Kristin Moras


 I'm Kristin, author of The Mulberry Patch. I write about living a slow, simple, and sustainable lifestyle amidst a fast paced modern world. 

How We Paid Off $50K+ of Debt in ONE Year and Changed Our Life | Part Three

How We Paid Off $50K+ of Debt in ONE Year and Changed Our Life | Part Three

Over the past two days, I’ve talked about how my husband and I accrued over $50K in debt and what we learned as a result of it. Today I want to share with you the game plan we came up with to crawl out from under our debt mountain.

What originally started off as one post on the subject has quickly turned into three. I realized that simply sharing the steps we took to eliminate debt wouldn’t be as helpful unless you understood the context behind how we came up with our game plan.

So if you haven’t read our story yet, or don’t really understand how debt works on a basic level, be sure to check those posts out first!

Again, I want to note: I’m not a professional financial advisor. If you find yourself in a serious situation (i.e. facing bankruptcy, managing debt for business purposes, etc.) you should contact a professional. The purpose of this post is to share with you my family’s story + what we did to change our situation in the hopes that you might find motivation, inspiration, or guidance on your own journey.

The Debt Free Game Plan

STEP ONE: Read about Dave Ramsey’s Total Money Makeover

If you are struggling with debt and managing your monthly payments, I highly encourage you to check out Dave Ramsey’s Total Money Makeover. You can even find it at the library FOR FREE. Here’s a quick summary of what you’ll learn:

  1. Pay yourself first. Before you do anything save at least $1000 for a rainy day fund.
  2. The Debt Snowball: Throw all of your extra money at your smallest debt first and then work your way up to the largest.
  3. Finish building up your $1000 emergency fund.
  4. Start investing in retirement.
  5. Start investing in college funds.
  6. Pay off your mortgage.
  7. Build wealth.

Dave Ramsey is a bit of a wild card. People either love him or hate him. We happen to fall into the former camp. You can keep reading this section to find out why, or skip ahead to step two to see how we put his process into practice.

Here’s the breakdown:

Why people love him: He’s helped 4.5 million people either get out of debt (including us) or learn to manage it more effectively. He also has really great insights into the psychology behind how we end up overwhelmed by debt to begin with.

Why people hate him: I’ve read a TON of financial advice books and almost every single one of them says to pay your higher interest credit cards or loans first. Dave Ramsey says to ignore that. He wants you to pay off your smallest loans first and then work your way up to the largest one, regardless of interest rates. He calls it the Debt Snowball and most websites I’ve read are strongly opposed to his method.

Why we love him: His Debt Snowball method was the ONLY process that made a difference in our finances.

We’ve tried paying the higher interest loans off first and it never worked. The reason? Most of our highest interest loans were the largest and when we would make a payment it felt like we weren’t making a big enough dent. Eventually we would get disheartened and end up making the minimum payment to save a little extra money for other things....

Which leads me to the next reason we love Dave Ramsey: His books, podcast, and website helped us understand that if you don’t buckle down, pay your debt, and understand the true value of your money, you’ll be stuck in a vicious debt cycle for a long time.

Once you’ve read through Dave’s philosophy on managing and eliminating debt, you’re ready for…

STEP TWO: Download YNAB (You Need A Budget)

One of the first things David and I needed to do was set aside at least $1000 as a rainy day fund, but honestly we felt like we had no breathing room in our pocket book to do so. That’s because we didn’t have a stable budget.

We knew how much our necessary expenses (rent, car insurance, etc.) were and luckily we always paid those first, but after that we would just spend our money until the bank account was down to almost $0.

So what was our solution? A nifty little app called YNAB (You Need A Budget).

It costs a little bit of money now (we downloaded a free promo version), but I can honestly say it’s worth every penny.

The great thing about YNAB is that you can download the app on your computer for detailed budget keeping (it shows you charts and breakdowns of your spending habits), but there is also a great app version for your phone so that you can update your purchases on the go. The phone app was what made all of the difference for us because it created a sense of accountability to actually follow our budget.

What I love most about YNAB is that you can specify a timeframe and a budget category to see exactly how much money you’ve spent in each area. After one month of using YNAB, we realized that an absurd amount of money was being spent on entertainment… money that we could have been using for savings or paying off debt.

After two months we were able to save our $1000 rainy day fund and free ourselves up for the next part of our debt free game plan.

STEP THREE: Pay off credit cards and manage high monthly student loan payments.

OK. If I can be brutally honest here, this part of our plan sucked… big time. We read Dave Ramsey’s Total Money Makeover, set-up our budget, set aside a tiny (but comforting) emergency fund, but then we needed to commit to actually paying off our debts.

What did paying off our debt look like?

It meant using David’s income for paying our mortgage, utilities, car and life insurance, and groceries, while my ENTIRE paycheck went towards paying off debt (our health insurance was automatically deducted from my paycheck every month).  

That’s right. The whole thing. We didn’t eat out, go to the movies, buy clothes, or do anything else entertainment related. The only exceptions were purchases or expenses related to my pregnancy. We also knew that “all work and no play makes Jack a dull boy,” so we did budget $20 a month to go on coffee dates or for us to eat out with a friend.

After a whole year of living this way we managed to pay off my credit card, two student loans, and a credit card that David and I shared.

By dedicating my paycheck exclusively for paying our debts, it helped us manage the insanely high monthly payments from our student loans. The two loans I paid off, even though the interest rates were lower than my largest ones, helped save us an extra $200 a month.

Instead of pocketing that money like we would have in the past, we immediately re-budgeted it for our other debts, which helped speed up and manage those payments.

STEP FOUR: Minimalism and identifying need vs. want.

This step goes hand in hand with step three. We had to understand and accept our needs versus our wants before we could change our habits and make a significant dent in our debt. It meant asking questions like: Do I need to spend $25 on this cute Calvin Klein shirt? Or should I save that money for gas or paying off a loan?

Committing to living a simpler lifestyle and exploring ways minimalist living helped other people played a huge part in our journey towards becoming debt free. I can’t remember who said this or where I heard it, but this simple phrase has really helped me stay focused and decipher what my needs are versus my wants:

“Instead of saying ‘I don’t have [time, money, energy] to spend on this,’

say ‘it’s not a priority for me. Then see how that makes you feel.”

I use this phrase often, especially in regards to money. If I’m thinking of spending money on something like clothing, I then say to myself “I don’t have money to spend on debt… It’s not a priority for me to spend money on debt.” That usually refocuses me and helps me put into perspective where I want to be financially.

STEP FIVE: Build Wealth

Dave Ramsey suggests doing this step last in your debt free journey, but we’ve changed it up a bit and are trying to focus on this now. When I say wealth, I don’t mean “I want to be filthy rich with a huge house, 3 cars, and all of the latest and greatest gadgets at my fingertips.”

What I really mean is that “I want to be debt free and mortgage free, with enough liquid assets available to enable me to live a comfortable life.”

A big move towards accomplishing this was sitting down and looking at everything we owned/were paying for. Some big ticket items that stood out were:

  • Our mortgage: We realized that we didn’t want to own the house we were in forever. We had bought it because we thought it would be a fun fixer-upper project. However we soon realized that (1) it didn’t leave room to grow our family and (2) it was a money pit with our new and improved budget system. So we made the hard decision to sell. We used the profit from the sale of our house (we got full asking price) to place a down payment on a new home (one that would accommodate our growing family) and then used the remainder to immediately pay off three more student loans.
  • My elderly father’s care needs: My dad was diagnosed with Lewy Body Dementia last year and his care needs increased rapidly shortly after. It got to the point where we were using a large part of our income to pay for his doctor visits, medications, hospital trips, and groceries. It was an emotional decision, but we applied for Medicaid, got approved, and moved him to a skilled nursing facility last February. It was hard seeing him there, but his quality of life improved dramatically, despite no longer having his own place. It also freed up our budget to start saving for our growing family’s wellbeing too.  
  • The physical goods we owned inside our house: We sold A LOT of stuff to get a jumpstart on paying off our debt. We’re talking DVD’s, old unused furniture, books, clothes… We are actually still in the process of downsizing. Before moving into our new house, we filled a 30X10 storage unit with items we thought we’d miss while living in an apartment. The startling truth was that after only a couple of weeks in our apartment we couldn’t even remember what we’d put in storage. It really opened our eyes to the amount of junk that can accumulate over time.
  • The services we paid for maintaining our lifestyle (internet, cable, etc.): We no longer have cable. Now we use Netflix, Youtube, and the CBS app for watching T.V. We also switched to Go Phones and lowered our internet package (although we do pay more than what the average person needs since David works from home). We do all our own yard work, housework, and make repairs to broken items ourselves - within reason of course. Altogether this saved us close to $300 a month.

As I mentioned in my first post, these steps helped us pay off most of our debt (we still have one student loan we are working on) in one year. The timeframe might be different for you depending on your current situation and priorities. For us, the sale of our house and using YNAB played a key role in our success. No matter your situation, hopefully these last three posts have provided some guidance or motivation for you on your debt free journey.


Well, that’s it! Again, if you made it this far, thank you for reading! I’d love to hear your feedback (negative or positive!) or other money saving ideas I may not have mentioned.


p.s. If you liked what you read here, please share with anyone else you may think would be interested. One of my main goals for the blog this year is to build community and I’d love for you and your friends to be a part of it!  

4 FREE Family Activities that are Unique and Fun

4 FREE Family Activities that are Unique and Fun

How We Paid Off $50K+ of Debt in ONE Year and Changed Our Life | Part Two

How We Paid Off $50K+ of Debt in ONE Year and Changed Our Life | Part Two