This article is part six of a series I’m writing explaining exactly how my family and I paid off over $90,000 of consumer debt in less than two years.
With only three debts remaining as of November 2004, my wife and I were thrilled with the progress we were making using the debt snowball method to repay all of our outstanding debt.
In the previous article, I explained how we paid off our final credit card and decided to hold off on our two remaining student loans (the next smallest balances in our debt snowball repayment schedule).
Instead, we focused on paying off our higher interest automobile loan for the extra savings in interest (sorry Dave Ramsey).
We “only” had $37,028 of debt remaining at this point (we started with $90,415), and our monthly expenses were going down (thanks to intense budgeting) while our income was rising (lots of overtime).
There’s a Reason It’s Called a Debt Snowball:
The amazing thing about the debt snowball method is how efficiently it allows you to pay off your debt. Whenever I tried to pay off our debt in the past, I would send a little extra money to one credit card one month, and then a little extra money to different account the next month. I thought I was doing the right thing, but without a concentrated focus on one particular debt, I would quickly get discouraged and give up only to “blow” the money on something else.
By paying off our first 7 debts in our debt snowball plan, we had freed ourselves from $1,200 in monthly payments allowing us to redirect this money towards paying off even more debt.
Everybody Has a Car Payment
No, everybody does not have a car payment. But in the 4 years it took my wife and I to accumulate over $90,000 of debt, this is exactly the justification I used for our excessive monthly vehicle payments.
Between graduating college in 1999, to finally admitting I had a debt problem at the end of 2003, I had financed 5 automobiles!
Having finally realized that vehicle debts were the primary source of my financial shortcomings, my family and I were excited that we were finally making progress towards paying off our one remaining car loan.
Now that our “debt killing” snowball payment was up to $3,600 per month, we were quickly able to wipe out the remaining $13,300 balance on our Volvo, and I’ve got to tell you it was an exciting period in our financial lives.
Sending in the that final payment to our bank in March of 2005 (and then receiving the car’s title free and clear) gave us quite a sense of accomplishment. It was another major financial milestone and we were once again optimistic about our future prosperity.
5 years later I am happy to report that we still have not had a car payment since we paid off our Volvo. We actually saved up and paid cash for our latest car purchase and we’re still driving the 2002 Volvo s40 as well (161,000 miles)!
Only Two Debts Remaining!
Our largest debt was finally paid off leaving us with “only” $16,000 or so of student loans! We were doing better repaying our debts than I could have ever hoped for (and I’m a very optimistic person), and we could almost see the “debt free” finish line (we didn’t have a mortgage yet)!
Unfortunately, we hadn’t gotten all of the financial blunders out of our system and my wife and I were nearly derailed by our next financial move. Believe it or not, we signed a contract to purchase our first home before we had finished paying off our remaining student loan debts! All that hard work and dedication to pay off all of our debt was on the verge of coming to a halt!
Were we going to let all of the momentum we had built up go to waste, or would we come to our senses and do the right thing?
Click here to read the final article in this series!
{ 3 comments… read them below or add one }
I have been reading your story daily and it so incredibly inspiring!!! How awesome that you buckled down and did it before you had children…my husband and I have about $13,000 in debt that we are trying to “snowball”. It is encouraging to read stories like yours where you accomplished it! Thank you for posting your story and I love your blog!!! Your blog was recently linked by another blog “Budgets are the New Black” and that is how I found your site…thank you for all your doing. You are like one of those “lighthouses” that Dave Ramsey talks about in his book, “More Than Enough”…a place where people can go and see that they aren’t the only ones who’ve made mistakes and that you can get through them.
Thank you Anna for your encouragement! I admit, it wasn’t wasy “putting myself out there”, but the response from readers like you has been overwhelming!
Thanks for reading, and please don’t hesitate to share our debt free success story with your friends and family as well! The more people I can share my debt free success story with the better!!
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Wow this is turning into a short story! Oh the suspense
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I am at about $37k or so (It’s in English pounds so not sure of the exact conversion as it changes daily). Problem is right now that I don’t earn enough to really pay high…. As I keep repeatedly telling you and every blogger I am in a debt management plan and I am hoping I can save up lump sums to pay the creditors off at some point.