How This Couple Paid Off $52,000 in Debt (and Had a Baby) in 2 Years

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On the outside, Danielle and Jonathan (J) might look like the perfect couple: young, beautiful, successful.

But the truth is they were more than $70,000 in debt — mostly because of student loans.

Then, two years ago, they decided to do something about it.

“I simply wanted financial freedom, to be able to lay my head down on my pillow at night and not ever have to worry about where the next dollar would come from to pay an outstanding bill,” explains Danielle, who blogs under her first name only at The Pennies We Saved.

They’ve since paid off $52,000 of debt — while starting a family. Here’s their story as well as some helpful tips to pay off debt.

‘We don’t make enough money for that’

It was May 2015. J worked in business systems analysis, and Danielle worked in the insurance department at a large hospital. They made a good combined income — between $85,000 and $110,000 — especially given the low cost of living in Minnesota.

But they were $73,000 in debt: $60,000 from student loans and the rest from medical bills and car payments.

Their wake-up call came, as it usually does, in an unexpected place.

They were on vacation, driving along the coast in Danielle’s home state of California, when she turned to J and asked, “Can you imagine what it would be like to wake up every day and walk to the beach?”

His response: “We don’t make enough money for that.”

At that moment, they realized it was time for a change. If they ever wanted their surf-and-sand dreams to come true, they couldn’t wait any longer.

Their first step? Tackling that debt.

“We [had] been in debt for years, and we absolutely hated its guts,” Danielle writes. “So together, J and I created a goal: to become completely debt free (except for the house) by 2020.”

How they started paying off debt

When they returned from vacation, they created a budget and sold whatever they could. They also started following Dave Ramsey and using the debt snowball technique he recommends.

Here’s how it works: You write out your debt obligations from smallest to largest and focus on paying off the smallest one first. Although it makes more financial sense to pay off your highest-interest debt, this technique gives you an immediate psychological boost.

“I would only recommend the debt snowball for those who have a hard time waiting to see progress,” says Danielle. “It allows for the small and fast wins.”

Once they made some progress and no longer needed the thrill of small gains to stay on track, Danielle and J transitioned to the debt avalanche technique (which involves paying off your highest-interest debt first).

They continue to be “very frugal,” according to Danielle, who explains, “We like to keep a substantial amount of money in our savings, and anything beyond that we throw to our debt.”

They also have side hustles: She freelance writes, and he buys and flips bicycles. “It takes a lot of commitment,” she says. “But in the end, it will be worth it.”

Along came baby: Pausing debt payoff

Like many people in their generation, Danielle and J knew they wanted to start a family but hesitated because of their financial situation.

“We quickly realized that being financially ready for a baby would likely never happen,” she says. “So we simply changed the way we approached paying off our debt.”

Here’s what they did:

  • They continued to pay their bills but paused the debt snowball.
  • Instead of putting their extra money toward debt, they popped it into a savings account.
  • By the time their daughter was born, they’d saved the equivalent of 35 percent of their annual income.

“When you are expecting, stop the debt snowball and focus on your savings,” Danielle writes. “You never want to assume that you won’t face any financial hardships prior to or after your delivery day.”

After their daughter was born, Danielle quit her full-time position. She now works from 2 to 7 p.m. each weekday as a secretary in the health care system.

“The hours work out perfectly because we are able to arrange care for our daughter with family and friends rather than paying for daycare,” she says.

5 favorite tips for paying off debt

Danielle and J have paid off $52,000 of debt in two years — an unimaginable feat for most people.

But they aren’t done yet; they hope to extinguish all their debt (besides their mortgage, of which $150,000 remains) by the end of this year. They have about $21,000 to go.

They’d also like to retire by age 50 — just 20 years from now.

Currently, they’re investing only up to their companies’ matches in their 401(k)s. But Danielle says, “Once we pay off all of our debt, we will start looking into mutual funds. Shouldn’t be too much longer!”

Do you want to become debt-free like Danielle and J? Here are five of their favorite tips to pay off debt:

  1. Find an accountability partner: “Having the support of my husband keeps me extremely focused, especially since we are in this together,” Danielle writes.
  2. Tape your goal on walls and mirrors around your house: “It’ll keep the fire lit underneath you,” she says.
  3. Join debt-free living communities on social media: Danielle recommends Facebook and Instagram for finding inspiration from like-minded people.
  4. Read books and blogs and listen to podcasts: She loves The Dave Ramsey Show — especially the “debt-free screams.”
  5. Give yourself rewards: Danielle and J plan to take a long vacation when they finish paying off their remaining debt.

Although Danielle and J found Ramsey’s teachings to be invaluable, they don’t think any debt payoff technique is one-size-fits-all.

“Don’t feel pressured into following one method to a T,” says Danielle. “Find what works best for you. Tweak things around, but make sure you remain focused and make progress.”

And even if it feels overwhelming, don’t wait.

“Everyone has to start somewhere,” she says. “If you don’t start your debt payoff plan today, you’ll never get out of debt.”

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1 Important Disclosures for Laurel Road.

Laurel Road Disclosures

  1. VARIABLE APR – APR is subject to increase after consummation. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes.

2 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student Loan RefinanceFixed rates from 3.999% APR to 7.804% APR (with AutoPay). Variable rates from 2.480% APR to 7.524% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.480% APR assumes current 1 month LIBOR rate of 2.07% plus 0.91% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score
  2. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

3 Important Disclosures for CommonBond.

CommonBond Disclosures

  1. Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018.

4 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate DisclosureVariable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2018, the one-month LIBOR rate is 2.07%. Variable interest rates range from 2.72%-8.17% (2.72%-8.17% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.50%-8.69% (3.50% – 8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled, must be in repayment of their existing student loan(s) and must make the minimum number of payments after leaving school. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a co-signer who is a U.S. citizen or permanent resident. The co-signer (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a co-signer will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
  7. Average savings based on 18,113 actual customers who refinanced their federal and private student loans through our Education Refinance Loan between January 1, 2017 and December 31, 2017. The calculation is derived by averaging the monthly savings of Education Refinance Loan customers whose payments decreased after refinancing, which is calculated by taking the monthly student loan payments prior to refinancing minus the monthly student loan payments after refinancing. The borrower’s savings might vary based on the interest rates, balances and remaining repayment term of the loans they are seeking to refinance. The borrower’s overall repayment amount may be higher than the loans they are refinancing even if their monthly payments are lower.
2.57% – 5.87%Undergrad
& Graduate
Visit Earnest
2.80% – 6.38%1Undergrad
& Graduate
Visit Laurel Road
2.48% – 7.52%2Undergrad
& Graduate
Visit SoFi
2.47% – 7.99%Undergrad
& Graduate
Visit Lendkey
2.57% – 6.65%3Undergrad
& Graduate
Visit CommonBond
2.72% – 8.17%4Undergrad
& Graduate
Visit Citizens
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.