How we paid off $62,000 in 7 months

Posted by in Budgeting, Communication, Debt

Shortly after we got married, Andrea and I got serious about our finances and paid off all our debt. It only took us 7 months.

While I’ve previously shared the method Andrea and I used to pay off all our debts, knowing what to do, and even how, isn’t always enough.  

Sometimes we need to believe something is possible before we even try.

Sometimes we need to know someone else has blazed a trail and succeeded, meaning it’s possible for us, too.

Sometimes, we need hope.

So in case this is one of those times you need some encouragement or proof you can pay off all your debts, here’s what our journey to debt-freedom looked like behind the scenes.

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Where’d all the debt come from?

All the debt was mine.

Despite a generous 3-year military scholarship, I had student loans to pay for my college housing (~$12,000 x 4), my freshman year’s tuition (~$30,000), and a summer study abroad program (~$15,000).

Then shortly before I graduated, USAA, a military-members bank, offered me a $25,000 loan at the ridiculously low rate of 2% interest. USAA dubbed it a “Career Starter Loan,” but really it was their clever way of ensuring I’d be a customer for the foreseeable future. I used $15,000 to refinance my study-abroad loan, bought a new laptop, and put the rest in savings.

If you’re keeping count, that pushed my total debt upon graduating college up over $100,000.

So of course I immediately got serious about my finances, did a budget, and started attacking my debt, right?


I bought a sports car instead.

I was 22 years old, only 4 months into my promising Army career, and had racked up over ~$115,000 in debt. All I had to show for it was a fancy diploma and a 3 year old Mazda.

The Army Will Always Be There For Me, right?

I was paying all my bills on time with my meager Army salary and still had a bit to spare at the end of each month to live on.

My minimum debt payments were roughly $1,100/month. I figured I’d just get used to paying that amount each month.

Then, as my first loan disappeared five years later, I’d roll it’s minimum payment over to the next debt. Then the next. Then the next. So on and so forth.

At that rate, I’d have my original debts paid off in about 10 years.

This would allow me to pocket any remaining money to have fun and rack up more debt (Another car, maybe a house) as my income increased.

Since this was in 2008 and the US was still conducting large scale combat operations in Iraq and Afghanistan, I was counting on spending a year or so overseas while the Army fed me, housed me, and paid me a bit extra to do so. I’d just have to deal with potentially getting shot or blown up.

Seemed like a fair deal to me.

2008 was also the year the global economy took a massive dump. But I figured the crazier the world got the more secure my career, and thus my financial plan, would be.

I knew my logic was twisted and cynical, but I had no idea how short-lived my plan would be.

My Wake Up Call

In November of 2008 I got hurt during a “classified training mission.” At first, I didn’t think much of it. I had all my fingers and toes and figured I’d be back to full strength in no time at all.

Except that’s not what happened.

Days turned to weeks, weeks turned to months, and I wasn’t making it back to full strength. Something was wrong. I wasn’t healing as expected and nobody could tell me why.

Then after months as the Army’s guinea pig, I finally learned my fate. Turns out I had a rare genetic condition the Army had never dealt with before.

Then in their infinite wisdom, the Army decided I was no longer fit to serve. I’d be a danger to myself and those around me. I couldn’t be trusted. In May 2009, the Army started the process of “medically retiring” me.

I was devastated. My dream-career, not to mention my financial plan, were ruined.

Now, I was facing a sudden entry into the worst economy and job market of my life. With over $100,000 in debt. I’d soon be without a reliable income, but would still be expected to reliably come up with my $1,100/month in debt payments.

Getting Serious

I remember driving around in my stupid sports car listening to talk radio one day. Once the angry, though entertaining, political guys finished, The Dave Ramsey Show, a personal finance program came on.

In the past I’d change the channel whenever Dave Ramsey was on the radio. Not that I had a problem with Dave Ramsey or his financial show. I just didn’t want to hear any financial ideas contrary to my plan. Ignorance was bliss.

Things were different this time. My plan was screwed. I knew I was in trouble and needed to work my way out of it. Next time I heard Dave Ramsey on the radio, I listened.

This still being financial apocalypse, folks from all over the country would call in looking for help. Ramsey would listen to their stories, give them easy-to-follow guidance, and, more importantly, hope. I realized I wasn’t alone.

Ramsey would also have guests come on to celebrate hitting key financial milestone. Normal people paying off all their debt. Normal people paying for their kid’s college in cash. Normal people retiring early and doing whatever they wanted with the rest of their lives.

These stories of normal people slaying their financial monsters certainly got my attention.

Getting to work

From what I gathered, Dave Ramsey gave the same basic advice in a financial mess.

First, do a quick budget. Figure out how much you make and subtract how much you need to spend each month. Then cut your expenses as much as possible.

Second, save the leftovers to build a small emergency fund. If something goes wrong, you can use your emergency fund and won’t have to turn to debt.

Then, once you’ve got a small emergency fund, start throwing all the leftovers at your all your debts. After your debts are all paid off, save the leftovers and grow your small emergency fund into a big emergency fund. This way you’ll never have to lean on debt ever again.

I did a simple budget, subtracting what I needed to spend each month from what I made each month. I quickly realized I had more money leftover at the end of the month than I really knew what to do with and had just been wasting it.

I cut my monthly expenses further by changing my student loan debt from a 15 year repayment plan to a 25 year plan. This move dropped my minimum payment a couple hundred bucks, but also added 10 years of interest payments. I felt it was the right move, though, given my situation. It immediately freed up some cash and I had no plan of keeping the debt around long enough for the interest to catch up to me.

Whereas Dave Ramsey would’ve instructed me to throw it all my leftover cash at my debt, I knew there was an “emergency” on the horizon, so I saved as much as I could while maintaining my minimum payments on my debts.

I “retired” from the Army in May 2010 and started my new career with a good-paying job 6 months later. I’d be lying, though, if I said it was a smooth transition. There were a lot of twists and turns, false starts, and dire situations. My emergency fund came in handy and bought me time to work things out.

I kept hustling and ultimately convinced a Fortune 500 company to put  24-year-old-me in charge of a $15M/year operation.

With my new career taking shape, I turned my focus back to paying down my debt. I re-did my budget to account for my new income and found I could be totally out of debt in only 3 years.

Will you marry me?

Andrea and I grew closer through all the craziness. We’d been together for 5 years at this point and it was time to move our relationship forward. I paid off a couple more debts, kept current on my remaining balances, and used my excess cash to save for an engagement ring.

My debt was no secret to Andrea, and to her credit, she didn’t really care. She valued me more than my debt and saw how hard I worked to restart my career and get my act together.

Andrea had also grown familiar with Dave Ramsey and was willing to take on “my debt” as “our debt.” She knew we’d have a plan to pay the rest of the debt quickly and didn’t want to wait for me to pay it off on my own. Besides, we’d been together for 5 years already…she’d been waiting long enough.

In September 2011 I asked Andrea to marry me, she said yes, and we were married a year later.

In that year, I paid the minimum payments on my remaining debts and we saved all our excess cash to pay for our wedding ceremony/reception and honeymoon. In the end, we had a beautiful wedding, a great honeymoon, and were able to pay for everything in cash. We even had a bit leftover.

Putting it all together

After our honeymoon, we moved into a new rental house and started combining our finances.

We decided to go with my bank, USAA, since they offered free checking, online bill pay, ATM fee refunds, and a bunch of other cool features Andrea’s bank wanted to charge for. (Most banks these days offer this stuff for free now, so if your bank doesn’t it might be time for you to make a change.)

Then once we could see all our money coming into and going out of the same account, we redid our budget. Andrea and I both earned similar incomes, but now our expenses were much less as a married couple than when we lived on our own. We only had one rent payment, one set of utilities, etc. Since our “married” expenses each month were pretty close to what one of us spent as a single person we had a lot of cash left at the end of the month.

By this point, the debt was down to ~$62,000 and it was time for us to attack it.

Even though we were both familiar with Dave Ramsey and had become responsible with our money, knowing what to do wasn’t enough. Andrea and I both wanted to pay off the debt quickly, but we didn’t agree on how.

Our Plan

The main point of contention centered around the money we had leftover from our wedding and some of Andrea’s savings from her years as a responsible person.

If we were to follow the Dave Ramsey plan to the letter, we’d drain our savings to pay off as much debt as possible in one shot. We’d maintain just enough to act as a small emergency fund, then once the debt was totally gone, we’d rebuild our savings to its previous level.

That plan would have us out of debt really fast, but was risky as it would leave us with only a small emergency fund for a while. I didn’t love this risky plan, but was comfortable with it. I was anxious to pay off our debts and I was already used to living with only a small emergency fund. Besides, with two incomes the odds of us having a catastrophic emergency were quite small.

Andrea hated the plan. She wasn’t comfortable with the risk and did not want to drain our savings. Having a healthy emergency fund gave her a sense of security I’d never experienced before and the idea of only having a small emergency fund freaked her out. She didn’t want to do anything to mess with her sense of security.

Balancing speed with security was a new concept for us. We viewed risk differently and had to come up with a plan we’d both be happy with. We realized, though, we would both get what we wanted if we compromised on the details of how to get there.

Here’s what we came up with.

1: We agreed to use some savings to pay off a couple of my smaller student loans completely. This still left us with enough of an emergency fund to maintain Andrea’s sense of security.

2: We agreed to keep our expenses to less than half of our combined income. We could’ve afforded a fancier rental home, we could’ve afforded to eat filet and lobsters every night, but we opted not to. This way, if one of us lost our jobs we’d still be able to pay rent and keep food on the table. While we were both working, though, we’d use the leftover cash to attack the remaining debt.

3: We agreed to stay focussed and pay off all the remaining debt in less than a year. If by our first anniversary we still had some debt we’d tap into our savings to pay off whatever small amount was left.

Assuming everything went according to plan, we’d be debt free with a healthy emergency fund within the first year of our marriage.


Everything went according to plan!

Seven months later we were totally debt free. ~$62,000 paid off and we still had a healthy emergency fund.

Or to put it another way, we paid off ~$115,000 in five years. I paid off ~$53,000 in 4 years on my own, slowed down my debt attack to get married, and together with my awesome wife wiped out the rest.

We celebrated by taking a weekend away to plan what to do next as a married couple and then took an awesome trip to Europe for our first anniversary.

601596_639568104290_175614966_nEven more important than paying off some debt, Andrea and I learned how to set the course of our lives and take action to get us there. We grew closer as a couple as we faced the challenge of paying off debt. We learned to talk about money without fighting. And above all Andrea and I learned to work together to achieve great things.

We’re (relatively) normal people. If we can do it, what’s stopping you?

Now hear it from Andrea

As I’m reading this with almost four years under our belt, I sit back and close my eyes for a moment and draw a breath. This was terrifying….I didn’t make it a secret that this particular season in our marriage was scary.

The debt hanging over our heads wasn’t the only reason I was scared. I was more scared that our personalities, our opinions would clash and that this would set the tone of how we would make further decisions based on how we listened to or not listened to each other, or how’d we miscommunicate or manipulate one another.

Would the intensity of our conversations lead me to think less of my husband?

Would I resent him for making me feel like I didn’t understand some of his plans or theories on what he was speaking about?

Would his alpha-take-charge clash with my sassy-type A-super-OCD- personality? (Uh, yes!)  

The idea of money is already an emotionally charged subject. Dialogue can get confusing no matter where you are in the planning stages. And when things get difficult, it’s easy to put the blame on the other person when things don’t go right.

Through this process, I learned that we each have our own individual thoughts on what “wealthy”, “accomplished”, and “successful” look like.

I found out what James’ intentions were behind his ideas or plans. I made a point to ask, because it was easy to confuse me and I began to see an insecurity starting to rear its ugly head again. In the past, the lie I told myself was that he was making this way too complicated and there was no room for my input, therefore he didn’t care about my feelings. Sick, right? So, we took some time to define it for each other. This was how we created a “safe space” to share ideas and thoughts without passing judgement or ridicule on one another. (Disarm!)

Defining the terms also helped in areas where we didn’t even know we had a difference in opinion. Cause, there’s nothing worse than assuming you’re in agreement, then going forward with a plan and then finding out we both weren’t on the same page in the first place, right? It was incredibly difficult at first, but we really listened and shared our thoughts with one another. 

It’s amazing how much you’ll relate to one another when you do.

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