Today Miranda (of Miranda Writes) shares her journey of paying off debt with her husband — $80,000 in total, and what finally got them to slay the Debt Monster once and for all. I don’t think I’ve ever enjoyed myself so entirely while also reading a ton of great advice and insight on budgeting. So let’s get right to it! Here’s Miranda:
Tell us a little bit about your debt story.
Our story is an all-too-common one. My husband and I were young and uninformed about money. We were trying our best, but ultimately, we racked up $80,000 in consumer and student loan debt. Not all of that was on the books at once. We would take out a few loans, then pay them off sporadically, always going back into debt each time. We were stuck in a cycle that never felt good, but we had no real plan or emergency fund.
It all came to a head around 2011. We had previously paid off some of the debt, but there was still a BIG chunk left. It felt like a guillotine looming over our heads and I (more so than my husband) was sick of it. I had heard about Dave Ramsey and read The Total Money Makeover. At the time, I was a little, um… obsessed. I liked the simple, old school approach. It felt doable in a way that nothing else had before. I told my husband all about it and said I wanted to pay off every cent we owed in full. This is the part where my husband would tell you that I drank the Dave Kool-Aid (true). He eventually agreed to my plan, and we got to work. There were certainly mistakes along the way, and it took about 2 years from the time we got serious before we saw that glorious $0 balance.
$80k! Congrats, you guys! So what specific things were most important in making that possible?
From the beginning, we got really honest with ourselves about credit cards. We know that for some people they’re a great tool. They use them strategically, pay off their balances every month, and have the airline miles to prove it. We are not those people. There are many things we can resist in life: taking every puppy home at an adoption drive, buying Apple products the day they come out, a third slice of pizza (sometimes), but credit cards are not on that list for us. I salute anyone who can use them wisely, but in our case, being responsible adults meant saying goodbye.
We also knew cutting back on expenses was going to be part of the deal, so we got creative. Aside from reducing our monthly bills, we found ways to go without that didn’t feel like a massive sacrifice. Some of the small things we did to save money were actually kind of fun. I taught myself to cut our hair (no tears and everyone has all their fingers). We discovered how much we prefer buying some things secondhand, as well as keeping a smaller wardrobe. Many of these things are still a part of our financial game plan. We did, however, start going back to professional hairstylists. Shampoo chairs=heaven.
The real game-changer was that we lived on half our income. Our decision to pay off debt coincided with a big promotion for my husband, but we did not use that as an excuse to spend more. We treated that additional money like it didn’t exist for any purpose other than reducing our debt. This was probably the single hardest aspect for both of us. Seeing a certain dollar amount on a paycheck and still feeling super broke was not fun. This is where it’s a good idea to remind yourself that it’s all temporary. Cookies help, too.
You mentioned that some mistakes were made along the way. Do tell.
We didn’t think (or talk) about money until money was a problem. We never discussed what we expected our money to do for us. It was just this thing in our lives, and we had no real intentions for it. When emergencies came up, we scrambled. This made for some unpleasant, last-minute decisions.
We did not start off on the same page when it came to our attitudes about debt. I had been approaching our discussions about it with a lot of anxiety and a ‘we-need-to-fix-this-now’ type of mentality. My husband is very ‘go-with-the-flow’ and he never responded to that. When our conversations shifted from thinking about debt as a massive problem to thinking about what we could do if we weren’t tied down to payments (dream vacations, retiring with lots of zeros in the bank, and being able to give generously) things became less strained. We changed it from a negative goal to a positive one. It took a lot more than one discussion, but eventually we got on the same team.
Once we finally made a budget, we (I) got way too obsessive about cutting every ounce of fat and things were a little too strict. This was fine when we were paying off those smaller balances, but over the long haul it was a bad idea. It’s extremely difficult to sustain a ‘no extra purchases’ policy for months at a time, and it usually back fired. If we had it to do over again, we would have made a point to put more spending money in the budget. Will power is a limited resource, and I’d be lying if I said we aren’t fans of shopping and eating out. It would have been smarter to have left some breathing room and not felt guilty about it. It was a hard lesson to learn because we just wanted to get it over with, but budgets really do need a cheat day.
What budgeting tools (apps, spreadsheets, strategies, etc.) are you using?
I wish I had a cool answer to this question, but I don’t. We are SO boring when it comes to our budget. For bills we use a Google Doc and our calendar. The only money app we’ve consistently used is mobile banking. Every two weeks when money hits the bank, the bills get paid, savings are transferred, and what’s left over is how much we have to spend. When it’s gone, it’s gone. Being debit card users means that our bank account is almost always up-to-date in real time.
We’ve learned that an itemized budget for anything other than bills is torturous for us to keep up with long-term. It worked great when we were actively paying off debt, but now we’ve changed that approach. We also found we like having more than one savings account. The larger one is for major stuff like a job loss or health emergency (that we hope we never need), and the other is a place to funnel money for those non-recurring expenses.
It might not be the most sophisticated answer, but a good, old-fashioned conversation is really our best budgeting tool. We make it a point to carve out time for money chats. Because we work completely different schedules, we cannot always have a face-to-face conversation when something comes up, so preemptively making decisions is vital to keeping us on track. These money talks coincide with the new budget at the beginning of the month. Because a lot of our expenditures roll over, they’re usually brief. It’s just a quick check in, but it’s key for us.
Any final words?
Here’s the thing about paying off debt: it is so unremarkable and very, very boring. There are no Rocky-style money montages (complete with theme music and sweatbands). No one high-fives you for staying the heck away from Target when you really want new throw pillows. If you run a marathon, your friends and family come to cheer you on, and when you lose weight, people tell you how great you look. Paying off debt is a huge accomplishment, but it isn’t as public a celebration as something like graduating from college or landing a great new job. There is not a ‘Congrats on paying your crap off’ section at the Hallmark store. When you pay off big debts, it’s sort of a quiet moment. You’ve gotta high-five yourself. Make it as fun as you possibly can. Celebrate your own little moments of victory. Most of all, even when you screw up, you have to keep going because (major cheese alert) it really is worth it. We had spent our entire adult lives in consumer debt and the feeling of clicking that last ‘submit payment’ button felt more liberating than I can fully express. *Sniff. Sniff.
Thanks for sharing your story, Miranda! What can I say? We agree 100% with everything she said. I don’t think anyone has ever described so perfectly the paradox of paying down debt — such a huge, important accomplishment, yet accompanied with zero fanfare (or Hallmark cards, ugh). And we loved how Miranda emphasized communicating with her husband. Being on the same page financially with your spouse is top priority. It’s a few years late, but big congrats on paying off all that debt, Miranda!
If you have any thoughts or high-fives for Miranda, feel free to leave them in the comments below.
Great tips Miranda and congrats on paying off your debt. I just read Dave’s book a couple of weeks ago (I know, I’m behind) and even though my hubs and I aren’t in debt, it still inspired me to really crack down on our budget creep. We had been going along without paying too much attention and the spending had really started to reflect that.
Thanks, Cat! Dave definitely has some awesome advice for anyone wanting to get ahold of their budget. I love his ‘give every dollar a name’ mantra. It’s really true that it will fly out of the bank account without a plan. Good for you for wanting to get it all squared away. Good luck!
Such huge debt is horrible, but I love to hear you ‘killed’ it like this. Loved the interview and it was very inspirational. Thank you for all the tips and showing us that nothing is impossible, if you really want to make it happen 🙂
Hey, hey! Thanks, Ramona! We definitely did not always feel like we were killing it. Sometimes we were pretty sure it was going to kill us. Haha!
We’re in the same boat with the credit card thing. We have tried to use them wisely but… in the end, we just rack up a few hundred dollars in debt and then freak out about paying it down. We now only keep one store credit card – a Belk card. We get really good rewards with it and since I usually set a budget before buying clothes, we always just pay it off in full because the spending was planned. We also keep a Discover card open to use when we travel. I don’t keep it in my wallet and I don’t have it saved in any online stores. That really keeps us (mainly me) from using it impulsively. So, now, if we use it when we travel, we already have a pre-determined budget and can pay it off immediately.
Hey Katie! Totally hear where you’re at with the credit card thing. We were there, a lot. Walking away from points and some of the minor conveniences was tough at first, but we’ve found a happy medium that works for us. The only time I’ve ever wanted to have a credit card back was during a car rental process, but knowing that we’re not jeopardizing our financial future is ultimately worth dealing with the long lines at Enterprise. Haha! Hope you guys are able to work something out. Best of luck to you!
Way to go Miranda! Such an encouraging post to read and I totally relate. I read in a OFB post from long long ago (aka can’t remember when/quote it exactly) that doing it well is sometimes like giving yourself a high five. I was so sad that confetti didn’t pour from my computer when I paid off my final student loan…but that high five to self was super epic.
However, we have found the same thing that was quoted here:”It would have been smarter to have left some breathing room and not felt guilty about it. It was a hard lesson to learn because we just wanted to get it over with, but budgets really do need a cheat day.” We found this out the hard way resulting in a lot fewer “guilty tears” and Dobby-like response (from me – not my husband) to not doing it right. 🙂 Keep up the great work!
Hey Trista! I am also very sad that confetti did not pour out of your computer when you paid off your student loans. We should talk to someone who works at the internet about getting that fixed, because that would have been freaking awesome! I’ve definitely had a few of those guilty tears and Dobby moments myself. You’re certainly not alone. The one awesome thing about a budget is that it starts over every month, or every week or day if you really want it to. Luckily for most of us, budgeting mistakes are not permanent. Unless you gave your money to one of those Nigerian princes that emails Johnny and Joanna all the time. That could be a bad one. 😉
Its great to hear how you settled your debt. I’m kind of looking for some quicker ways to deal with my debt though.
What’s up, Mike! I completely understand wanting to get the debt paid off fast. The best no-gimmick strategy I’ve ever seen/heard of for paying off debt quickly is to sell a big ticket item (or a whole bunch of medium ticket items), OR take on a temporary side hustle. Preferably one that is high on flexibility with no income cap (aka not-minimum wage), like waiting tables at a super busy restaurant (especially during the upcoming holiday season) or mowing lawns on the weekend. Hope those are helpful!