Being in debt is scary. You’re standing in a hole with no idea how to climb out. You’ve tried before and failed and you are beyond frustrated. And I’m going to be honest with you. I can teach you the theory. I can be your biggest cheerleader and tell you what you have to do to climb out. How to budget, how to prioritize what to pay down, why it’s important. But I’ve never been there. I’ve never stood in your shoes and felt the fear. I can’t imagine how hard it is to start your debt-free journey only to slide back when your car suddenly needs new tires. So, I’m calling in reinforcements.
I’m a huge believer in learning from people who have done something you want to do. As such, I’m beginning a monthly interview series where I talk to people who have walked the journey. They are here to be your sherpas. These people have been in large amounts of debt, faced a wake-up call, and climbed out. And they are back to tell you how you can do it too.
Today we have an interviewee who has held her daughter in her arms while realizing her family’s $80,000 of debt might keep them from paying the power bill that month. Her husband once had to work four jobs to make ends meet. But now they are completely debt-free except for their mortgage. Quite impressive!
If you would like to be considered for an interview, drop me a note!
Let’s get started…
Aha Moment Interview: How Real People Get Out of Debt
Tell us about yourself!
My name is Krystal, and I’m a 32-year-old teacher-turned-blogger. I still teach part-time and I love my students so much, I will probably teach until I’m too old to stand. But I also love my readers, and my blog has become a huge passion of mine. I married my college sweetheart, and we have two girls, ages 11 and 7. In high school, I moved from Orange County, California, to Richmond, Virginia. While at the time I thought it was the end of the world, I have fallen in love with this state and one of our favorite things to do is visit all of the beautiful scenery and historical landmarks.
How much debt do you have today and where did you start?
As of today, my husband and I are completely debt-free except for our mortgage. We paid off over $80,000 of debt and can I just say it was SO worth the short-term sacrifice?! Some of the debts we tackled were medical bills, personal loans, car loans, and a small credit card. And a big chunk of it was undergrad and grad school loans!
We became aggressive with our debt snowball in 2012 and paid everything off by November 2016. Then spent 2017 building up six months of expenses for our emergency fund.
What was your “aha” moment that made you realize you had to get out of debt?
My “aha” moment was one day when I was holding our infant in one hand and our power bill in the other. I realized that I had to choose to either buy groceries or pay our power bill. It was so humbling to realize that there was no end in sight unless we made a change.
My husband and I never again wanted to fear a bill coming in the mail. We knew that we wanted to model better stewardship of our finances for our girls. Managing money is something that EVERYONE has to do, and we wanted our girls to be able to do it well! So, we had a really tough conversation, we cut out everything we could from our living expenses, and little by little pulled ourselves out of the mountain of debt we were buried under.
What lifestyle changes did you make while paying down debt?
We cut out everything that was a “want” for three months just so we could get a good jump start on our debt free journey. We knew we could do anything for just three months! Cable, eating out, expensive family fun nights, clothing. We made do with what we had. We shopped for groceries on sale. We curbed our spending in every area we could think of.
Did you have a side hustle (side job) to help you pay down debt faster?
When I was teaching full-time there was an after-school care program the county offered for lower-income families. For two years, I worked there a couple of afternoons a week. It was exhausting because it was after I had already taught all day. Working an extra three hours on top of my days was a sacrifice, but I made it work. And the extra money went straight to debt!
What was the biggest setback you’ve faced while tackling your debt?
There were a lot of little setbacks because that is life. But the biggest setback was when both our cars died on us in the same year. That meant having a car payment added to our debt, but in those days we had absolutely no choice.
We handled it well by doing tons of research and getting the best quality used car for a very good price.
The hardest lesson in paying down debt long-term is realizing that setbacks are a part of life, and things will always pop up. The trick is to use those moments to dig in your heels and stay motivated instead of quitting because it’s hard. If you stick with the plan and stay diligent through all of life’s setbacks, the reward will be so worth it in the long run!
Did you and your spouse have any differences of opinion on how to get out of debt? How did you get through it?
My husband and I were equally on board with paying off our debt. I am totally the nerd, so I did all of the research and planning and number crunching. I shared all of my thoughts and ideas with him, but we never did anything that we were both not 100% in agreement about.
This doesn’t mean that we agreed on everything all of the time because we definitely didn’t! But when we disagreed about something, we sat on it and talked about it until we could reach a compromise we were both comfortable with.
Paying off our debt taught us to be a team, and as a result of that, we have such great communication about so many other things in our marriage. I’m a firm believer that managing your money will either make you or break you, and we were determined to get out of debt WITH each other, not in spite of each other. It really takes both of you being on the same page!
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Did you use a debt snowball or avalanche?
For those of you who don’t know, you can read about both methods here. But the short story is that a debt snowball means paying off your debts from the smallest balance to the largest. An avalanche is paying off your highest interest debts first.
A debt snowball was our method of choice. It gave us the quick wins we needed to stay motivated, especially at first. Those first three months were HARD since we committed to cutting out so many things, but we paid off several of our smaller debts! So, we knew it was working and we were excited to keep moving forward.
What financial mistakes did you make while getting out of debt that other families can learn from?
One of the mistakes we made was assuming we would be fine with no fun until we were completely debt-free. We had to realize early on that if we didn’t plan to, you know, have a life, we would quickly throw in the towel. But when we budgeted for fun, we were able to live guilt-free knowing we had planned for those things.
My husband and I had a small amount of fun money that we could spend however we wanted. We also took out a little bit each month for us to do something fun as a family, like eat out or go to the movies or go to the apple orchard. Finally, we saved a little bit each month for a frugal vacation. We set an amount, had it transferred to savings automatically, and then had money for a small vacation already saved every summer. We kept travel costs down by sharing a house with another family or two or driving to our destination instead of flying. We also ate in more than we ate out so having a hotel/beach house with a kitchen was a must for us.
Everyone will have their own things that keep them motivated. Figure out the things you can’t live without and make a plan to do them as inexpensively as possible.
Finally, where can readers find you and follow your story?
You can follow along on my blog, Simple Finance Mom, where I write about easy budgeting, paying down debt, saving money, and investing for beginners. My debt-free story continues to be one of my most popular posts. You can read it right here. You can also see sneak peeks of my life and behind the scenes of my finances on Facebook, Instagram, or Pinterest.
Smart Money Mamas’ Thoughts
This was so inspiring, THANK YOU, Krystal, for sharing your story with us.
A few quick comments from me:
- As a parent, just reading Krystal’s description about deciding between groceries and the power bill made me anxious. That must have been so hard and I am in awe of her and her husband using that feeling to make a major change.
- Getting out of debt requires sacrifice. Cutting down on “wants” and Krystal working those extra hours was what helped them achieve their goals. But financial freedom was worth it!
- I completely agree with Krystal’s tip about not cutting out everything that makes you happy. It is almost impossible to stay motivated when you don’t give yourself some joy. Just remember there are lots of options for fun, cheap dates, and free family fun.
Thank you again, Krystal, for helping me kick off this series with a bang!
What did you think of Krystal’s story? Any thoughts you would add?