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Published: Apr 30, 2020 12 min read
Courtesy of Wade Thiel

Last year, my wife and I paid off more than $30,000 in student loans. This year, we should pay off another $21,000. That’s $51,000 of debt eliminated in just 24 months.

We didn’t inherit a large sum of money from a grandparent or a long-lost uncle. For the first time in our lives, we simply focused on our financial health. Two years later, that work on our finances has protected us from the worst of the current economic turmoil.

When I graduated from college, I had no debt. I snuck out of the University of Indianapolis debt-free thanks to scholarships and generous parents. My wife, like most people our age, had to take out student loans and work the entire time she was in school.

She completed her degree in five years, attending both Indiana University Purdue University Indianapolis (IUPUI) and Indiana University in Bloomington, Indiana. When she finished, she owed almost $70,000, a mix of private and federal loans.

We both landed back in Indianapolis in 2017. Despite earning decent money and having a low overall cost of living, we still lived more or less paycheck to paycheck. We’d also racked up a fair amount of credit card debt in addition to the student loan debt we still had. My wife had been making payments for 3 years, but she still owed $50,000 in student loans.

That wasn’t a huge issue—until we decided we wanted to have kids. We wanted to enter into the next phase of our lives without debt weighing on us. Here's how we tackled our goal, and what we've learned along the way.

We Talked About Our Money Habits (With Help from a Pro)

With only a year of marriage under our belt, money was still a tough thing to talk about. To put it simply, I’m a saver and my wife is a spender—a common issue among couples, I’m told.

It almost pains me to spend money on anything, whereas my wife gets a lot of satisfaction out of buying everything from groceries to clothing and jewelry. This was a point of obvious friction, and we both had relatively unhealthy relationships with money. Because of this, we decided we could use a middleman: we met with a financial advisor at the beginning of 2018.

With an advisor, you get an impartial, knowledgeable voice in the room. The advisor helps you create your budget and trim expenses. When deciding what to cut, our advisor was a huge help when we struggled to agree.

There are downsides to a financial advisor, especially when you’re trying not to spend money. We paid a one time fee of around $1,200 for our advisor and now pay a lower annual fee every year. That first fee onboarded us as a client and covered the several meetings we had to get on the right track.

You can also pay an hourly fee, but we like the annual model because it gives us access to our advisor throughout the year.

We Crafted a Budget That Worked for Us

I’m not going to tell you to never go out with friends, skip vacations, and only ever put money toward your bills. That’s not a realistic way to live. Instead, try to create a budget designed to pay down debt where you can still do some of the things you enjoy. Otherwise, you won’t stick to it.

With our low mortgage payment and low necessary expenses, we were able to create a budget based on 60% of our income. This came out to about $47,000. Worked out monthly, it’s just over $3,900.

That $3,900 had to include all expenses: mortgage, groceries, entertainment, insurance, phone service, dining out—everything. The other 40% of our income went entirely to shrinking our debt.

We made smart decisions early on. We had a low mortgage payment of around $600 and kept driving two old, but reliable cars that were paid off. Those two factors alone set us up for success.

A typical mortgage payment in the U.S. is about $900, federal data show, while a new car payment averages $550 a month, according to Experian. Paying down debt quickly would have been tougher if we would’ve had to deal with those higher monthly payments.

If you’re serious about paying down debt, it might be time to think about making some life changes. To get rid of a high rent payment, you might have to move into a smaller apartment or out of a neighborhood you love. It won’t be easy. You may need to let go of some things you enjoy.

How much do you spend a month on clothing? What about eating out or bar hopping? Are all those various TV and personal hygiene subscription services draining your account? Cut this stuff out or at least reduce them. We cut out a streaming service we hardly used and reduced other monthly subscriptions like makeup, wine, and cleaning supplies.

Our financial advisor helped us make those decisions, and he also helped us choose which debt to tackle first. We showed up with about $5,000 in credit card debt. The average interest rate on that debt was about 18%, with the highest getting up to 28%. We hit the highest interest rate debt first and worked back from there. It took most of 2018 to pay that off and get used to living on our new budget.

When 2019 rolled around, we had no credit card debt and were much better at sticking to our budget. Next, it was on to the $30,000 of private student loans for the next 12 months. Again, we tackled the loan with the highest interest rates first, which was just over 9%.

A Side Hustle Added Extra Cash to Our Debt Payments

A good budget wasn’t our cure-all. I write professionally, for corporate blogs, advertisements, marketing materials, and articles (like this one). I had a full-time job as a writer with a nationally known outdoor outfitter, but I also freelanced with publications on the side.

About the time we turned our focus to student loan debt, I ramped up my side hustle efforts. That meant a lot of late nights and early mornings, and I became a pro at managing my time.

I assigned 30-minute time slots for each one of my tasks. Some would take two or three time-slots. Others could be done in one time-slot. If I finished something early, I took a break. If something went long, I bumped the other tasks in my day out.

Some days stretched well into the evening. But the days went fast, and my productivity skyrocketed. I binged Netflix far less than some of my friends, but I’m okay with that.

Once you earn money from your side hustle, you have to manage that money correctly. You’ll likely work as an independent contractor, and that means you have to pay your own taxes. I saved 30% of every dollar I made for taxes.

I opened a checking account specifically for my side hustle money. Clients deposited money there, and I kept 30% of the money in that account, though that turned out to be more than we needed. The rest went to us.

We Were Far From Perfect With Our Spending

I won’t lie. Looking over the budget, we could have been more diligent with spending. We could have lowered monthly expenses more by reducing the number of times we went out to eat or meet up with friends for drinks. That said, we did put an additional $5,000 into our savings account by the end of 2019 to beef up our emergency fund.

There are always extra costs that come up—car repairs, birthdays, holidays, weddings, unexpected medical expenses, and more. We budgeted for many of these, but we couldn’t plan for everything.

We had to put well over $1,000 into my wife’s car for a new steering rack, tie rods, and oil pan. Around the holidays we spent over $1,400 on gifts for each other and our friends and family.

We also overspent on groceries almost every month. It’s likely we budgeted too little here, but we could also have more diligently stuck to our shopping list, and focused more on finding deals and coupons to save.

But having the cushion of 40% of our household income plus freelance income gave us tons of wiggle room. That cushion helped us pay far more than the minimum payments on the loans, even when we didn’t hit our monthly budget goals.

Before the end of 2019, we had paid off exactly $33,397 in student loan debt. We completed our goal of paying off all the private student loan debt. This year we should pay off the remaining $21,000 of federal loans, and be free of student loan debt forever.

We Couldn't Plan for the Unexpected, like a Global Pandemic

At least, we hope to be able to pay off the federal loans. The coronavirus has thrown a wrench in our plans like it has for so many others. In March, I was laid off from my full-time job. We now rely on my wife’s salary and my freelance income exclusively. We put our student loan payments on hold in April, but we’ll get back on track soon now that we’ve absorbed the initial shock of losing my salary.

Our budget saved us. If we were still living more or less paycheck to paycheck, we’d be in serious trouble. Instead, we can afford our expenses as well as continue to pay off debt. The pandemic—and the economic free fall that came with it— has complicated our debt-free goal, but we’re confident we can still make it happen.

We started paying down our debt so we could start a family. But we’ve realized now the work isn’t over. It never really is. Even after the student loans are gone, we’ll stick to our budget and work toward buying a bigger house and new cars.

Even with my job loss, we’re in a better place now financially than ever before. We’re closer now because of it—and not just because we're stuck inside our house together right now. Working through money issues and budgeting has made us a stronger couple. We’re ready for what lies ahead, no matter what it is.

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