How we paid off our DEBT!

photo (36)

Can you believe October is almost upon us?! I love summer, but fall in Korea is pretty darn spectacular as well. Are you a fan of fall? We’ve been spending as much time as we can outdoors hiking, camping, and most recently biking. As some of you know the beginning of September was a very exciting time for Tom and I. After 18 months we reached a BIG BIG BIG goal of ours.  We became 100% DEBT FREE!!! Lots of our friends messaged us wondering how we did it? What was our secret? Could they do it too? I’ve been thinking about this post for a long time. Debating how I wanted to write it exactly. Our goal is not to tell you how you should do it, but rather how/why we did  it ourselves! We understand that the way we did it doesn’t work for everyone. You have to find what works for YOU. I truly believe that anyone can do it & our hope is that if you’re feeling trapped or burdened by financial debt that this gives you HOPE and inspiration to reach your financial goals- whatever those goals may be.

In, May 2012 I graduated with my teaching degree after five years of school. Newly engaged, looking for a job, and soon-to-be married  …money was tight. Tom was working on paying off his car. Rent, bills, gas, groceries. You know the drill. It got to be a lot. We had six months before the school loans required payment (although accruing interest during this time) and a wedding in the Dominican Republic left us with a credit card bill waiting for payment. WHEW! It wasn’t long before we looked a bit closer and realized that I had $42,000 of college debt to be paid.  We decided some changes needed to be made & adventure was calling. We packed our bags and flew across the world to work as teachers in Korea. Living in Korea helped us incredibly to start working on our debt. Our rent was paid, our tickets to Korea were paid for, and bills were low. We make good money here, but our salary is still the same as what a teacher in the states would make per year after taxes are taken out. So while Korea helped jump start on our debt, it isn’t the reason our debt is gone.

Here’s how we did it:

1. Live simply, beneath your means. It is very easy to spend what you have & expand your lifestyle in tandem with expanding your salaries or promotions. It is on the other hand, very difficult to spend significantly less than what you make, even if it means achieving a financial goal like paying off debt. Living beneath our means, to us, meant avoiding traditional materialistic spending habits. Before just about every single purchasing decision whether it was $1.00 or $100 we would think of the product’s use, future, and the purchase’s impact on our lives. We asked ourselves often “Did we NEED it?” or “Did we just WANT it? Did we need to go out for coffee OR could we make it at home a little bit more to cut unnecessary costs?” Living beneath our means to us meant-living simply with less.

2. Make debt a priority. Tom and I always did our budget for the month after first paying our debt. We agreed upon a certain amount (which was as much as we could) to pay debt each month while still having money to do life! We had a set amount that  we paid each month right off the bat. It came out of our paychecks immediately. We made debt our first priority. Doing this still allowed us to travel extensively while paying off debt. It didn’t mean we stopped living or exploring. I truly believe that because we didn’t spend our money first and THEN pay our debt, we were able to stick to making the debt a priority. It was at the top of our list because we knew if we only paid the minimum amount due that interest would continue accruing and we would have never made progress on eliminating the debt! It’s a slippery slope if you don’t make debt your priority.

3. Make a PLAN! We set goals, made a plan, and put it into action. Sounds simple, right? Not always! We really had to change our entire spending mentality. By making a plan together and writing it down we knew we could start achieving. Each time we hit a small goal it felt like a tiny victory! Having someone to hold you accountable for your goals was extremely helpful for us. We didn’t want to let each other down. We were a team working together towards hitting that goal. Adding up our debt and seeing our grand total brought a big knot to my stomach. It was this big knot in my stomach that made me think about every purchase decision. The better you stick to the plan, the debt knots will disappear more quickly.  With each goal we hit (no matter how small) we were further motivated to push for the next goal on our plan.

–One last thing to note is that just because our debt is gone we are both truly committed to continuing ALL of the above that I mentioned. Continuing to live below our means to now SAVE. Making saving a priority for our future. Always having a plan in place to continue hitting goals set by us to SAVE! It truly is a lifestyle choice & we plan to continue traveling & saving along the way!

Have you paid off debt? What are YOUR TIPS?! What works for you?

Comments

  1. Thank you so much for sharing! We are always looking for ideas especially now that we are very serious about paying off our debt. Congrats to you guys! So inspiring!

  2. Thankfully I had a scholarship that got me through school, but Angel graduated with debt–his strategy was to immediate after college move in with his parents (because of his culture, they love to have their sons live with them. They wish he still lived with them.) and worked overtime at the hospital constantly till he had paid off $25,000. He stopped working overtime after his debt was paid off, but throughout our marriage we definitely practice living below our means and thinking carefully about purchases, and that has let us really never have to worry about money, because we know we’re never living paycheck to paycheck! And that’s a good thing–because it really allowed us to move to China. The move meant that we didn’t get a paycheck for 2.5 months, so it’s a good thing we didn’t absolutely “need” one every 2 weeks.

  3. We’re both somewhat up to our necks in debt and really am inspired by people like you. Honestly, it’s hard to commit to paying it off so quickly and for the time being we’ll be staying afloat through minimum payments. Maybe things will change. I’ll be keeping your tips in mind though, always:)

  4. LOVE this post!!! I definitely need to work on all 3 of these points… mainly making it a priority. I’m teaching ESL in Peru now, and not getting paid a ton, so if I do #1, then that will help a bunch! I have a separate account for money specifically for student loans, so that helps me not touch that money unless I’m sending a payment. I also hated getting married knowing I had debt, but it’s just part of life! Thanks for the encouragement that paying debt off CAN be done while still living a fun life!!! 🙂

  5. Good tips. I think so many people come to Korea with the intention of paying off study loans or credit card bills and forget about paying it off for fear of missing out. I totally agree with living below your means how ever hard that might seem. Way to go!

  6. Thank you for the advice. I am also a teacher, 22 years, from New Jersey. My paycheck has become less over the last few years under our current governor. I am facing this challenge now as I try to pay off the marital debt left by my husband. Your are right. The key is living below your means.