Our Debt Free Journey out of $20,000 Debt on One Income

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Debt can be crushing, discouraging, suffocating, distracting, and depressing all in one breath! It doesn’t matter how much debt you are in, it is prison!

I know very well the physical and emotional expense debt can have on a person. Our family had racked up over $20,000 in debt! Oh. Oh no! I’m getting lightheaded just thinking about it!

Oh but wait! Never mind. I’m okay! That’s right… as of October 20, 2016 our family is completely DEBT FREEEEEEEE!!!!!!

Can I tell you how amazing it feels to get a paycheck and not have to throw hundreds of dollars at debt?

Amazing! Remarkable! Astonishing! That is how it feels to officially be debt free! We don’t owe a single soul a dime!

Do you want to feel the same way? You TOTALLY can!!!! I can’t add enough exclamation points, bold font, or italics to emphasize how possible this can be for you!

If you are feeling overwhelmed by debt, make sure you don’t miss my tips on What We Would Do Different at the end of this article! These tips could save you THOUSANDS of dollars!

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With our recent accomplishment of ending our debt free journey, I have a lot I want to share with you guys!

So let’s start with our story, our debt free journey! As we were making our way through paying off all our debt, one of the most motivating things was to listen to others debt free journey. What they learned, how they over came trials, and to hear all about their success!

Our Family’s Debt Free Journey

Where it all started

The first thing you need to know is how much debt we had and where it came from. Almost ten years ago the hubby and I got married. We were in the last two years of college and had very little money.
We fell for it. We fell for the “this is what you do” trap. We thought that when you are in college the “thing you were supposed to do” was get student loans. Ten years later we really regret that decision!

Our student loan debt totaled out to around $15,000. Then came our dumb mistake number two… We decided to borrow money from the bank to put towards buying a car.

All you need to know is that we will NEVER do that again! Never will we get into debt for a car (or anything for that matter, okay maybe our first house but that’s it!). The total amount we borrowed for our car was $8,000. 

Overcoming hurtles in our debt free journey

In 2008 I graduated college with a Bachelors Degree in Business Management, then one year later hubby graduated with a degree in Construction Management. Do you remember what happened to the economy and specifically the housing market during those two years?

The American economy was pretty much in the gutter and trying to find jobs was pretty tricky! Long story short, we moved to San Diego with no jobs, hubby went back to school for heavy duty diesel mechanics, he got a job but a few months after I eventually quit my job to stay home with our daughter, hubby got a 20% pay cut due to mandatory furloughs.

Bam! Our first smack in the face. We thought we were on track for buying a home. We thought hubby had a secure job. Nope. We ended up having to use the money we had saved for a house down payment to live day-to-day.

We felt blessed to have the savings, so this trial wasn’t completely life shattering. So we tried our best to remain positive and move past it. We looked for ways to progress my husband’s career so we could get out of the sinking sand.

Fast forward a year and hubby finally had the opportunity to become a police officer for the City of San Diego. Something he had wanted to do for a while.

Finally things seemed to be getting back on track! We had replenished our emergency fund. We had begun paying large amounts towards our debt. Then suddenly this past February my husband began to experience extreme pain in his foot.

Another long story short, after a few misdiagnosis, turns out he had a very serious infection in his foot and needed surgery. This infection was contracted at work (important to note for later in the story). His foot is doing great now, by the way.

But from the time his foot pain began and the time he was able to go back to work at full duty, it was almost SIX entire months before we were able to start putting money back towards our debt free journey!

Again, we felt blessed that hubby’s foot wasn’t as bad as it could have been. (There was talk about amputating his foot! Crazy!) We also felt blessed that we have really great health coverage that left us with only $100 copay.

Another blessing was that although we were not able to put extra money towards our debt at the time, we were still able to pay all our bills on time without having to dip into our savings! We feel so grateful that our Heavenly Father has blessed us so much, even in our trials!

Back on track!

So finally after hubby was able to get back to work, started working overtime again, we were able to put an additional $500 each month towards our debt! Though we were then six months behind schedule, it was nice to be making progress!

Then came a surprise! But this time, it was a fabulous surprise! The city had approved an extra uniform allowance to be paid out to officers! HUGE blessing for us!

We were able to use a chunk of the money to buy supplies for hubby’s work. But there was about $5,000 left over that we were able to throw at our debt! Check out my October 2016 One Income Budget Update to see exactly how we used that money.

THEN… just a few weeks later we received a check for about $2,000 from hubby’s work to compensate for his foot injury! Are you kidding? Are we not being looked after or what!?

That was it! That was the final amount we needed to finally make our very last debt payment and now our debt is history! 

As of October 20, 2016 our little Cooper family officially become debt free! It was a long debt free journey for us, but we stuck with our goals and made what temporary sacrifices were necessary in order to reach our ultimate goal of living debt free!

What we would have done different

1.The first thing we would have done different would have started our debt free journey much earlier! We went almost SIX years by just making minimum payments.

Think of all that interest we ended up paying! Ugh… okay YOU think about it and I’m going to focus on the fact that it’s over! Learn from our mistake and start your debt free journey NOW!

2. The second thing we would have done different was paid better attention to our interest rates. It wasn’t until we were about one month from becoming debt free that I actually paid attention to what our interest rates were on our loans.

I just assumed that student loans had the lowest rates. WRONG! Most of our loans had a higher interest rate then our car loan! Crazy!

This is also about the time that I heard of a company called SoFi . What they do is simple, help you lower your interest rates on your debt. Personal loans, student loans, and even mortgages.

SoFi has amazing fixed interest rates for refinancing your loans. I wish I would have found them sooner and then refinanced to a much lower FIXED interest rate! You can also refinance personal loans to help you save money using a lower interest rates.

A word of caution before you consider refinancing your loans! I heard this advice from Dave Ramsey and agree 100%. Before you decide to refinance any loans, there are three things you need to be sure …

• You only get to refinance one time. So be sure you are clear on what is happening with your money.
• You HAVE to get fixed rate. I repeat, make sure that you are getting a FIXED interest rate!
• Fixed rate needs to be lower then you total “aggregate rate”. Which is a fancy way of explaining the average interest rate paid on all your debt. So be sure that your refinanced interest rate is lower then the average between your current interest rates.

If you are in the same position we were, with your interstates way too high, or you flat out want to cut down on the cost of paying back your loan, you will definitely want to head over SoFi and see if you qualify for their amazing programs!

Bonus! When you go through my links for student loans and personal loans SoFi is going to hand you an extra $100! So, not only are you going to be saving crazy amounts of money with a lower interest rate, but you will automatically get an extra hundred bucks if you use my links!

What now?

The first thing on our list after paying off our debt is to start working towards buying our first house! I know… that means debt. Haha! Kinda counterproductive right?

We could go on and on debating how much we should save for a down payment or whether we should pay 100% cash for a home. Bottom line, after some serious prayer and research, here is what we are doing for our family.

The plan is to save $5,000 for purchase of a home. Using the USDA loan, it requires $0 down and all your closing costs can be wrapped into your mortgage. We will however, have to pay for any inspections.

After we have that savings set aside, the plan is to move onto Dave Ramsey’s baby step #3 and start saving 3-6 months worth of expenses. That number for our family will be a little over $13,000, which is for three months worth of expenses.

This task is going to take us some time… Especially since we will also be putting money aside to make home improvements (the house we are going to be able to afford here is going to be pretty sad to start off with!).

Also, our plan is to get a 30 year fixed rate mortgage BUT pay it off in 16 years. The goal is to be making enough money myself, here at Pennies Into Pearls, to be able to double down on our mortgage payments. Once we actually sit down with a lender at the beginning of 2017 I can give more updates on that!

There you have it! A complete breakdown of our debt free journey! Though from the time we started acquiring our debt it has been 10 years, we were actually able to pay off most of it in the last year!

We have decided to share this with you guys in hopes of motivating you to get out of debt! To live a financially free life! To be able to find what you value most in life and actually enjoy it!

PLEASE! Let me know if you have any questions about our debt free journey or our family’s plans for the future!

Thanks for stopping in and I will talk to you guys soon! xoxo

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