Six months after the birth of our first child in 2010, my husband and I decided to get serious about our debt.
The plan: Pay off all our consumer debt and a decent chunk of our home mortgage.
What started out as a desperate attempt to stop the collection calls from the hospital billing office and freeing ourselves from thousands of dollars in credit card debt, eventually turned into a lifestyle that has helped define my entire attitude toward money.
We developed a credo: No matter how tough our financial situation gets, we can get tougher without taking on more debt. Every last thing I did in those years was linked to my desire to pay down debt, from baking my own bread to forgoing haircuts, and purchasing all our home furniture second-hand.
Even through a job loss and living on food stamps, we eliminated $35,000 worth of debt in about five years. If we did it, so can you.
Here are some of the lessons I learned while paying down debt:
There’s no better feeling than financial security
We paid off our $3,000 of consumer debt in the first year. Then we tackled our $12,000 hospital bills. After that, we built an emergency fund of 3 to 6 months worth of expenses. For us, that number was $10,000 and to be honest, it seemed absolutely impossible.
How on earth was I going to save up that much money and then just sit on it?
I set up a separate bank account for that cash, and made transfers every month. We started saving $200 per month and sold one of our cars to add to the fund. I even started a part-time daycare business in my home to help sock away extra cash. By doing those things, I eventually worked my way up to setting aside $600 a month.
Here’s the thing: I found that once we had our first $1000 in the bank, I experienced a new level of peace that I had never felt before. We were no longer one small disaster away from absolute financial ruin, and we didn’t have to worry about using credit cards to make up for any cash shortfall. That feeling of financial security motivated us, until we achieved our $10,000 goal 20 months later.
Long term financial goals require flexibility
My husband and I experienced a lot of financial ups and downs in the five years we spent paying down our debt. But that wasn’t necessarily a bad thing.
When we started out, we weren’t making much money. My husband worked in retail and I was a stay-at-home mom. We eventually had two more kids, and our combined income for a family of five was scarcely more than $30,000.
At one point during our journey, my husband was laid off for a few months, and we had to rely on food stamps to buy groceries. Still, because we were dedicated to living within our means, we didn’t fall back into consumer debt.
Those rocky times taught me how important it is to roll with the punches and be willing to adjust your methods to achieve your financial goals. Now I know to save more when times are good, so I can be prepared when times are tough.
Living within your means is (almost) always possible
Paying off $35,000 in five years may not seem impressive when you break it down: $7,000 per year. But for nearly four years of that time, we were living near the poverty line. We managed to save for an emergency fund and pay down debt with “spending fasts.”
Except for essentials, we’d go for weeks without buying a single item. We never went out to do anything that wasn’t free–parks, libraries, and walks by the river were our go-to options. We stopped getting haircuts, stopped going out to eat, stopped planning vacations until we were back on our feet.
I created a gratitude journal to remind myself of how good my life was when I needed perspective, because let’s face it, living frugally isn’t easy. But for most people living within your means is almost always possible.
Light at the end of the tunnel
Eventually my husband graduated from college and and got an engineering job. I finally decided to take the plunge to become a freelance writer, and put in the hours and dedication until it became a career.
We’re also tackling the remainder of our mortgage, and are even enjoying having a little extra money for the first time in our lives.
Now that we are in a better financial position, the lessons I learned while paying off debt comfort me. I know that even if my husband or I lost one of our jobs tomorrow, we would still know how to survive with very little.
You can too, while getting out of debt.
Gemma Hartley is a full-time freelance writer living in Reno, NV. Her work has appeared in The Washington Post, CNBC, Glamour, Women's Health, Redbook Magazine and more.