How We Paid Off $29,000 in Debt!
Money management is very personal, but I think it can be helpful to read about how others make their money work for them, so that you can find what works best for you!
Today’s post is a GUEST POST from reader Julie who shares how her family paid off $29,000 in debt on a $29,000 a year income!
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Six years ago, my family had just made an out-of-state move in order for my husband to take a new position with a salary of $29,000 a year. I also found a job in our new town making about $25,000 a year. Two weeks after I started my new job, however, our son needed to be hospitalized for three days. I lost my new job because it required me to work for 60 days before taking any days off: sick or otherwise. I chose my son.
My husband and I decided that I would not seek other employment right away, so we became a one income family with one child and another one on the way and owing a total of $30,000 on 4 credit cards. We were not even bringing in enough money to cover the minimum payments. We decided to pay off the smallest debt right away with our tax return, so we paid off $1,000 and had $29,000 to go.
Daunting to say the least, and we didn’t have money hanging on the tree in our backyard!!
For 2 months, I quit making payments on the credit card with the largest balance. (Note: This WILL affect your credit rating so only do this if it is your last option.) I called them at the end of those two months and asked if they could help. We worked out a 0% interest rate and a monthly payment that we could afford. Over time, I worked with the other two credit card companies to do the same.
We also became a cash only family. Our agreement with the credit card companies included closing the accounts and no longer using the cards. In order to pay those three credit card bills AND feed our two children, we had to start cutting back. This was not all immediate, but over time we:
- Nixed cable for netflix saving $53 a month.
- Moved, saving $400 month in rent.
- Started regular meal planning. ($50 a week early on, but we recently increased that to $70 a week.)
- Reduced cell phone by $40 a month. (Read here how to lower your cell phone bill.)
- Applied for a low income program with our land line company and reduced our bill by $25 a month
- Moved to a home with wood heat and cistern water. Electric and gas evened out, however, we have no water bill which saves us about $40 a month.
- Switched car insurance companies and reduced our bill by $40 month.
- Paid off the last of our credit card debt!!
So, compared to where we were six years ago, we have shaved off $1057 a month from our budget. (This number includes the monthly payments we used to be making on our credit cards.)
While we are still living on $29,000, we have enough at the end of the month to save for a few different areas and no longer live from paycheck to paycheck. I can not begin to describe how good that feels!
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Julie is a stay at home mom to 1 handsome devil, 3 little beauties and a wife to her husband of 10 years. She blogs over at Vibrant Designs, runs a small online business to help pay for the fun things in life, and loves to sew!!
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I think it’s great that you were able to make it work on one salary and get out of credit card debt! And I think it’s great that you are sharing this with others. I know how good I felt when I paid off my $29,000 mortgage in 1990!
Wow! That is awesome! I need to takea look at where I can shave of some extra spending and save money. Thank you for sharing!
you’re welcome 🙂 I love sharing our story!
I love to read about success stories! We too are working on paying off our mortgage but we still have 45 months to go….Being patient is the toughest thing for us. As you can imagine we want it done now, but we decided to sit back and wait and not rush our lives away, instead we will focus our time on other needs.
Thank you for sharing! When you say you moved, saving you $400 a month in rent, do you mean that you moved from one rental to another, downsized rental, or that you bought a house? I’m assuming rental, but I was wondering how you could save so much in rent!
Thank you!
HI Alexis 🙂
Yes, we were renting and we moved to a different rental going from $850 a month in rent to $450 a month in rent. It was a downsize for us (our children all share a VERY large bedroom). Our current home is unique in that as I mentioned it has wood heat and cistern water. Many people wouldn’t want to deal with these types of “utilities” but it works for us and brings the rental cost down. We are hoping to purchase this home in a couple years! thanks for the question!
Julie
Thank you for sharing! You got me motivated!
Love to share our story! Thanks for reading 🙂
Awesome story!!
Very inspiring story! Thanks so much for sharing, I was encouraged.
I absolutely love to share our story. It was so encouraging to read of others paying off debt back when we seemed to be drowning so I want to do the same for others now.