Dan recently sat down with our friends, Chris and Amanda, to talk about their debt pay-off story for The Money Smart Nomad Podcast. They paid off a massive amount of student loans in less than four years with nothing but hard work, dedication, and sacrifice.
Check out Dan’s conversation with them here.
We’ve known Chris and Amanda for many years, but it was the first time that we heard a lot of the small details of their financial journey. These two are absolutely incredible! And they’ve got us super pumped to get tackling our student loan debt.
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Past money goals
Dan and I have accomplished HUGE money goals together in the past.
From June 2014-August 2015, we each worked hard to pay off all of our consumer debt, plus save up for our wedding and honeymoon in cash. And you know how expensive weddings are in Chicago….!! Or anywhere really.
Then from November 2015-May 2016, we were able to build up a full 3-6-month emergency fund.
Since then, a lot of things have happened, but here’s the short version:
1 – I was laid off.
2 – We decided it was a good time to explore a travel lifestyle where we could eliminate our rent and utilities budget.
3 – I took a lower paying job. Hey, at least it was something!
4 – An unexpected 3-night stay in the hospital…. Cha-ching!
5 – Dan quit his 9 to 5 to open up his own financial planning firm.
6 – Our car broke down, the warranty voided, and we had to buy a new one.
7 – I was fired from my new job. A SERIOUS blessing for my health & well-being, not so much for our wallets!
8 – And last but not least… We are too stubborn to give up on our dreams of being our own bosses so we decided we would pour all of our energy into our businesses rather than applying for jobs.
Risky?! Heck yeah. But that’s what was in our hearts.
Needless to say, for the past 1 ½ years, we’ve relied heavily on our emergency fund to get us through all of these life changes, transitions, and hardships. We also haven’t been able to accomplish ANY money goals since May 2016 with all of this happening.
And ya know what?! That’s totally fine in my book. We took some time in 2016 and 2017 not only to roll with the punches, but to change our ENTIRE lifestyle, pursue working for ourselves, and travel full-time.
That’s a lot! We’ve been accomplishing different goals of ours and creating a life we love. We won’t regret it!
There is just something really powerful about accomplishing a big goal together as a couple, isn’t there?! Even if you haven’t experienced it personally, you can FEEL it in stories like Chris and Amanda’s.
Hearing Chris and Amanda’s story re-ignited our itch to set another big money goal in 2018. We want to pay off our student loan debt FOR GOOD, as soon as possible.
We have about $110,000 worth of student loans. Yep. $110,000…. and we’ve decided we want to pay it off by the time we’re both 35. That gives us a little over 4 years to pay off all this debt.
Debt-free: 2022, baby!
How will we do it? Hang on….
Our Big Why
You’ve heard Dan reference this in past episodes of the podcast, and you’ll hear Amanda talk about it in the newest episode, too.
Four years is a LONG TIME to stay focused, disciplined, and wait to reach any goal, which is why it’s important to clearly understand the reason why you’re pursuing your goal in the first place.
When times get tough, you get tired of telling yourself no to certain things, you get discouraged, you get tired of it all, etc., you can look back at your ‘why’ to remind you of the big picture. It’ll help you remember that your small sacrifices now will be completely worth it in the end.
So what’s our big why?
The minimum payments on our student loans are holding us back. They’re holding us back from the FREEDOM to pursue hobbies we’d like to try, visit our family more often, travel destinations we want to see, etc.
We want to create a stable future for ourselves and for our *future* children, live life on our own terms, and the financial freedom to create whatever that looks like for us down the road.
We want to help people see that tackling a huge amount of debt with a small income can be done and that it’s worth the sacrifice, even if it seems like it’ll take forever.
The reasons go on, but those are the main ones.
Reaching Our Goal
We’ve already eliminated huge living expenses like rent/mortgage and utilities through house sitting, but there is definitely more expenses we can cut back on. In particular, our grocery and entertainment categories.
And while we’re only making a few thousand dollars a month right now, we have specific steps in mind to increase our income throughout 2018.
Expand our Virtual Assistance Business
This business has been our bread & butter in the past 6 months, and it’s actually done really well for us very quickly! We had clients within the first month.
There seems to be a big need for Virtual Assistants that understand the Financial Planning space, so we plan on adding part-time team members this year so we can expand the business and service even more clients, which will obviously bring in more revenue.
Consistent Income in the Financial Planning Business
We actually invested in an extensive and robust marketing program to help us grow Dan’s Financial Planning firm this year.
The biggest goal for us with this business is to start making consistent, regular income with it. It is intended to be our main money maker eventually, but it’s just not there yet.
Cut Back on Even More Expenses
Yes, we’ve eliminated our rent and utility payments through house sitting. We’ve also eliminated all monthly payments that aren’t necessary and limited gift money, entertainment, personal money, etc.
We hardly buy clothes, we don’t spend money on junk, tools, fancy whatever…you get my point. But we’ll admit, we consistently are over budget on groceries and entertainment money!
Which had me thinking about how we can solve this problem…
In the spirit of getting creative to achieve this huge money goal of ours, I thought it would be fun (and effective) to do some 4-Week Challenges throughout the year to focus on different ways of cutting back or earning more.
Specifically, over the next four weeks, I really want to try to reduce our grocery and entertainment money spent. So I came up with 3 goals for a “Frugal February”:
1 – Empty the pantry
I’m not talking about throwing away any food.
Do you notice how much food is actually in your home at any given time?! Random cans of beans and soups, boxes of pasta, meals you left in the freezer that you forgot about, etc?
The ingredients you bought with the intention of making certain meals never were made, so they just sit in the pantry for a while.
Please tell us we’re not alone! It happens to us quite a bit. And it accumulates quickly, even though we move often!
To start, the goal is to see how long Dan and I can go making meals with only the things we have in the house right now. I bet we could at least eat for another two weeks! There is plenty of food here, and we should take full advantage of money already spent on groceries!
2 – Stick to a $300/month budget for groceries
This was one of the ways Chris and Amanda used to help pay off their debt aggressively.
There’s just one problem. Dan and I spend SO much money on food every month, and we’ve had a really hard time trying to get that budget down.
We like to eat healthy and we like making new recipes that usually require all sorts of ingredients. So maybe we limit that to once or twice per week and stick to really simple, easy meals during the week that can keep us in line with $300/month.
3 – Use CASH for entertainment money
Like I mentioned earlier, this is our most commonly over-spent category in our budget. If you use cash to make purchases, though, it’s impossible to over spend because you only have so much money on hand!
Whatever we allocate for the month (which will be very minimal since we want to be super aggressive with student loan debt), we will take it out on cash and plan activities accordingly.
I think it’ll be a fun challenge to find free activities for us to do here in Durango. And the good thing is our ski passes and equipment are already paid for so that’s a fun activity we can do on the weekends without needing to spend money. Now if we could just get some snow here in Colorado….!!!
What kinds of creative things have you done to help you aggressively pay off debt? We’d love to hear your ideas!
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