How We Plan to Tackle Our Debt

As I mentioned in our great confession post, my husband and I have quite a bit of debt to pay off, specifically $55,879.43, which is down from our confession high of $56.908.71 (just 7 weeks ago).  Of that debt, $36,518.78 is student loan debt.  The rest is credit card debt.  Honestly, just a few years ago I wouldn’t have really worried about the student loan debt and would have only tackled the credit card debt.  However, we would like to have a significant chunk to put down on a house in a few years, and I don’t want to purchase a house if we have other debt.  Here is our plan for paying it down quickly:

Work extra jobs.  I have increased my freelance writing and virtual assistant work so that I will be consistently making over $1000 a month.  My ultimate goal is $2,000 to $3,000 a month between blog advertising, freelance writing, virtual assistant work and eBooks that I sell on Mom’s Plans, but that goal is still out of reach.  I also want to enjoy having my two girls (both under 3) home with me before they go to preschool, so I don’t want to make myself too busy with work.  Yes, I want to pay off debt, but I want to enjoy my children’s few years at home with me all day too.

My husband will be moving into a post-doc position next month, and we both agree that he should not take extra jobs.  He will work at the post-doc during the day, and at night he will work on publishing articles, which is necessary to get a research job at a medical school, which is his ultimate goal.

Look into debt consolidation.  My husband has several student loans out, each with different terms.  We need to begin paying on the first two in January; the second two begin in July.  We will look into debt consolidation so his loans will only require one payment a month.  We don’t plan to roll mine into his because mine is nearing completion and a large amount of the monthly payment is now going on principal instead of interest.

Snowflake money on the debts.  Any extra money we make by doing such things as saving using a coupon or filling out a rebate form, or using a discounted gift card will go toward our debt. 

Pay off the debts smallest to largest.  We do plan to pay off our debts smallest to largest, but we will be doing that in categories.  For instance, we owe $6,647.27 on our business credit card and $12,713.46 on our personal credit card.  My student loan is at $6,785.27, so if I were strictly following Dave Ramsey’s plan, that would be my second debt to pay off after the business credit card.  However, I am not comfortable with that because I don’t like having outstanding credit card balances in the current economic climate.  I don’t want to have to worry about interest rates on my credit cards climbing.  I know the student loan rates are fixed, so I will pay those off after the credit cards.

We know we have a long road ahead of us, but we also know that it is possible to live our lives debt free.  Our plan is to be out of debt or close to out of debt by the time my husband takes his first real job after his post-doc in about two to three years.

How does this plan look to those of you who have paid off your own debt?  What other suggestions do you have?


  1. Sounds like a good plan to me. Tell me it’s exhilarating to do and just as exhilarating Yo get INTO debt thanks to all it buys? Benefits both ways no?


  2. When we were paying debt and building savings, every cash gift also went into the pool.

  3. I admire how focussed you are on tackling debt. Very inspiring Melissa!

  4. Sounds like a great plan. I would focus on the highest interest rate debt first, since that is what is costing you the most to borrow. I would also look to see if you could balance transfer your credit card debt to a 0% rate for at least a year. It will save you some money while you pay it off!

  5. Good luck with your debt pay-off! We paid off $25,000 in non-mortgage debt in September 2010, and it really opens up new doors and possibilities.

  6. Hello Melissa! I wanted to let you know that as of Friday, we are debt FREE! 🙂 We are so excited. We followed the Dave Ramsey way of smallest to largest debt (mostly!) and that helped.

    I love your plan. Go and attack that debt! You can do it!!

    I agree with Marie that every cash gift should go to debt. We also did several things to help us add more “snowflakes”. Remember, the debt paying time is tempory and the more sacifices you can make, the better. Some examples of our sacrifices: not give Christmas gifts to each other, limit our kids activities to one per year, buying used everything!, rarely eating out, no cable, etc.

  7. Years ago in the mid 90’s we decided we could not make it anymore with the debt load. We filed bankruptcy and were placed in the one where you still pay all your debts off. I think it is called Chapter 13 or is that 11? Anyway, we made it through that and didn’t learn our lesson. We got back into debt and we hit bottom again and decided to join a group where they take a certain amount and over 3 years we again were debt free. To this day we do not own credit cards and only live on what we earn. If we don’t have the money we don’t buy it. Yes, things are tight now that I lost my job in January 2010 but we keep at it. Right now we use $50 per week for food. I shop and cook and buy fresh every day. Coming up with menus for the dinners is sometimes the hardest thing I do. Good luck and you can get debt free.

    • Thank you for an inspirational story. I love that this time around you were able to stay out of debt even with job loss. 🙂

  8. Great ideas. I wish you the best of luck. I would suggest using one of my favorite tools to aid you in your goals. I love this free budgeting website! It has revolutionized my finances.

  9. Nice plan Melissa. Just wanted to stop by to say hi 🙂

  10. Be careful about transferring your student loan debt to another debt through consolidation. You’ll lose the ability to write it off on your taxes, so make sure the interest rate differential is enough to account for that benefit.

  11. I am excited for you to be debt free. We also followed the Dave Ramsey plan and paid off 52,000. in 18 months. It was tight but that was 2004-2005. We have not had a credit card or debt since then. 4 kids later it can still be tight but the feeling that everything you buy is yours because you paid for it. We still use the envelope system and I highly recommend it you will feel like you got a raise. You will also see where all the little money is sneaking away. lol Good luck let us know when it is all gone.

  12. Hi – I was wondering where you do your freelance writing and virtual assistant work – are you working for an established site? I would love to do this as well, but don’t know where to start. Thanks!

    • I work with several bloggers in the personal finance realm. I made connections with two of them, and it just blossomed from there. I think if you can get one or two good clients, word of mouth referrals will get you more work.

  13. What worked for me was creating a spreadsheet and updating it as the months went by. It made me feel like shit if I even inched in the wrong direction.

    I have a great one if you’d like it.

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