We paid off over $200,000 of student debt in 18 months: Here is what we did next to create new money goals

“We looked for value in all our choices.”

Disha Spath and her husband Josh paid off over $200,000 of debt in 18 months.
Courtesy Disha Spath

Paying off student loans was an enlightening and ultimately empowering journey for my husband and me. In the process of paying off our more than $200,000 of debt in 18 months, we learned how to streamline our expenses, budget together, and build confidence in our money management abilities. 

Over the course of our debt payoff journey, we moved to a smaller living space and rented our primary residence. Once we were done with paying off our loans in 2019, we were faced with the fortunate position of having some choices to make.

Now we had big questions like, how much house could we afford to buy? Should we pay off our mortgage or focus on investing? How much leverage were we willing to take on for rental property investing

So we used the skills we learned from our debt payoff experience to make a whole new set of money goals. Here is how we made our new plan. 

We looked for value in all our choices

Through our debt payoff journey, Josh and I worked hard to minimize and streamline our fixed monthly expenses. We cut the cord with cable, utilized low-cost grocery stores, drove old reliable cars, moderated spending at restaurants, and made sure to cancel any subscriptions we weren't using. 

We kept up these habits as we entered into our next chapter. The addition of any new fixed expenditure was scrutinized for value. 

When our son demonstrated a deep desire to learn how to play piano, for example, we readily signed him up for lessons. But we decided not to upgrade our paid-off, older cars to take on a new car payment because the ones we have, while not fancy, are perfectly functional. 

Overall, we tried to be mindful of not inflating our monthly expenses too quickly, while also looking for experiences that would enrich our lives in the long term. 

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We put our goals in writing 

With that value mindset, Josh and I sat together and wrote down specific goals we had in mind for 5, 10, and 15 years in the future, and made our more immediate decisions accordingly.

We decided that we wanted to work toward reaching financial independence in 10 years. My aim is to become work optional, but I don't see myself retiring entirely. To reach this goal, we decided to save 50% of our income each month. We hit this objective most months, but sometimes we don't, and that is OK. 

For our investment goals, we broke down our desired asset allocation and figured out how much we would contribute every month. We aimed to max out all the tax-advantaged accounts available to us. We also hoped to minimize expense ratios and manage our portfolio ourselves using low-cost index funds. We also decided on our rental property investment strategy, and laid out a 10-year plan to build that potential passive income into our finances.

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We also decided how much we wanted to have in our emergency fund and where we would keep it. After looking over interest rates, we decided to keep the fund in a no-penalty CD. Lastly, we wrote down our donation goals for each year and how much we wanted to invest for our children's education.

Then when it came time to make big decisions, like when we bought our house, we had all the information we needed at the ready, and understood what mattered most to us. 

We automated our investing

My husband and I continued to meet at the end of the month — a holdover from our debt payoff experience — to go over our spending and plan for the next month's expenses. Once that was done, everything else was automated out of our savings account. 

We also set up automated contributions into our retirement accounts, 529s, brokerage, and other investment accounts. That way we could continue to meet our goals, regardless of what distractions might come up. We also automated our mortgage and credit card payments.

We budgeted for a 'fun fund'

Once Josh and I had our goals ironed out and the auto withdrawals set up, we budgeted for and rewarded ourselves with a "fun fund" every month, worth about 5% of our monthly expenditures. It was important for us to let ourselves enjoy today, as well as save for tomorrow.  

So we allotted a small amount of money every month that each of us could spend with no judgment or questions asked, which we still continue to do today.

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We made buckets for spending goals

To save for specific, short-term goals, such as a vacation, a rental property down payment, or a backyard renovation, my husband and I utilize a bucket system, which we keep track of with our savings account. We find the buckets useful because the system allows us to specially dedicate savings for each goal and to move them around if our plans change.  

All of these strategies have served our family well in the last few years. We have been able to navigate some unexpected crises like my husband's open heart surgery, major home repairs, issues at the rental properties, and job changes without sacrificing our financial stability. Ultimately, with our plan, we have been able to meet our money goals while also enjoying life. 

Disha Spath is an internal medicine physician, a mother to two awesome boys, and a wife to Josh. She writes about money-saving hacks and personal finance to help doctors and other high-income professionals get out of debt and design their ideal life at The Frugal Physician. She also writes and podcasts about personal finance at The White Coat Investor.

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