Money Management Basics: How We Paid off $8,000 Debt

We live in a generation where debt is the norm. I went to college and left with $40,000 worth of student loan debt and no degree. We have unpaid medical bills and loans from family members; I had a business that went under and I still owe final paychecks to the employees. This is the norm for the average American household. Raise your hand if this is you too?

We live paycheck to paycheck, and one small hiccup in our finances can financially ruin us – and has before. In April of 2016, on my 30th birthday of all days, we received an eviction notice. It was out of the blue, as we were actually current on our rent! It blew my mind and when I called the property management company, we were told that the owner had decided to sell the house to a family member and we had 30 days to move. I was flabbergasted, here I was celebrating my 30th birthday while my world crumbled around me. We had no savings, and we were sinking any extra money into our business to keep it afloat while waiting on payment for a large order. That payment was a month of work on our end, and in the end most of it went to paychecks. We were officially homeless with a sunk business all in the span of one week. To say it sucked would be  an understatement.

In the midst of our lives being turned upside down we started looking for ways to keep this from ever happening again. We did some research and ended up learning about a guy called Dave Ramsey and his biblically-inspired training, Financial Peace University. Dave’s system walks users through baby steps, and we are currently in what he calls, on his podcast, “step 0.5”: getting current on our bills. It has taken both my husband and I working 60+ hours per week for this past month but it is done. Finally. Our next baby step is saving up $1,000 in a local savings account for an emergency fund.

We will be documenting our journey and hope to help inspire others and we go kicking and clawing out of this hole we have found ourselves in. If you are interested in following our journey or even starting your own journey please feel free to learn along with us.

The baby steps are:

  1. Put $1,000 in an emergency fund

  2. Pay off ALL debt using the debt snowball method

  3. Save 3–6 months of expenses for emergencies

  4. Invest 15% of your income into Roth IRAs and pre-tax retirement funds

  5. Save for your children's college fund

  6. Pay off your home early

  7. Build wealth and give

Now, did I mention that we are a family of seven with an average household income of $30,000 a year? That isn’t much when you are feeding a large family, but we are doing it. Very slowly, right now, but I am hoping to continue and be out of the hole within five or six years, a challenging but attainable goal. We are currently $73,129 in debt with an average income of $3,500 per month, and this year we have paid off $8,000 of debt. That was a huge encouragement! and will help us go forward into this next year.

lifestyleE.S. Willis