I’m so impressed with Elliot and Alison, and I am SO INCREDIBLY happy for them! I got a chance to ask to pick their brains about how they did it. Below is the interview. – Anna
The Story of How We Eliminated $70,000 in Student Loan Debt in Only 26 Months…
Hi, Our names are Elliot (28 years old) and Alison (27 years old). We’ve been married for 5 1/2 years, and we live in Boise, Idaho.
And Then We Saved: How much debt did you have in the beginning, and what kind of debt was it?
Elliot and Alison: We started our journey to financial freedom with $70,000 (yikes!) in student loan debt. I wish that included our graduate degrees, but sadly that number covered only our undergraduate programs.
ATWS: What was it that got you to the point of deciding to get out of debt? How did you feel right before you decided to get out of debt, and then right after making the decision?
E & A: After three years of paying the minimum payments on our student loans, we realized we had made very little progress overall. It was incredibly discouraging to feel that we would be buried under those loans for years to come. We realized then that something pretty drastic was necessary, and for the first time, our desire for true financial freedom outweighed our desire for short-term gratification. Once we changed how we thought about money, we were in the right place to do something about it, so in September 2012 we enrolled in Dave Ramsey’s Financial Peace University (FPU) program. We started FPU with a whole heap of student loans; nine weeks later, we still had a whole heap of student loans, but for the first time we also had a vision for what our lives might look like without those payments, and a real plan for how to accomplish it. For the past two years, we have worked that plan and clung to that vision.
ATWS: When did you start getting out of debt?
E & A: Our real journey started on our first day of FPU: September 12, 2012.
ATWS: So, what’s the secret? How’d you get out of so much debt in such a (relatively) short amount of time?
We freely admit upfront that almost all of our success can be attributed to our initial decision to take FPU. Is Dave’s plan fancy? No, definitely not. In fact, it’s about as basic as they come, but that’s exactly what we needed, something straight-forward and to-the-point. In a nutshell, here are the steps we took to plow our way through the debt:
1. We decided that we wanted to become wealthy and leave a legacy of wealth for our children.
2. We went to FPU and got on board with Dave’s plan.
3. We implemented Dave’s plan with our regular monthly cash flow (i.e. we cut down to a bare bones budget and used every extra penny to pay down debt).
4. We searched out some bonus ways (apart from our regular monthly cash flow) to bring in extra income.
5. We worked to improve our communication and refine our goals and vision for our money.
6. We began educating ourselves about financial success and long-term wealth management.
ATWS: How did you two work towards the goal together? Do you have any tips for getting on the same financial page as your partner?
E & A: For us, little progress in our personal finances was made until we aligned our goals, and for us, the first goal was becoming debt free. It’s been our experience that if spouses have competing interests or values with regards to their money, progress in either direction will stall.
ATWS: 2 years is a long time to stay committed to a get out of debt plan? How’d you stay motivated? Did you two ever want to give up?
In our Western culture, there is so much need for mindfulness and intentionality with personal finance. Some days we look around and it feels as if everyone around us is buying new things, better things, more advanced things. ALL THE THINGS. And what have we bought recently? Actually, we’ve sold things. And what we have bought have been used things and make-do things. There were so many days that we wanted to throw in the towel and go buy the newest iPhone (and a pretty case to go with it!), but we tried to remember that in the long-term, a fancy phone could never bring us peace or afford us the lifestyle that we ultimately wanted. Every once in a while, we would fail and buy some thing to make us feel better, but most of the time we were able to control our impulsive sides. To keep up motivation along the way, we read a lot about wealth management and debt repayment. Here are the resources we found most useful:
• The Total Money Makeover by Dave Ramsey
• Entre Leadership by Dave Ramsey
• The Celebration of Discipline by Richard Foster
• And Then We Saved (of course!!)
ATWS: What are the top tips you’d give someone who wants to get out of debt?
• The first tip we have is to change your thinking about money. Short-term gratification is a band-aid, it will never make you wealthy – just because you can afford the payment on a new car, doesn’t mean you can afford the car. See the difference? I know it sounds harsh, but that’s the kind of thinking that traps a lot people, I think.
• Our second tip is to establish the why – why are you getting out of debt? What’s the long-term goal? This is the higher level thinking that will keep you grounded when that gorgeous coat at J. Crew is calling your name.
• Our third tip is to get on a written budget. This is so important! As Dave Ramsey says, “A budget is telling your money where to go, rather than wondering where it went.”
• Our last tip is to make spending money a (small) part of your budget. We set aside $100 each month ($50/each) so that we could still go out with friends or buy a new shirt for work if we needed to. And if you like a good challenge, make it a game! Over the last two years, we have become incredibly resourceful about when and where to buy things – did you know that every week the Goodwill gets a shipment of new items that Target couldn’t sell on clearance? WIN.
ATWS: So, you’re debt free!!! How does it feel???
E & A: We became debt free on Thanksgiving Day 2014, very apropos! Truthfully, words can’t suffice. It’s a feeling of joy and privilege that no thing has ever provided us.
Combining relationship and money dynamics can be tricky. If you or your partner have student loan debt, have you two had a conversation about getting it paid off? If so, how’d it go? If not, is there something that’s holding you back from talking about it?
P.S. Here are 5 very good reasons to become a cheapskate.