Here is a quick history on what my husband and I did to pay off over $70,000 in debt in a year and how I quit my job even though I made over 2/3rds of our income!
Our debt:
- Honda Civic $19,300
- Student Loan 1 $3,400
- Student Loan 2 $22,780
- Home Equity Loan $24,560
Total: $70,040
Why Pay Off Our Debt?
I wanted to start a family and really wanted to work part time from home. When I added it all up and looked at the short time frame that I wanted to do it in, I cringed. Our taxes showed we made about $130,000 a year. It was great money. But I wanted to quit, and I made $100,000 of it. It almost didn’t seem possible, but I knew the first step would be to become debt free.
I read Dave Ramsey’s Total Money Makeover. And first thing we did was sell our two month old Honda Civic.
We traded it in, and only lost $1,000. As a trade we bought a ’00 Jeep Cherokee for $7,700. I was amazed at how little we lost since I was so scared we would lose so much more. They say you lose a ton of money as soon as you drive it off of the lot, well at least in our case it was only equal to $1,000!
Our debt was then down to $59,440.
The Dreaded Budget
We sold the Jeep CJ7 with 36″ tires that was my husband’s baby. He worked on it for hours and was part of our local Jeep club. It was worth about $3,000.
That allowed us to create our baby emergency fund of $2,000 and start to pay off the smallest student loan.
A month later we found out we were pregnant. It was March ’06 and we were due in December. Our countdown had started!
Our debt was down to $55,440.
I never wanted to have to budget. We started to budget and quickly realized we needed to cut it to the bone. I never thought we were crazy spenders, but it all adds up quickly! We canceled cable, and lowered our cell phone plan. Our budget only included the bills, $25 each of our own spending money, and necessities.
As anyone knows who has tried to do a budget, it is hard! Sticking to the grocery budget was the hardest in the first month. We guessed that we should only spend $300 a month on groceries.
I never had to count how much money I was spending before. I tried to keep a calculator in the store with me but I felt dumb walking around the store with a calculator. I felt like it everyone was looking at me add up every purchase, and sometimes I would accidentally hit the clear button. It was so frustrating.
Eventually when my husband and I both went shopping together, we started playing a game to see who could add up the items in their head and guess the total grocery bill. It became a challenge to beat my husband. I have to admit playing a game is a lot more fun than just sticking to your budget!
We never went out to eat, but instead found that some of our friends felt bad for us and would pay for us to go to dinner with them. I hated to feel like we needed charity and I told them over and over that we had the money we just didn’t choose to spend it on going out to eat.
Where could we find extra money?
While we made good money, I had a tight time line. Since I wanted to be home with my son and we only had so many months to do it in, so we did everything possible to make extra income. I found out that if I worked on site with my job I would make $40 extra each day so I traveled as much as I could.
I traveled so much in fact that I ended up over doing it. I was working almost 70 hours per week when I was 7 months pregnant. I couldn’t get out of all of that work because I had gotten myself into it.
I actually had to get a written doctors note asking to keep my hours at 40 per week for medical reasons. That was the only way I could get my company to help with some of my work.
My husband has a very sporadic income as a performing artist. He started doing website design and graphic design to make extra money. He took any job that he could and was working literally day and night on extra projects.
(He worked like a dog for those months and dealt with a very pregnant wife so I commend him at what a great job he did!)
Our tax refund came back, we had three yard sales that summer, we sold a kayak, a wine rack, my weight bench and more on Craigslist. We cleaned out every closet and sold random things on Ebay. We started to realize how much stuff we had, and how much stuff we didn’t need. We thought we were minimalists before.. but we were wrong.
Find out the how I quit in the second part of ‘How I Paid Off Over $70,000 in a Year and Quit My Job – Part 2″
Financial Samurai said...
Wow, WELL DONE! What a fantastic leap of faith since you accounted for 100K of the 130K! I’m so impressed with your planning and your courage.
I need some more courage….. maybe i will get it when I decide to retire in 8-10 yrs.
Thanks for your article and welcome to the challenge!
Best,
Sam
.-= Financial Samurai´s last blog ..Why Are President Obama And The Democrats Against Charity? =-.
Jaime said...
It’s so much easier to talk about once it’s done! I remember reading everything I could about everyone else’s story and figured my story might be able to help too.
I feel like you can never have enough courage, and that’s why the leap of faith is so hard. It’s that turning point that makes you go through with it anyway that’s the tough part.
Thanks so much for welcoming me to the challenge. Under 2 million Alexa ranking here I come!
Warmest,
Jaime
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Ryan said...
I love the multi-faceted approach to paying off your debt. Too many people just look at their standard paycheck and wonder where the money will come from. Often, it won’t come from there – it needs to be sourced through extra jobs, selling stuff, etc. You guys did a great job! Now you get to do the more fun job of watching your money multiply.
.-= Ryan´s last blog ..How to do a Home Inventory =-.
Jaime said...
Thanks Ryan! When you are living paycheck to paycheck it makes sense that you won’t be able to squeeze a lot out
Oh and I just read your post, How to Become a Millionaire the other day and it is great! I loved your quote, “It’s only a matter of time.” That is exactly why I started this site.
Thanks for reading!
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Marjory said...
Stumbled this weblog post, bless you.
Jaime said...
Thank you so much Marjory. It makes my day to see that you liked it
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1milchallenge said...
That’s an amazing effort! Good on you. Only loosing $1,000 on your car is brilliant too!
Love your blog btw.
Jaime said...
Thanks for stopping by! I enjoyed reading your blog too
Good luck with your book!
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DAVID PHILLIPS jr said...
THERE EVER ONE AND Jaime Tardy
I HAVE READ YOUR STORY AND THANK YOU.I LIVE ON SSI AND I ONLY CAN MAKE $600 A MONTH BEFORE THAT TAKE ANY THING OUT.I HAVE A LOT OF BILLS TO PAY.MY INCOME IS SET.I ONLY GER $674. A MONTH AND I HAVE TO GO TO THE FOOS BACK.I DON’T GET ANY FOOS STAMPS.I GET TO MUCH MONEY.SO HOW SOME ONE LIKE ME CAN DO WHAT YOU DO Jaime.I DON’T HAVE A CAR AND I HAVE TO LIVE IN A APT PLACE.I LIVE DAY BY DAY.SO CAN YOU HELP ME OUT.
THANK YOU
YOUR FRIEND
DAVE P I AM 52 YEARS OLD AND NOT MARRED. HAVE A SWEET GIRLFRIEND.
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Three said...
Great job jaime. You’ve set a good example that everyone should follow to free themselves from debt. Did you, in any way, feel bad at first for giving up things that you value? Just want to check because i know some people who are hesitant at first. They tend to cultivate this hesitance and end up achieving nothing on their goals. I would rather follow your example than suffer from having too much debt and end up looking for means to repair credit rating instead of enjoying a stress-free life.
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gml said...
Just got my job that was going nowhere reduced to two days a week, so I am now ready to move my business forward and make it happen. Any suggestions?
Jaime said...
Start listening to the millionaire interviews. They give great advice, and talk about when they first started. Then I’d find a mentor, someone who is already doing what you want to be doing and talk to them. Best advice I was ever given! It’s how I became a coach.
Good luck!