We have said that we paid off $20,000 debt in 5 years on an average income of $22,000 per year. Here is an accounting of the debt (over and above our regular bills) and the payments that we made to eliminate the debt. If you’d like to know how we paid it off, here is our debt reduction story.
Debts
$3,000 -Mike’s credit card debt when we married
$2500- Cost of moving to Texas
$2500- Cost of moving to Idaho
$2085- New transmission for our car
$500- Cost of repairing cracked head on the car
(These two repairs occurred when we were in Colorado (1200 miles from home) and needed the car to get home.)
$2500- Purchase 1991 Buick
$7,200- Out of pocket medical bills from the birth of our daughter.
Total debt incurred $20,285.00
Income for years 1995 through 1999
1995- $19,382.00
1996-$17,530.00
1997-$19,646.00
1998-25,444.00
1999-$26,509.00
Total Average income over 5 years $21,702.00
Debt Payments
Monthly
1995- $100 month – $1200/ year
1996- $100 month- $1200/year
1997- $100 month= $1200/year
1998-$300/ month=$3600
1999- $300/ month= $3600
Total- $10, 800.00
Extra
$1,000.00- gift when BJ was born
$1,200.00- gift when Elly was born
$3,000.00- cashed in for Mike’s retirement
$700.00 sold Geo Metro
$601.00-1996 income tax return
$1830.00- 1997 income tax return
$688.00-1998 income tax return
$2359.00-1999 income tax return
Total- $11,378.00
Total Debt Payments- $22,178.00 (includes interest)
photo by: Alan Cleaver
We thought we kept tract of monthly bills very closely, but
you do even a greater job. We don’t know how you do it with
all the extracurricular activity you have with your business.
You certainly do a fabulous job with your Newsletter. Thanks
I think it is wonderful how you are so open with your debt reduction, and also so open with your monthly budgeting. It is so helpful and motivating when you see someone actually accomplished, what would seem like an impossible task, I know it keeps me motivated to get out of debt. Thank you for being such an open book about these things. Sincerely, Kim
So did you put that 100 a month to something right away that month, or wait till end of year and put it towards as a lump sum.
They usually put it on something each month. It is better to do it monthly especially if you are paying interest on the money because the more you can pay off each month the less interest you have to pay and eventually that interest adds up so much so that you can pay off another debt just with the interest you were having to pay on something else.
You are so encouraging.Before when I would read about paying off bills I would get so discouraged because they were assuming that the reason you were in debt was because you just liked to shop,eat out a lot and have nice cars. The people had large incomes so they should be able to pay it off soon. I can relate to you. I feel like God showed me “Living on a Dime. Thank you so much.