How One Couple Paid Off $127,000 of Debt in Only Four Years

how to pay off debt

Cherie Lowe had it all: a husband, a home, a healthy daughter, and another on the way. She also had $127,000 worth of debt. “We didn’t have a plan for our money,” Cherie says.

By 2008, the couple had $80,000 worth of student loan debt from undergrad and graduate school and the remaining sum was a mixed bag of car loans, credit card bills, medical debt, furniture they had on a payment plan, and a gap loan from when they were unemployed. But, with a second child about to come into the mix, the pair knew they had to get their finances in order.

Four years later, Cherie and her husband Brian tackled the $127,482.30 (but who’s counting?) of debt. Here’s how they did it.

How to pay off debt like Cherie and Brian

There were no financial advisors involved to explain how to pay off the debt or secret investment tips for Cherie and Brian. Instead, they followed a very basic strategy: Dave Ramsey’s Baby Steps plan. You pay off the smallest debt first, working your way up to the largest, regardless of interest rates.

“It became a game to us,” says Cherie. “Every week we’d ask ourselves what could we do to make more money and what can we do to save more money. We used the difference to pay off the debt. It’s not complex, it’s just not easy.”

The first step to reach that goal was choosing an actual start date to turn their financial lives around. “Having a second child was a crystallizing moment because you realize there’s another mouth to feed and college to pay for, and we couldn’t do that with our debt,” she says. “So, on April 2, 2008, we started our journey to pay off the $127,000.”

Setting the start date was just the initial tactic the couple used, but it was these little hacks and shifts that helped Cherie and her husband. “We thought it would take us 15 years to pay it all off, or just over seven if we were aggressive,” says Cherie. “But, with a bunch of tweaks in our lifestyle over a few years, we were able to tackle it in just four years.”

Today, Cherie dishes out advice on her blog Queen of Free. She also wrote “Slaying The Debt Dragon,” a book that shares all of the tiny budget hacks that made a huge difference.

If you want to pay off your debt, too, here’s her best advice.

1. Adjust your tax withholdings

“The very first thing we did was adjust our withholdings on our paychecks,” says Cherie. Rather than waiting for a lump sum at the end of the year, Cherie decided to get a little bit more in her paycheck every month to help pay off debts.

“We knew we wouldn’t get a few thousand dollar[s] refund once a year, but we got an extra $100 every month. That was money we could put towards the debt every month.” In fact, that one tip alone helped them knock out a small department store debt almost immediately.

And with the average student leaving college with about $37,172 in student loan debt, you’re looking at a monthly payment of $351. An extra $100 a month is almost a third of the payment right there.

2. Don’t eat out for a month

“While meal planning, in general, was certainly something that helped us save a lot of money, it was when we stopped going out to eat altogether that we saw a huge difference,” says Cherie.

A year and a half into their debt-slaying journey, Brian decided to give up restaurants entirely. Even if he had a business meeting, Brian simply wouldn’t eat. Cherie eventually joined in his endeavor until their debt was paid off.

“We saved around $240 a month not eating out and paid under $100 a week for our grocery bill when we were in the thick of paying off the debt,” says Cherie. “But, we still don’t go to a restaurant for the month of January to help us save some money and reboot after a crazier holiday spending season.”

She swears that seeing the success of such a small change can become addicting. Start with one month of not eating out and see how long you can continue the trend. “We still meal plan and will choose one day a week where we’ll go out for dinner,” she says. “This actually makes going out more fun because it’s special and you’re saving money.”

The key for how to pay off debt is always taking those savings and putting it toward what you owe.

3. Name your debt

Even Cherie admits this is a bit of a quirky hack, but it helped keep her marriage strong and debt-paying mission on track. “We decided to personify our debt and named it the dragon,” she says. “We would do things like write letters to the dragon and it was a good practice to realize we weren’t fighting each other, but we had a common enemy.”

Personifying the debt, according to Cherie, helps you get perspective and makes you realize that it threatens the person you want to be financially, personally and emotionally. “When debt has a name, you can attack him or her for negatively affecting your life,” she says. “It’s a weird psychological tool, but it works.”

4. Give up meat

Again, another unique tactic, but Cherie swears by this hack. “We gave up meat for the last six months of our debt-paying journey because we didn’t want that extra expense,” she says. “We could eat more effectively by doing grains, pasta, and veggies. So, whatever money was spent on meat went towards paying off the debt.”

Cherie started by just eating meat on the weekend, but toward the end gave it up entirely. She also realized that most fruits and vegetables kept her family fuller for longer and bulk grains, legumes, and beans were really affordable. Those bulk items were also a good source of protein for her family while they gave up eating meat. She got creative with her meals using these items, and it helped trim the grocery bill by $10 to $15 a week.

5. Budget bills with your utility company

While Cherie and her family were doing everything they could to reduce their utility bills (think wearing sweaters and turning down the heat or keeping everything unplugged), they decided to put their gas bill on a budget plan.

In the summer, their gas bill was only $18, but in the harsh Indiana winters, it would spike to over $100. So, they worked out a budget billing system with their utility company.

“Most utility companies (lights and gas) have some sort of budget billing,” says Cherie. “They will look at your bills for the calendar and will break it up into a set payment instead of basing your payment on usage. This means you get the same bill every month and they’ll usually give you a discount.”

She adds, “This helped us to know how to budget for our utilities every month so we could know exactly how much we had to pay off our debt rather than it fluctuating constantly.” The utility company will adjust your bill from year to year, but at least you have a steady amount you owe no matter what.

Cherie said there is a chance you could overpay slightly using this tip, but the electrical company will just adjust the following year. The same holds true if you’re underpaying for your usage. The main point is that it helps you maintain a more steady budget, which helps when trying to pay down debt on an aggressive schedule.

Learning how to pay off debts doesn’t happen overnight

“In the end,” says Cherie. “We just kept playing that game of what can we do to save money and make money. There were no major overnight overhauls, it was a slow process of incremental changes and sacrifices that led to huge results.”

She adds, “If you make smaller changes and keep them in place over time, you’re going to have a lot more success. Otherwise, you make too hard of shift in a short period of time. You can’t sustain a change that’s too dramatic.”

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