$60,000 Debt Payoff Motivation

[TrueMaroonGrind]

I have seen some posts on this forum to help people motivate themselves to pay off debt. I would like to share my story so far and start this motivational post to help keep my spirits up during this long debt payoff process.

My wife and I both attended college, where we met, and both accumulated a lot of student loan debt. I graduated in December 2013 with a BS in Engineering and 4 student loans totaling over $32,000(6.8%,10yr). My grand idea after school was to take out a $25,000(4.15%,6yr) loan to buy a new car.

My wife graduated in May 2014 with a BS in Animal Dairy Science and decided to teach. In December 2015 she completed her masters in Middle School education online while she was teaching. She had 2 student loans one for 5,000(4.00%,10yr) and one for 33,000(5.00%,30yr).

I know so many mistakes were made, but we are in this situation now and I am hellbent on removing this burden from my family. Here is the situation today:

- Car: $11,557(payment: $400)
- My student loans: 2 loans remaining at $5,986(payment: $90) and $6,229(payment: $93)
- Wife's student loans: 2 loans remaining at $4512(payment: $55) and $32,176(payment: $200)

In total it is a whopping $60,463 of pure debt burden. My goals for 2017 are to pay off the car and bring my total non-mortgage debt down to $45,000. Lofty goals I know, but easy goals are not worth striving towards.

Any motivation, personal stories or advice would be greatly appreciated.

[Jluke]

I had 100k remaining on my mortgage and paid that off in 3 years...

don't beat yourself up over the student loans... that was an investment. but now you do have to pay them off.

minimum payments will get you nowhere - that is how the banks win.

figure out a plan to pay extra on the loan(s).

you can always look at Dave Ramsey's approach to debt, if you haven't already. his investment advice is poor from what others have said.

good luck.

[TrueMaroonGrind]

I had 100k remaining on my mortgage and paid that off in 3 years...

don't beat yourself up over the student loans... that was an investment. but now you do have to pay them off.

minimum payments will get you nowhere - that is how the banks win.

figure out a plan to pay extra on the loan(s).

you can always look at Dave Ramsey's approach to debt, if you haven't already. his investment advice is poor from what others have said.

good luck.

I have about $600 bucks of extra cash each month that I am putting towards the car, so we can knock the car out as soon as possible and free up $1000 monthly to put towards the smaller student loans.

I have spent some time listening to Dave Ramsey. He has some good advice, especially for those neck deep in credit card debt. I have decided to adopt a few of his principles, but not all.

I would be ecstatic if I could pay off my $60,000 in 3 years. Paying $100,000 in 3 years is an impressive accomplishment.

[HundredK]

You're not the only one in heaps of debt here (hint, my screen name refers to debt, not assets). So I just wanted to say good luck, you can do this!

Since being on this forum, I've found tons of ways to cut down expenses and focus on debt payoff. Ultimately I actually decided not to do it all as quickly as I had initially hoped, but I am much happier with my life doing it a bit more slowly. So keep your mind open and listen to input from others.

[sblatner]

I'd suggest taking Dave Ramsey's Financial Peace University class. Lots of valuable lessons about cash flow planning, paying off debt, insurance, etc. My husband and I are hosting the class and are finding the information valuable.

Regarding your student loans, are they made up of smaller loans? If so, Dave suggests to put each loan in order from lowest amount to highest amount. Get gazelle intense and pay off the smallest loan first and then work your way up. The process works.

First baby step is to get $1000 in an emergency fund.

[TrueMaroonGrind]

You're not the only one in heaps of debt here (hint, my screen name refers to debt, not assets). So I just wanted to say good luck, you can do this!

Since being on this forum, I've found tons of ways to cut down expenses and focus on debt payoff. Ultimately I actually decided not to do it all as quickly as I had initially hoped, but I am much happier with my life doing it a bit more slowly. So keep your mind open and listen to input from others.

Thanks for the encouragement. I really appreciate the advice on paying slower. I agree I don't want to completely give up all of my entertainment/vacation spending. I can see getting burned out really quick if I give everything up for the sake of paying off debt super fast.

[TrueMaroonGrind]

I'd suggest taking Dave Ramsey's Financial Peace University class. Lots of valuable lessons about cash flow planning, paying off debt, insurance, etc. My husband and I are hosting the class and are finding the information valuable.

Regarding your student loans, are they made up of smaller loans? If so, Dave suggests to put each loan in order from lowest amount to highest amount. Get gazelle intense and pay off the smallest loan first and then work your way up. The process works.

First baby step is to get $1000 in an emergency fund.

Thank you for the advice. I think I will take financial peace university the next time our church offers it.

I have the $1000 emergency fund established yay!!

Only my my wife's $32,000 loan is split about 6 loans. I looked into the debt snowball, but I can pay off my car in about the same time as any other loan. That frees up about $1000 monthly to knock out my student loans.

That is my plan at the moment, but things do change.

[Singuy]

My approach to debt and income may help.

I had a mortgage debt of 300k when I was 25, and paid it off when I turned 32. My wife had a student loan debt of 176k when she was 29, and paid that off before her 32nd b-day.

Secret trick.

Pick up extra shift/do overtime for anything you want to waste money on. Allocate your base pay toward debt/savings/living. Every time you want to go on a trip or buy something that is out of the ordinary, work for it first! You want to buy a high end computer?..work a few extra shifts for it. You want to go on a vacation?..add more shifts to that equation.

Use your jobs as a piggy bank instead of your own. Extract extra money from your work.

[LivingAlmostLarge]

Singuy assuming you even have a job that pays overtime. Salary doesn't.

But a second job if you are young and have no kids is not a bad idea. You'll be working so much you won't have time to spend money. If debt free is your goal.

[Permanent Temp]

Singuy assuming you even have a job that pays overtime. Salary doesn't.

But a second job if you are young and have no kids is not a bad idea. You'll be working so much you won't have time to spend money. If debt free is your goal.

I did this worked a second job until recently. Built up a great emergency fund paid off my car and the last of my credit card debt. It's not easy though. Sometimes I wonder did I waste my the last of my young years on this since now I have 30K in debt again.

But oh well. The new debt is from house repairs and its a zero percent loan. Sometimes we just got to do what we have to do.

You can do this though don't get discouraged. At least its student loans and not credit card debt!

[GoodSteward]

Glad to see you are pushing hard to get your family in a debt Free situation!

Getting out of debt quickly does take sacrifice, but you must be careful you don't try to throw out the baby with the bathwater. Finances are mostly based on emotion. The side effect of over obligating your cash flow to debt repayment, or being too aggressive with your planning, is that you can set yourself up for failure. If you never actually hit the goals it can cause you to get discouraged, which can make you do a 180 back into living with debt. "I can't do it, I'll just live with payments" It happens all the time. Probably why a lot of people come here, get super excited at what numbers can look like on paper, but then find out they can't seem to make it actually happen.They think they are failures and can't do it. In reality, they simply planned to aggressive and it wasn't doable. You have to plan right to be successful.

To avoid this mistake, ease up on your goals if you haven't given yourself some wiggle room for unplanned things. Make sure you have some cash flow left each month. As you go along, put that money onto the debt if you don't end up needing it. This allows you to not get discouraged when life happens, but will boost you up if you end up hitting your goals sooner.

Just my .02$ Awesome job on what you've done so far!

[creditcardfree]

Well said, GoodSteward!

OP, you have a great goal. If you understand that this is a journey that can be done, I believe you can get there! There will be bumps, but stay the course, it is very well worth it.

[tripods68]

You didn't list your income and expenses so it is very difficult for anyone to comment about your budget.

Lots of very good advice so far. Get a 2nd job, follow Dave Ramsey.

You said you have 45k of debt remaining. How long do you want to be in Debt?

5 years?
2 years?

Take a pick right which one best fits your lifestyle?

[snafu]

Kudos to you for making the decision to make clearing debt a high priority. Is your wife onboard? I've found it helpful to note every 'spend' on a list on my cell phone, it made me more aware of spending. I was surprised by how much l spent on incidentals. It's important to give every dollar a 'job.' If you're willing to list sums allocated we may be able to offer suggestions to make dollars 'stretch.'

I learned from experience that having a meal plan and buying loss leaders has an impact on our bottom line. We're less motivated to eat out if there is a meal prepped and waiting and we've stopped needing to throw out food that's droopy or expired.

Terrific to see you've already put in place $ 1,000. EF since it's reported 2/3 can't do that! I suggest you look for free or nearly free entertainment offered in your community. It's often subsidized with your tax dollars so you may as well participate. Have you every taken the role of 'tourist' in your day's driving range? We've taken a 'picnic' lunch/meal and explored places, museums, factory tours and festivals recommended to visitors. The point is to sleep at home, saving accommodation costs. We only go to restaurants that we've never tried for an appetizer or dessert for example. The point is to have a good time without extra expense.

With spring upon us, I suggest going room by room on a declutter mission. Try to identify items no longer used, no longer needed and offer them for sale on your local FB sell page, Craigslist or even a yard sale if there is a community event. We've always assigned 'snowflakes' [small bits of unexpected income or savings] to a specific financial goal. It makes a surprising difference.

I'm confident you can reach your goal. We're here to cheer your every success

[Gailete]

A suggestion here, is every payment on the car and school loans is round up each payment and how much you round up depends on how tight your funds are. If you are just barely getting by, round up to the dollar so that $197.25 becomes a payment of $198. After a few months that you can see you have managed this, then round up to the nearest $5 so that bill you would now be paying $200. If that goes well, throw another $10 to that payment and then eventually $25, etc. You can still be throwing the bulk of your payment money to one bill in particular, but all the others are getting smaller at the same time as well.

Depending on how your bills are set up (I'm not sure if this works with student loans but does with cars and credit card bills) if you have more than one payday a month, make partial payments every pay period. Every bit of the principal that you can pay off the soonest, is less interest you will have to pay.

Doesn't seem to be doing much, but that is what I was doing this year. I knew my car payment would be done in July or August, but I started making extra payments and within a couple of months I realized that I had the cash to finish paying it off so I did! What a great feeling. If I hadn't made some extra payments, etc. the number would have been too high for me to pay off the car yet. Also got our smallest credit car bill paid off doing the same thing!

How do you eat an elephant? One bite at a time. Little by little it works and even if all you are doing right now is rounding bills up to the nearest dollar or $5 (and not adding TO the bill) you will see the minimum payment going down instead of the usual going up. It works. It isn't instant, but it works.