actually nice seeing the account balance grow every month (totally passive). In a way, I am very thankful we took out a Personal Loan because we probably wouldn’t be at the place we are at today without it. The most important tip for starting your own debt paying journey is to not throw all your money at debt unless you have a decent emergency fund of 2-6 months!

Budget, Budget, Budget!

I couldn’t have paid off over $77K worth of debt had it not been for budgeting. I tried budgeting prior to the debt paying journey but never really got the hang of it. I never understood the concept. It’s actually really easy and I love budgeting now because it allows me to have control over my money.

Budgeting is very simple and I follow the zero based budgeting system. I’ll give you an example of a zero based budget.

It’s a very simple concept to understand. Whatever income you have coming in each month, you must assign all the money towards your monthly expenses. Basically, at the end of each month you should be left with a zero balance (Income-Expenses). Don’t be alarmed, I don’t mean having a zero balance in your account, I mean having a zero balance on the budget plan.

Once you start budgeting, it will help you keep track of all your necessary and unnecessary expenses, it will also help you quickly discover why you may be living paycheck to paycheck and why all the money keeps disappearing.

Read more: How to Budget Your Money For Beginners

Budgeting is the most important aspect of this entire process, it will give you an idea of where all your money needs to go each month and help you keep track of it. Plus it will help curb all unnecessary spending. It will allow you to think twice before making a large purchase and help figure out if you have enough in your budget to cover those costs. It will also help you determine if you will have any extra money left over to throw at debt.

Confronting The Monster in The Closet

We couldn’t have taken the first steps to get out of debt without facing the reality of our financial circumstance. When we listed all our debt 18 months ago, we had a total of $116,000, ranging from 8 credit cards, 1 car loan, 2 medical loans, 2 student loans, and 2 personal loans. Now we only have 1 student loan and 1 family personal loan left to go.

Are you ready to confront the monster in the closet AKA debt. Get a pen/paper or type it out, whatever you prefer. Create a list of ALL YOUR DEBT from smallest balance to the largest balance on the bottom of the list. Now you know what you’re working with. Don’t be afraid when you see your total debt amount, it’s just a number. You can definitely pay down your debt too, but keep in mind that your journey will be a marathon, not a sprint unless you hit the lotto!

With the list on hand, you will target the first item on the list using the Snowball method. I’ve used this method to pay off over $77K of debt in 18 months so far and I’m still using it. It’s a very easy and motivating method that you can also try to tackle your debt. Read how you can use the snowball method to apply to your situation below.

Read more: How to Get Out of Debt with these 5 Tips

Now’s The Time to Start Finding Savings

For those of you are not able to work now because of COVID-19, it is a perfect time to look for ways to save in each and every category of your budget. Find ways to cut unnecessary food costs, shop for more affordable car insurance/renter’s insurance/home insurance, look for cheaper phone carriers, and more.

During this month, I found a major way to save on payments going out for the month. My student loan payment that must be paid is about $400. I called up my student loan provider and asked for a forbearance due to COVID-19 and being out of work. Basically, they are able to stop payments required on my account due to COVID-19 for 3-4 months and on top of that they are waiving all interest accrued for that duration. How awesome is that? Do you have student loans as well? Call them up and ask for a forbearance too, it will help free up some money for these rough months also it will save you so much of accrued interest during this time.

Read more:

95 Best Money Saving Tips to Start Now

Tips to Save Money on Your Phone Bill

Easy Ways to Save Money on Food and Groceries

Find Ways to Make Extra Money During COVID-19

Feb-March is when states slowly started implementing stay at home orders and businesses started closing down. Millions of Americans are now out of work. It may be difficult now but the government is rolling out help for citizens. There is the stimulus checks set to go out soon and also ramping up of unemployment benefits that may help make ends meet for people. However, what if you still need some extra money coming in while staying safe during these times?

The best way to make some extra money on the side would be to start selling items around the house. Do you have clothes, accessories, shoes, or electronics laying around the house collecting dust? Sell them to make some extra money. This way you can still earn some side cash without putting yourself at risk during the COVID-19 pandemic.

March 2020 Debt Payoff Progress

At the end of this month, I found $3,610 in overage from budgeting. Combining the $3,610 with our debt snowball rollover amount of $1,669 leaves us with $5,279. Where in the world did we get $3,610? It was both our combined tax return amount plus a temporary job assignment I took on one of my days off. Since we have our emergency fund in place, we throw every extra money we have at our remaining debt. We now have a total debt remaining balance of $38,661. We paid off $77,339 so far in 18 months. Slowly but surely, we’re chipping away! Key take away is before throwing all your money at debt, save for your emergency fund as well. Also, use your tax return wisely!

Are you ready to start your own debt free journey? Get started by grabbing this free Debt Thermometer and join us in the free 5-Day Debt Free Bootcamp to pay off $500 worth of debt in your first month.