This is my story of how I paid off $45,000 in just 17 months while working as a detective.
Today I want to talk about paying off debt because it gives you so much freedom. You're able to do the things that you want, save for the things that you want when you're money isn't going to things that you've already paid for already bought, you know it's, it's stuck in the past, you're still paying for the past. Let's start paying for the future and saving for the future and that is possible when you are debt free. All right, so my journey starts back in 2012 we'll start there. I'll try and you know, make this quick, but I want to give you just kind of the overall picture. So in November of 2012 we bought our dream house. We sold our starter home. That just really didn't work well for our family and bought our dream home.
10 acres, uh, had a big shot for my husband. Uh, those, you either don't know him, he's a big car guy does. Um, he works in racing, like cars are his thing. I always have been. So this as a 40 by 60 shot, 10 acres would it, you know, we're, we're out in the country but close enough to uh, grocery shores and stuff like where it's just really convenient and it's just works very well for our family. Well, shortly after we bought our dream home, actually like two months later, um, we found out that I was pregnant with our second child. Our first child was only 18 months, somewhere in there. Whenever we bought our house, well, our new house, the property, everything was great. But the house, the layout didn't work. It had, it was basically a small two bedroom with a separate in law suite that had a small bedroom, a living room, kitchen, bathroom, all that.
But it was only accessible through the garage or outside. So this was not going to work for two kids because our second bedroom and the main house was like, it's so small, it's barely big enough for an office. Like you can barely fit a twin size bed in there. So two cribs were not gonna work like in, there's three doors because there's a door to a bathroom, the main door and the closet door and there's like no room in there. So what we decided to do was to enclose the screened in porch and connect the in-law's suite to the main house. I would add a bedroom at a place space and then make it flow where we can get to the whole house without having to go outside, you know, would work better for do's little kids. Right. So we were trying to where options, figure out how the heck we were going to pay for this.
So we got a couple estimates and it was going to be like $25,000 to do this. And that is with the roof already being there and the foundation aren't even being there. We're literally just in closing the screened in Porch area and you know, finishing touches and it was still $25,000 okay. So we're weighing our options. We just bought this house, there's no equity in the house. And my husband started talking to people that he work with that we thought, you know, were financially savvy. You know, they seem to know what the heck they were talking about with money and things like that. They told us to do a 401k loan. A, it's a low interest rate. You're really paying yourself back and you know, if you lose your job, you know you've got other options and your income will be lower. So it really won't be that big of a deal.
Well I hope you can see where this is going. So we finished the renovation, the money is spent and gone. We have our second child, newborn. I returned back to work in January of 2014 I come home like the first week of January, just are the new year. Literally just went back to work. I was a detective at the time, and I walk in the door and my husband's already home, which was kind of odd because he doesn't get home before me. And I can tell by the look on his face, something is not right. But he is a jokester. And he, even after being together almost 20 years at right now, I still can't tell when he's joking sometimes. So I was like, okay, what's going on? And he says, I lost my job today. And I thought he was kidding. I'm like, you're joking. You know, you did not.
He's like, no, for real. I lost my job. And I could tell that he was being serious. And so after, you know, I panicked and freaked out and cried and all that stuff. You know, I looked through our savings, um, talked to, he ended up getting a severance package. Um, you know, he started looking for a job and then we got a letter in the mail about this 401k loan that we'd only paid on, you know, I think like six months at this point, and we had 60 days to pay it back. Well, the money's gone at that point. We owed $20,000. You know, I don't have $20,000 laying around or I wouldn't taken out 401k loan. Um, and my husband didn't have a job, so how am I going to get another loan to pay off this loan? I, you know, with my income, I could not even pay all of our bills, you know, and I had to worry about feeding two children and making sure that, you know, we had electricity and a roof over our heads and I certainly wasn't worried about this 401k loan, so we ignored it. Um, my husband ended up finding a, everything was great. He's been at the new, his new job like five years now or something like that. He loves it much better. Uh, but then the next year we got a little note in the mail about, uh, you know, a tax statement thing saying basically Canada as a withdrawal and we were going to have to pay taxes on it. Like it was income and penalties and fees and everything for taking out so much money out of our 401k.
So then more panic set in again. It's like, what am I going to do? We went from getting back like $4,000 to owing over $6,000 to the IRS and that's not something that you want to do. Like Oh, in the IRS is panic mode. So I started trying to figure out what, how the heck are we going to pay this? I had some money in savings, but I didn't want to wipe that out. You know what if, what if my husband loses his job again, you know, I'm not going to be without some savings. So decided to do a um, cash advance on my credit card. That was 0% interest for 18 months and just wrote it off as a lesson learned in life, never to a 401k loan again. Well, the next month I started getting the bills for the credit card. I don't know what the heck I was thinking.
I just thought I had 18 months to figure out how to pay this off. Like, I don't know. I don't know why I didn't think that I would have to pay it every month leading up to that 18 months, but for whatever reason, I didn't. And so I started getting the bill in the mail and I'm like, I have to pay this. I've got to take it out of the budget. I don't know how I'm going to pay it and how the heck am I going to pay off? And I think it was at the time, it was $6,000 in 18 months. I'm like, how the heck am I going to pay this off in that time? So I started looking for debt, pay off plans, came across Dave Ramsey, zero based budgeting, the debt snowball, and I'll explain all that. And my life was changed forever.
So those 401k loan was really the catalyst to making the big changes that we needed to in our life and in our finances. Uh, so even though it costs us a ton of money, you know, I'm still thankful for the lessons that I learned from it. You know, e everybody makes mistakes and you have to learn from it. Move on. You can't just keep beating yourself up about it. So what we did was I read the total money makeover, and it was life changing, I read it in like two days. And to me it was very inspirational. Now I know some people, if you've ever listened to his podcast or his well, his podcast or his TV show or whatever, uh, either love him or hate him. So just sworn warn you. Uh, you know, but I really liked the message in the foundation behind it all.
So basically you start with catching up on your four walls. That's food and you know, you had to pay for food, clothing, your housing and your transportation so you can get to work, keep a roof over your head, keep clothes on yourself and feed yourself. So if you're behind on your bills, that's where you start. And you start with a zero based budget, which is planning for every single dollar in your budget. So before I would just write down how much I expect us to get paid, what the bills were for each paycheck. I, and I still do, I've always done it a budget by paycheck and then whatever was left over, we would just spend, like I would say, oh we should spend, you know, $800 a month on food and 400 on gas and Yada Yada. But we would just swipe the debit card and not pay attention where our money was going.
So one of the first steps in this plan is to track your expenses so you can see where your money has been going. And that is one of the most eye opening steps you can do. It's one of the hardest steps, but you have to do it because that is where you will know what changes to make and you will know where your money has been going. So if you're one of those just like me, that at the end of the year and you're doing your taxes and you see how much money you made and you're like, where the heck did all this money go? Because I have nothing to show for it. Like I made all this money, I should have something to show for it. This is where you start. This is where you see where that money has wind going, and then you build your zero based budget around that.
So like for me, um, I was, we were spending $1,200 a month on eating out and groceries. So I was spending so much money on groceries for at the time. Remember, this is just a family of four with one being a toddler and one being a newborn. We were spending $1,200 a month on food. It was ridiculous. So I knew that that was one of the places to cut back. Um, and then I also, you know, cut back on, uh, you know, services like my cell phone bill, the TV bill, like all that kind of stuff. Alright, so started with a zero base budget, cutting expenses, seeing where your money is going, and then whatever is left of your budget. So remember, the a zero waste budget is planning every dollar. So after you get all those things planned for, everything is in, then you've got so much money in leftover that goes toward your goals.
So first you want to save $1,000 at a minimum, and I can go into this in another episode, but you know, for a lot of people you may need to save more than a thousand dollars. But you know, some of you may have never saved a dollar in your life, so thousand dollars seems huge. So you know, that's a minimum. Just get to there and then reevaluate your goals and if you need to save more or if you can go on to paying off debt. So once you save your thousand dollars, then you start paying off your debt. Everything extra in your budget goes toward the debt snowball and the debt snowball is listing out all of your debts from smallest balance to the largest balance. Your regardless of interest rates, there are some instances where you will want to factor in interest rates or even payment amounts depending on your situation.
But in general, for most people that just doing the debt snowball is what will be the most effective method for you because it's more motivating. Uh, you get the quick wins of paying off the small balances and you see, you can actually see the progress quickly and that will motivate you to keep going. Um, if you focus on the interest rate only, you know, that could be your biggest debt and it could take you forever and then you'll give up. Like there's no point in that. Start on a small debt, get it paid off so that you're motivated to keep going. Okay. So we already had the thousand dollars saved. Like I said, we had money, I'm already saved, but I didn't want to use it just in case. So we were able to just jump right into the debt snowball. And the first we only had, so at that time we had the credit card that the taxes went on, which is like $6,000.
We had my car, which was $14,000. And then we had my student loans, which were $25,000. So the very first thing we did was focus on the credit card and we got that paid off in like two months or so. Um, you know, at this time I didn't know I would be talking about it so much. I didn't track like I don't remember exactly when we paid off the first credit card. Uh, and then we paid off my vehicle so we got that paid off at the end of the year. So I do know that. So we started this journey in May, like may or June. And so by the end of the year we had paid off both of those. So that was like half of the debt. And then January 1st, 2016 we started focusing on my student loans, which was $25,000. And I had only borrowed $28,000 and I had been paying on it for 10 years and I didn't even use my degree.
I was a detective, like I had a degree in psychology cause I was going to be a counselor. I always thought I was going to be a counselor. That's what I had planned on doing all through high school, all through college. And then my last semester of college I decided that I was sick of school and I was done. And I was going to go be a police officer instead of going to get my masters degree. And then I had all this student loan debt for no reason. But anyway, that's besides the point. So my interest rate on the student loans was ridiculous. It was like six point something. So in 10 years I had paid off $3,000 and we, let's see. Um, so in 10 years I'd only paid off $3,000 and I was paying almost $5 a day in interest every single day. It was like $4.62 cents, something like that, $4.64 cents, whatever.
And that's one of the things I did to keep me motivated to keep going because it was like, you know, once you get halfway through, when she would kinda get toward your last year, biggest one, it can seem like a mountain, even though you've made all these big changes and climbed all these smaller hills is like, oh my God, I'm never going to be done. So I calculated how much I was actually spending every single day in interest. Um, and some other things that we did. We, um, at this point we decided to shut off our retirement contributions because I realized how much I did the math and saw how much faster I could pay off this debt if we did that. Um, we already have quite a bit saved, um, in our retirement accounts and I still had a pension that I had to contribute to and the town that I worked for, um, well in the state, they, um, the local government, they have to contribute to my 401k as well.
So we still had money going into retirement, um, but not our own money into our 401ks. So we cut that out and that was actually a couple of hundred dollars. So that helped us speed up paying off my student loans. And I only recommend that to people. If you are all in, you are intense about this, that you're not going to go and spend it on other things because you will, um, you will see that you have all this extra money and think that it's extra and spend it and then not turn your retirement contributions back on. So I don't take this recommendation recommendation lightly. So you really need to think about it before you do it because retirement is crucial. So just because I only did it halfway through, like I didn't want to do it at first. So once I sought ran the number, saw how much faster we could do it and be done, I decided to do it.
So, you know, think about it really hard before you actually shut it off. Um, we sold some big things. We sold a trailer and a four wheeler, which for those of you that don't know, my husband, this is huge. My husband is a hoarder. He literally has every single magazine he's ever had his entire life. Literally it's still out in the shop in bins. It's ridiculous. He says he knows, you know, where they all are and what they say and he still looks at him. So to get him to like really sell anything was a major, major feat. And really without him being fully onboard, we wouldn't have been able to do it this quickly. Um, so, you know, if you're struggling and doing it this on your own, I've got, um, I guess coming up on a, on another episode coming up soon about getting your spouse onboard and living on one income.
Um, but anyway, back to why that they all stories. So, you know, we made a lot of changes to do it faster and faster. You know, I didn't just, now I do jump into things, but you know, I went into this and made small changes as we went and as I saw progress and how much faster we could do it and keep going, we made changes gradually. You know, I didn't just do my zero base budget, do my debt, snowball, do cash envelope, shut off the retirement contributions, sell everything all in one day. Okay. This was a increase in intensity and change of behavior over the 17 months. So, you know, that first month, don't beat yourself up if you're not all in, just keep making the steps and changes in the right direction and you will get there. And as you see the progress and as you see that debt balance going down, you'll be more motivated to do it faster and find things to do to make it happen faster and faster.
So like another thing I did was I sold like all my lamps and my wall decor, like I'm wanting to eventually change the style anyway, but like it looked like we just moved in. Like I literally sold the pictures off my walls and all my lamps. Like I was intense about it once we got to that point. And I just wanted it to be done with my student loans because I was seeing how much money we were spending every day for that, you know, when you're spending $5 everyday just to have the loan there, that's insane. So I wanted to add in my life and gone forever. And so that really helped motivate me to go and do it faster and faster. Uh, some other things that we did or that I did to, um, stay motivated while doing this was I joined, uh, groups that were about budgeting, Dave Ramsey paying off debt.
Um, and that really helped keep me motivated to, uh, talk to other people and see other people doing the same things that I did or that I was doing. Um, another thing that I did was I read debt, pay off success stories like every night before going to bed. And that's one reason that I share so many on my website as well. And you can go to my website, go to debt and debt, sex success stories, and you'll be able to see like all the ones that I've done so far, debt free interviews. Um, let's see, what else did I do? I pay a [inaudible].
Okay, so we cut back our food budgets. You know, I've talked about how we were spending $1,200 a month. We cut out there that down to $600 a month. Um, and initially we cut out lunch, but that didn't work very well. So we ended up adding money in for lunch, but it wasn't every single day for my husband and I, that was our social time to get out of the office. We have stressful jobs and like that's our time to talk to people in distress a little bit. So we did add that in. Um, we realized that we just, that was something that we needed to do. Uh, we also, you know, we said no to things like not everything. Like we still had fun, we budgeted money in for things that we wanted to do, but we did, we didn't do everything that our friends wanted to do.
Like we still said no to some things because it wasn't a priority right then. And then if, if there were something that we wanted and it could wait until after we were debt free, it waited. I mean, the last month that we had, my husband actually asked me were more debt free, can we buy shaving cream again? Like that's how intense I got there at the end because I just wanted it gone. And so like I bought generic stuff. I didn't, if it literally, if you could do without it for a month or two months, I didn't buy it like it could wait. And then of course then once we paid it off, you know, I caught back up on things. I just wanted it out of my life and I wanted the freedom and be able to say that I did it and you know, feel like I accomplished something.
And that's what I did. And you know what, we were able to pay it off in seven in, well the student loan was 10 months. So that was 10 months of it. We paid it off in October of 2016 total of 17 months, $45,000. And you know what, I'm so glad that we did. You know, I had people asking me while I was doing this as if you died tomorrow, would you still be, um, would you still be doing this? Like, and I said yes. Like I want my family to be set up financially to be able to live without me, to be able to grieve, to do what they want to do once I'm gone and without doing this, you know, my husband would have to go right back to work, uh, not have any time off. You know, somebody is going to have to pick up the slack at home with babysitters and house cleaning and all that stuff.
You know, and I have life insurance, I have a plan, we don't have debt. So that it just make things a lot smoother and easier if something does happen to me. But you know what? I still enjoy my life. It's not like I'm not having fun. I still had fun and it was temporary. Now I'm on the other side of it. Been debt free for, um, almost two years. No three years now. Yeah, almost three years now. And of course I'm still thankful for. I'm glad I did it. I'm glad I made the sacrifices then so that I can live the life I want now because without it, I wouldn't be able to be at home with my kids, building my business. I'd still be stuck in a very stressful job that I just was burnt out on and didn't want to do anymore. And I wouldn't be able to take my kids to school over day, pick them up, work on my business.
Um, help you guys get your lives. And finances together so that you can do it too. If I was still in debt, I would still be working a regular job and being on call and having to see and deal with things that nobody really should have to see and do. And so that is why I am very, very thankful that we made the sacrifices to get to where we are now. You know, and I, and then human now I still have people say, well, you're just lucky. I, you know, that must be nice. Yeah, it is nice. But I'm not lucky. I worked hard. I made a plan. I followed through on that plan and I did what I needed to do so that I could live this life that I want now. And that's what you have to decide for yourself is what are you willing to sacrifice now for what you want later.
And once you do that, everything else will fall into place. You will know what you need to say no to what changes you need to make so that you can get to your bigger goals. And you know, don't let anybody discourage you and tell you that you need to have debt, that there's good debt, there's a, you know, you should always have a car payment. You should always have a mortgage payment, student loans, good debt, no debt is good debt. You know, mortgage is not considered in this debt free journey just because it is a much bigger loan. But we are working on paying it off early. Like that is the end goal. Uh, but for right now, you want to concentrate on your consumer debt. So your credit card, your car payments, yes, you can be without a car payment. You don't have to always have a car payment.
You just have to decide that that's what you're going to do and then do it. Uh, and you know, find the ways to make it happen. You know, and like I said earlier, you may not be able to do it as fast as I did. Um, but that doesn't mean you can't do it. It, it'll, it'll happen in your time and as fast as you can do it. So. Okay, I'm going to quit on my rant today and I will talk to you soon. We've got some great guests, podcasts coming up. Uh, and I will be talking about how our 401k loan cost us almost a million dollars. So, uh, look forward to that. I am so excited about this podcast and sharing these stories with you to help motivate you to pay off debt. And remember, you can go to budget's made easy.com for all my free resources and helpful advice and follow me on Instagram at budget's made easy. I will talk to you soon. Bye.