Paying off Debt: A Year Into our Journey

Pay off Debt

If you know our story, you know that we are just over one year into our paying off debt journey.  We started on January 1st of 2013, after coming to the realization a few months earlier that we were in WAY too deep.  I know that many people are likely facing that revelation about their debt right now, and I also know what a scary thing it can be to contemplate starting on the road to paying off debt, especially if you have as much debt as we did, and still do.

Just to give you an idea of where we started, on January 1st of 2013 our debt-to-income ratio was a whopping 65%.  We had credit card and other debt that totaled more than half of our annual gross income, not including our mortgage, which was also ridiculously high for our income level.  Although bankruptcy and a debt management program were definitely on the table, we decided to give it a go on our own first.  Here is some of what we’ve learned after completing year one of a serious attempt to dump debt:

Paying off Debt is Not Easy, and it’s Not Always Fun

I say not “always” fun because there are some days when it’s pretty exciting watching those debt numbers drop.  Fun can come and go, but if you’re in deep, it’s never easy.  Why am I sharing this potentially discouraging fact with you?  Because I want you to have the best chance of success, and if I lie to you and tell you paying off debt is easy, I’m setting you up for failure.

Your best chance of success in paying off debt will come if you know and understand that you’re in for work, and lots of it.  Come to grips with this fact before you start your journey to debt freedom, and you won’t have to deal with the shock when the heavy lifting comes.

Your Plan Will Likely Change Multiple Times

When we started our journey to pay off debt, I kind of thought that we’d make our plan, implement our plan, and just sit tight until the dirty work was done.  That wasn’t the case, however.  We have learned that we need to be assessing our plan and its success on a regular basis, being willing to make adjustments if something isn’t working or if things have changed for us in one way or another.

For instance, last year we set budget limits on certain items, such as entertainment, and then just kind of were winging it for the month.  We found we routinely went over in areas with this tactic, and have now switched to an envelope system in areas where we want more control over our spending.

Our grocery budget is another example: In the beginning of 2013, we were determined to spend no more than $300 a month on groceries for our family of six.  We learned real quick that this was too strict of a budget for us, and so after a year of trial and error, we decided in January of 2014 to up that number to $400 a month, and we’re much happier at this level.

This doesn’t mean, however, that we’re not still constantly on the lookout for ways to lower our grocery bill even further. It just means that we’ve given ourselves a bit more wiggle room in this area while we’re busy paying off debt, for sanity’s sake.  Giving yourself a bit of grace in this way when you’re paying off debt will grant you a higher chance of success.

Celebrate Your Victories, Both Large and Small

When you’re deep in debt, it can be tempting to look at how far you’ve got to go, which can lead to discouragement real quick.  It’s important to celebrate each and every win you have, no matter how small, when paying off debt.  Celebrate when you’ve stayed on budget, even if it was just in one area.  Celebrate every $1000 – or even $100 – drop in debt you make instead of waiting to celebrate when a card is fully paid off.  Celebrate each time you avoid giving in to emotional spending.  Pat yourself on the back for every win, and forgive yourself for every failure, all while committing to do better next time. (Editor’s note: I could not agree more with Laurie here. Celebrating those victories while paying off debt is vital to success so debt fatigue does not settle in. I know it’s counter-intuitive, but it’s needed to help spur long term success.) 

One year in to our paying off debt journey, we’re “down” to a 57% DTI and have dumped a tad over $2500 worth of credit card debt.  This may not seem like much for a year’s worth of effort, but it’s less than we had at the beginning of last year, and it’s a nice start on the road to debt freedom, so we’re counting it as a victory.

No matter how big your pile of debt is, there IS a way out.  Choose today to never, ever give up your dream of being debt free.

Have you started a journey to debt freedom this year? What are your best tips for staying motivated while paying off a large amount of debt?


Photo courtesy of: StockMonkeys

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Laurie is a wife, mother to 4, and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom, and to a simpler, more peaceful life.


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