Our Debt Payoff Plan: Paying Off Over $670,000 of Debt

It all started when my husband and I both took out student loans in undergrad. The loan balances weren’t so bad at that time. My husband graduated with about $20,000, and I graduated with about $35,000.

Then came med school and law school loans galore.

By the time I graduated from law school, my $35,000 had ballooned to a little over $104,000. My husband still had one more year of med school.

I had become fascinated with personal finance during our junior and senior years in college, and by my last year in law school I had stumbled upon blogs by people who paid off their student loans in a short amount of time, like Making Sense of Cents and No More Harvard Debt.

Although their debt balances weren’t quite as high as mine, I still found inspiration in their stories. I decided I would pay my loans off within two years of graduating. If they could do it, I could.

I was starting my first brand new, shiny real job at a Biglaw firm, and with the salary I was about to earn, it was definitely doable.

Life happened in the best way

Then, my husband (then-boyfriend) proposed, and I put all that debt payoff stuff on the back burner. We had a wedding to plan (and pay for)!

We spent that next year saving for our wedding. We refused to go (further) into debt for one day—even if it was a once-in-a-lifetime event that had to be absolutely perfect, as all the wedding vendors told us.

When we got married, my husband was in his last year of med school, and his loans were in deferment. When he graduated, though, he had over $316,000 in student debt. We signed up for the income-based repayment plan for his loans and filed our taxes separately so the payment would be based on his resident salary (i.e., the payment was $0). We continued paying the minimum on mine.

We took a couple of trips abroad (including our honeymoon) and visited friends and family all over the country. Because we weren’t going into credit card debt for our travel and could afford the monthly student loan payments, we thought we were doing well. We were even maxing our 401(k)s!

We started planning for children and were ecstatic when we found out that our first son was on the way about a year into our marriage.

We had already been thinking about buying a house because (1) rent was skyrocketing in Atlanta and (2) that’s the next step in a young married couple’s life. The baby sealed the deal.

Coming face-to-face with our debt

When we found the perfect house, we began the mortgage process. It was during that time that the full weight of our student loans hit us.

We needed FOUR continuation sheets for our mortgage application to list out all of the loans. I felt a pit in my stomach when I saw the balance. We knew we had debt, but we had never added it all up before.

$447,460.

Nearly half a million dollars in student loan debt. We were shocked at the full amount of debt we had.

(I should note that this balance also included about $3,000 on our credit card, which we pay in full each month, and about $13,000 on a car loan, which has since been paid off.)

You’d think that seeing that balance would have given us second thoughts about buying the house. You’d be wrong.

We signed the huge stack of papers at closing and moved into our mostly-bank-owned house, adding another $200,000 to our debt.

We continued paying minimums on our student loans, and our mortgage payment turned out to be lower than our rent. Because we could afford all of our payments and weren’t living paycheck to paycheck, we thought we had this money stuff figured out.

Turning point

Our son’s birth changed everything.

When it was time for me to head back to work from maternity leave, I started thinking about all of the time I spend working and consequently all the time I wouldn’t be spending with the baby. Of course, I wasn’t sure how things would be, but I knew it wasn’t what I want for our family.

Before my maternity leave, billing was constantly on my mind, especially if I left the office early for something. Looking forward, I knew I wanted to be able to go to our kids’ events or pick them up early when they’re sick or go on a trip without the nagging thought that I need to be billing in the back of my mind.

I talked to my husband about what our future could look like if we got on top of our finances. I reminded him of my original plan to pay my student loans off quickly and told him about all the financial accomplishments I had read about from my favorite personal finance bloggers over the years—becoming debt free, investing and building wealth, reaching financial independence, retiring in their 30s and 40s.

If they could do it, we could.

He was on board! We decided that we wanted to reach financial independence so we could have more control over our lives and more time to spend with our family. Neither of us is interested in the early retirement piece because we like what we do, but we can certainly get behind spending a little less time doing it.

At the end of 2016, we made a list of all of our debts and found that my husband’s $316,000 student loan had grown to $349,384 because interest continued to accrue.

Our total loan balance was $673,623. Ugh.

We started to pay extra on one of the highest interest loans each month, but our extra payment was only about $200. That wasn’t moving the needle on our mountain of debt. We needed a better plan.

The better plan

I had heard about Dave Ramsey before but always brushed his financial tips aside, thinking they were too conservative for my tastes.

After hearing about him again during this time, I decided to read The Total Money Makeover and was surprised to find that I agreed with more of his views than expected.

His core principles of being debt-free and focusing on one financial goal at a time are logical to me. I didn’t (and still don’t) agree with all of his teachings, but we began our own modified version of the Ramsey process.

We decreased our retirement savings to 6% (to still take advantage of my husband’s match). Then, we listed our debts from smallest to largest and started using the extra income that was no longer going to retirement, along with any other extra money we received, to begin paying off our loans in that order.

Related: How to Pay Off Debt Fast: The Debt Snowball Method

We got a nice head start from our tax refund last year and continued from there. We paid better attention to our finances and got more intentional with our spending.

My husband also started moonlighting at a clinic on weekends to bring in some extra money.

All in all, we paid off $47,029.45 in 2017!

What’s next?

My husband graduates from residency this year (2018), and his salary will nearly quadruple. We plan to continue living the same way—no lifestyle inflation here, please—and following our plan. The goal is to pay everything off in the next five years (although I’m secretly hoping we can do it faster).

Then, we’ll focus on our other financial goals, such as saving for college for the baby and any other kids we have, building wealth to leave a legacy for future generations, and financial freedom!

You can follow our journey here!

Do you have any debt? What are your favorite debt payoff tips? What are your ultimate financial goals?