How We Paid Off $107K in Debt in Less Than Three Years
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"Now we know that no financial goal is too big."

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This story is by Kevin Jones, as told to Marianne Hayes

In 2011, I landed a great job at an architectural firm, and married my wife Erin, a junior accountant who was finishing up her bachelor’s degree. Life was good.

Well, except for the $107,000 of debt we’d accumulated by 2012: $63,000 in loans from my master’s, another $30,000 from Erin’s degree and a $14,000 car loan. This translated to $900 monthly payments—plus another $250 after Erin’s grace period ended that November.

While blending our finances after the wedding, we realized how dire this was. How could we save or buy a home while paying more than $1,100 every month on a combined $83,000 income?

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So we buckled down, and took stock of what we had.

We actually had $6,000 saved, which we decided to treat as our emergency fund, and $7,000 in Erin’s 401(k). Then we slashed our spending, swapping our $60 cable bill for a $7 streaming service and cutting $250 from our food and entertainment budget. I also bought a no-frills, $30 flip phone.

We directed it all to our debt, using the snowball method. Fortunately, our lowest balances carried the highest rates—but this approach was so empowering, we wouldn’t have done it any other way.

Debt ThermometerWe saw immediate progress.

Thanks in part to a $3,000 bonus I got early on, we knocked down one loan from $1,800 to $600 the first month—then paid it off the next. Hitting a milestone so quickly stoked our motivation to keep going.

We even drew a thermometer showing what we’d paid and how much was left, with each level representing $3,000. You’d be surprised how effective a visual reminder can be.

As our income grew, debt remained priority #1.

After graduation, Erin got a new job and a $12,000 raise. And by fall 2014, our joint income had risen to $107,000. But we never fell victim to lifestyle creep: We followed our budget and funneled tax refunds and bonuses to our debt, making monthly payments from $2,000 to $4,500.

We made some tradeoffs, of course. While Erin contributed 4 percent to her 401(k), I paused my retirement savings. We also delayed saving for a home and growing our emergency fund, figuring we could cover an emergency with cash.

We didn’t deprive ourselves, though. We made room in our budget for the occasional day trip and other inexpensive getaways, and even snagged a free trip to New York after I won a design competition.

Finally, in September 2014, we submitted our last debt payment.

It felt amazing! But we didn’t stop there. Turns out, cable and lunches out weren’t that important to us—though I did buy a smartphone. Maintaining our spending habits helped us build our emergency fund to $12,000 by the end of 2014.

That allowed us to start saving for a home and increase our retirement savings to 15 percent in January 2015. Later that year, we welcomed our son. It was so reassuring to know he was being born into a financially secure household. And finally, this past September, we bought our home—and have already saved $28,000 for future remodeling!

Despite all our accomplishments, the biggest reward has been confidence. Now we know that no financial goal is too big. (Hey, we saved half our income in 2016!)

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