Our Debt Payoff Plan: Paying Off Over $670,000 of Debt

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It all started when my husband, Mr. TMG, and I both took out student loans in undergrad. The loan balances weren’t so bad at that time. Mr. TMG graduated with about $20,000, and I graduated with about $35,000.

Then came med school and law school loans galore.

By the time I graduated from law school, my $35,000 had ballooned to a little over $104,000. Mr. TMG still had one more year of med school.

I had become fascinated with personal finance during our senior year in college, and by my last year in law school I had stumbled upon blogs by people who paid off their student loans in a short amount of time, like Making Sense of Cents and No More Harvard Debt.

Although their debt balances weren’t quite as high as mine, I still found inspiration in their stories. I decided I would pay my loans off within two years of graduating. If they could do it, I could.

I was starting my first brand new, shiny real job at a Biglaw firm, and with the salary I was about to earn, it was definitely doable.

Life happened in the best way

Then, Mr. TMG proposed, and I put all that debt payoff stuff on the back burner. We had a wedding to plan (and pay for)!

We spent that next year saving for our wedding. We refused to go (further) into debt for one day—even if it was a once-in-a-lifetime event that had to be absolutely perfect, as all the wedding vendors told us.

When we got married, Mr. TMG was in his last year of med school, and his loans were in deferment. When he graduated, though, he had over $316,000 in student debt. We signed up for the income-based repayment plan for his loans and filed our taxes separately so the payment would be based on his resident salary (i.e., the payment was $0).

We continued paying the minimum on mine and took a couple of trips abroad (including our honeymoon) and visited friends and family all over the country. Because we weren’t going into credit card debt for our travel and could afford the monthly student loan payments, we thought we were doing well. We were even maxing our 401(k)s!

We started planning for children and were ecstatic when we found out that Little TMG was on the way about a year into our marriage.

We had already been thinking about buying a house because (1) rent was skyrocketing in our city and (2) that’s the next step in a young married couple‘s life. Little TMG sealed the deal.

Coming face-to-face with our debt

When we found the perfect house, we began the mortgage process. It was during that time that the full weight of our student loans hit us.

We needed FOUR continuation sheets for our mortgage application to list out all of the loans. I felt a pit in my stomach when I saw the balance. We knew we had debt, but we had never added it all up before.

$447,460.

(I should note that this balance included about $3,000 on our credit card, which we pay in full each month, and about $13,000 on a car loan, which has since been paid off.)

Nearly half a million dollars in student loan debt. We were shocked at the full amount of debt we had.

You’d think that seeing that balance would have given us second thoughts about buying the house. You’d be wrong.

We signed the huge stack of papers at closing and moved into our mostly-bank-owned house, adding another $200,000 to our debt.

We continued paying minimums on our student loans, and our mortgage payment turned out to be lower than our rent. Because we could afford all of our payments and weren’t living paycheck to paycheck, we thought we had this money stuff figured out.

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Turning point

Little TMG’s birth changed everything.

I talked to Mr. TMG about what our future could look like if we got on top of our finances. I reminded him of my original plan to pay my student loans off quickly and told him about all the financial accomplishments I had read about from my favorite personal finance bloggers over the years—becoming debt free, investing and building wealth, reaching financial independence, retiring early. If they could do it, we could.

He was on board! We decided that we wanted to become financially independent so we could have more control over our lives and more time to spend with our family.

At the end of 2016, we made a list of all of our debts and found that Mr. TMG’s $316,000 student loan had grown to $349,384 because interest continued to accrue.

Our total loan balance was $673,623. Ugh.

We started to pay extra on one of the highest interest loans each month, but our extra payment was only about $200. That wasn’t moving the needle on our mountain of debt. We needed a better plan.

I had heard about Dave Ramsey before but always brushed his financial tips aside, thinking they were too conservative for my tastes.

After hearing about him again during this time, I decided to read The Total Money Makeover and was surprised to find that I agreed with more of his views than expected.

His core principles of being debt-free and focusing on one financial goal at a time are logical to me. I didn’t (and still don’t) agree with all of his teachings, but we began our own modified version of the Ramsey process.

We decreased our retirement savings to 6% (to still take advantage of Mr. TMG’s match). Then, we listed our debts from smallest to largest and started using the extra income that was no longer going to retirement, along with any other extra money we received, to begin paying off our loans in that order.

We got a nice head start from our tax refund last year and continued from there. We went out to eat less. We bought things on sale and used coupons. I signed up for Ibotta, an app that offers rebates for in-store and online purchases.

Get $10 when you sign up for Ibotta using your email address through my link and redeem your first offer!

Mr. TMG also started moonlighting at a clinic on weekends to bring in some extra money.

All in all, we paid off $47,029.45 in 2017!

What’s next?

Mr. TMG graduates from residency this year (2018), and his salary will nearly quadruple. We plan to continue living the same way—no lifestyle inflation here, please—and following our plan. The goal is to pay everything off in the next five years (although I’m secretly hoping we can do it faster).

Then, we’ll focus on our other financial goals, such as saving for college for Little TMG and any other kids we have, building wealth to leave a legacy for future generations, and financial freedom!

You can follow our journey here!

Do you have any debt? What are your favorite debt payoff tips? What are your ultimate financial goals?

If you liked this post, don’t forget to (1) share it with everyone you know and (2) connect with me on Pinterest and Twitter.  See you there!

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6 comments

Thanks, TPP! He actually is in the PSLF program, but we don’t plan on letting that debt hang around for 10 years. 🙂

The Physician Philosopher

Good night!! I now understand why you have the view that you do on debt. If I had that much debt, I’d be destroying it.

Why didn’t you guys take part in PSLF?

TPP

You are very fortunate you both have very nice professional degrees but how about individuals who tricked by schools suggesting greats Careers after graduation only to find they place them 8 dollarper hour. They will never pay off their debt. They will continue to live below poverty and continue to struggle with false hopes and false opportunities.

Thanks so much for your comment, Phil!

Although our professions allow us to make more money and pay more on our debts than others, keep in mind that we wouldn’t have this much debt if we hadn’t gotten professional degrees. I imagine that those individuals you refer to don’t have as much as we do.

That’s not to say that their debts aren’t large, but to say that they will never pay off their debt and will live in poverty forever is a bit much. I reject the notion that anyone is stuck making $8 an hour because they were tricked by their school. That is a victim mentality.

There are opportunities to make money all around. The internet makes things more accessible than ever before. Those individuals who feel stuck making a low income can supplement their income by taking on a second job or freelance on the side or start their own businesses and make more than they’re making now.

I want to encourage anyone who feels the way you described in your comment that there is hope. It just may not be in the package that you were expecting, such as a corporate job.

Please feel free to reach out to me if there’s anything I can do to help.

Do you share your incomes,hard to but things into perspective if you don’t share.
Are you saving 10% or 80% per month and using towards debt?
Thanks

Hi Brian!

Thanks for your comment. We don’t share our incomes for privacy reasons, but I have shared that I’m a Biglaw attorney and, at the time we started our journey, D was a family medicine resident. He has since graduated from his residency program and is an attending now.

We aren’t in one of the most expensive areas of the country like NY or California, but we’re in a large city. I hope that helps!

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