How to pay off $96,000 of debt in 2 years

Today's post comes from the amazing Millennial Boss. J is a 20-something side-hustler who lives in the Pacific Northwest. She works in tech by day and is a blogger and podcast host at night. Check out her podcast, FIRE Drill podcast, for financial inspiration and early retirement strategies. She also blogs at millennialboss.com about career hacking and student loan payment strategies.

Somehow I managed to rack up nearly $100,000 of debt in my mid-twenties

I use the term “somehow” because, from the outside, it looked like I was doing pretty well for myself.

I had been crushing my career goals and was recently promoted to management at a Fortune 100 company. I had a six-figure salary, an amazing boyfriend, a new home, and a dog.

I financed an SUV and all of the furniture for my house. Besides that little bit of debt though, I should have been good, right?

I was shocked one day when I added up all of the money that my boyfriend and I owed together. Between his student loans, my student loans, our credit card debt for the furniture, my car loan, and other credit cards, we owed $89,000.

Then, I considered that my parents probably took out loans for my education (called ParentPlus loans) and the chances that they had paid back those loans already were slim. They had their own financial struggles and this was at the bottom of their list.

I called them and found out that they had taken out $7,000 for my education and hadn’t yet paid back the debt. It also was at a whopping 9% interest rate. Ouch!

I added those loans to my total and determined that my boyfriend (now husband) and I were $96,000 in debt.

That number was shocking. I immediately set a plan to pay off all of the debt ASAP.

My plan to pay off my debt

1. Figuring out who pays what

First, I must mention that my plan always involved my boyfriend and I paying off the debt together. We owned a home together and it was only a matter of time before we got engaged.

That being said, I was more able to contribute to the debt payoff. I had a job in technology that gave me more disposable income to hit our payoff milestones. It would have taken longer if we split everything 50/50. And I was impatient.

I did wait until we were engaged before I paid off his student loans. Besides that though, I paid off any debt we had together and my own debt from my own bank account.

I don’t regret this choice and it was the right choice for us. I don’t think this is the right choice for every couple.

It does make our lives easier though since we can move forward together without being held back by someone’s debt.

2. Getting others on board

My boyfriend was 100% supportive of our plan to pay down the debt. He didn’t suggest expensive outings and helped us insource as much as possible during this time.

My parents gave me the password to their ParentPlus student loan account after some negotiating (they didn’t want me to pay them back but at the same time, I was in a better place to pay than them and I felt strongly about paying my own debt).

I had the most difficult time with cross-country friends from college. I missed out on a few girls' weekends, which led them to stop inviting me places and get frustrated with me.

I also “cheaped out” in their eyes on a bachelorette party, when I chose to stay in my home and commute to the party instead of splitting an expensive Airbnb downtown.

I don’t regret those decisions because I am debt free and I am slowly making appearances on the girls' trips and other wedding-related activities now.

During that time though, I faced a lot of pushback and some direct text messages where my friends thought I wasn’t valuing their friendship.

3. Creating a burndown chart

Once I had the goal set, I created a simple burndown chart in Numbers (the Mac version of Excel). Essentially it divided the total amount of debt by the number of months I gave us to pay it off.

This chart gave me a target to shoot for each month. The target was actually pretty impossible to hit after 3-4 months in, and I’ll share why.

4. Selling everything I own

It was easy to hit the monthly targets in the beginning because I had years of consumerism to shed.

I was young (only mid-twenties) so anyone older than that probably has even more accumulated stuff to sell off.

I started with the big ticket items (our second TV, our second couch, guest bedroom furniture, etc).

I sold them on Craigslist and made $4,500 in 1 month. I had a bit of a strategy to how I got the most money on Craigslist, detailed in this post here.

I also sold my car. Now, you wouldn’t believe the amount of people who had convinced me to buy the car in the first place. From coworkers to parents to friends, people get fired up when other people buy cars.

When you’re selling a car, on the other hand, everyone tries to convince you to keep it. You’ll hear things like, “the hit you’ll take on depreciation is not worth it” or “just keep it, you won’t get enough money back to make it worth it.”

I had the strength to block out the naysayers because I did the math.  My $387 car payment actually cost me $750 per month when you considered all costs that went with the car (gas, maintenance, insurance, registration fees included).

Yes, I knew that selling a car after just buying it 15 months before meant I would take a huge depreciation hit and I would never get the money back, but more importantly, it would stop the bleed.

I could take the hundreds of dollars saved each month and put that towards debt.

It was a no-brainer for me.

Here is my post on how I got the most money possible for my car (including how I ordered the exact paint color online to touch up scrapes myself) and a second post on my reflections on being car-free one year later.

I also donated hundreds of items of clothing in this process, to both lower my taxes at year-end and to embrace a more minimalist lifestyle.

I don’t think that part worked though, despite eliminating hundreds of items of clothing every year for the past 3 years, I still have more clothes than fit in my closets.

I must have gone absolutely wild during my early twenties buying clothes (and kind of remember that).

I’m much more mindful to not add to the mess going forward.

5. Figuring out my problem areas

It got really hard to hit the monthly debt pay down targets after I sold as much as I could.

I was heavily influenced by the blog nomoreharvarddebt.com and read that Joe, the author, liquidated his 401(k) in order to tackle some of his debt.

I didn’t want to do that, and given the bull run we’ve seen in the past few years, I’m glad that I didn’t.

This led to me figuring out where I could cut back on my monthly spending.

We already had roommates so we couldn’t add a roommate to reduce our mortgage (this was one good habit we had implemented when we bought our house).

We did spend a ridiculous amount on eating out at lunch. I went to Chipotle almost every day.

I started bringing my work to lunch instead. Admittedly, my lunch was typically bad. I would make a ham sandwich and put some chips in a bag and call it a day.

That being said, it was cheap.

I also cut my Starbucks habit by making coffee in the morning before work. And by “making coffee” I mean that I bought the tubs of Starbucks unsweetened iced coffee that you can buy in the grocery store for $5 and also bought almond milk to put in it.

I would put that in a tumbler and drink it on my drive to work.

Now for many people, that’s still “buying coffee” but the $5 tub lasted me a week and a half, maybe more depending on how much coffee I was drinking that week.

I could have cut it down further by making hot coffee and icing it myself if I wanted.

6. Increasing my income

After a few months, I hit a certain point where I couldn’t hit the debt pay down targets without increasing my income drastically.

I already made six figures and was a manager at 25 years old in a Fortune 100 company.

I couldn’t really go up from that in my market, at least in my twenties.

I had to move to the heart of my industry, Silicon Valley, to get the career opportunities and higher pay.

The move would be good for my career as well.

I attended a conference for women in technology and made a connection that led to a job at an incredible company in Silicon Valley.

After a bit of deliberation, I decided to take the job. I was incredibly happy in my job at the time, and loved my boss and the team I managed, so this was a hard choice for me.

My boyfriend also had to leave his job and start over in his career too, so this decision wasn’t easy.

7. Making sure I didn’t increase my cost of living with that income

I worked at the new company for a year and found that my income increased, but so did my cost of living.

My boyfriend and I had to make sure that we chose an apartment and a lifestyle that did not cost any more than our previous lifestyle - so we could apply the difference to the debt.

This led to us living in a tiny little apartment that was nowhere near as nice as our spacious and beautiful home.

We could have easily “afforded” a nicer apartment but we were clear with each other on our goals.

We were able to accelerate our debt payoff with that decision.

8. Not feeling sorry for myself

We paid off the debt during the time that we got engaged and married. This was either the perfect time to pay off debt or the hardest.

Women in America are encouraged to think of their weddings from a young age. There is also a lot of peer pressure regarding the engagement ring and the wedding.

I had to be strong enough to resist societal expectations and go my own way. My husband had to do the same.

For example, my husband proposed with a moissanite engagement ring (the ultimate diamond hack).

He felt a bit weird going this route but I had recommended it to him ahead of time.

I couldn’t justify spending thousands of dollars on a stone, especially with my own views on the diamond industry. Learn more about my engagement ring here.

We also paid for our own wedding and budgeted $15,000 for it. I had many tearful fights with my Mom who envisioned a different wedding than we had planned. I got so upset one night that I swear I caused my appendix to burst. I was rushed into surgery.

I couldn’t really receive help in the wedding planning process since most people don’t understand or really “get” what it takes to pay off so much debt.

That is probably why most people are in debt.

Both my husband and I were strong enough to withstand difficult conversations with friends and family members regarding the wedding.

Luckily, my sister understood what we were doing and was able to help me find a venue within budget and tried to reason with my Mom regarding the guest list.

My Mom had even offered to pay for part of the wedding but 1) I knew their financial situation was not good and they couldn’t really afford it and 2) I don’t believe weddings should be wasteful no matter who is paying.

I think many young people take money from their parents for weddings or rack up credit card debt for an engagement ring without thinking.

I am glad that we got through a potentially very expensive time in our lives, without adding to our debt.

Other young people aren’t so lucky.

What’s next?

In January of 2017, I logged into my parent’s account and paid off the $7,000 of ParentPlus student loans. We had just married the month before (and had an awesome frugal Game of Thrones inspired wedding).

Paying off the debt was exciting and luckily we hadn’t liquidated our 401(k)s so we weren’t starting at ground zero with savings.

We decided to keep up our frugal lifestyle and apply the disposable income each month towards savings. We both now max our retirement accounts and invest in after-tax brokerage accounts for additional savings.

We also both have multiple side hustles that produce passive income for us that goes straight into our savings.

Although we both like our jobs, we will save so that we have the option to step away from traditional work in our thirties.

It’s crazy how fast the savings add up once the debt is gone. It’s also amazing how great it feels to be debt-free.

For more debt pay down inspiration, check out J’s blog Millennial Boss.
Also, check out her podcast, Fire Drill Podcast, on iTunes or Google Play. She co-hosts with another millennial female and together they interview six-figure side hustlers and early retirees to learn how they did it.

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