[UPDATE: WE’RE DEBT FREE – $130,912 PAID OFF!]

According to various sources, the average American family is somewhere between $16,000 to $134,000 in debt. For most people, student loans, credit cards, and auto loans make up the lion’s share of those totals. In 2016, we realized that we were just like the average American. We were more than $90,000 in debt and we were wondering if paying off debt was a realistic goal.

Surprisingly, it was!

$117,000 later, we’re ready to share how we got our debt down to within $20,000 in less than 2 years!

We Changed Our Mindset About Money

To be honest, paying off debt starts with how you think about your money. For most people, the only time that they think about their money is when they realize that they don’t have enough of it.

Your income is your greatest tool for building wealth and paying off debt. But truthfully, it won’t work for you unless you change your mindset about money.

“I don’t make enough money to get out of debt”

“I can afford to buy this item that I don’t actually need.”

“I promise I’ll pay my credit card off next month.”

Those are just a few of the lies that we often tell ourselves that ultimately keep us saddled with debt. When you decide that you are going to begin doing things differently, your financial life will change.

In our case, we decided to become intentional about how we dealt with our money. We knew that we couldn’t continue going down the path that we were headed, so a change had to be made.

We Determined Our Actual Situation

About 76% of Americans live paycheck to paycheck and another 6 in 10 Americans don’t have enough in savings to cover an unplanned $500 – $1000 expense. That sounds crazy, doesn’t it?

The reality is that those statistics are probably not that far off from the truth. This ties closely to the fact that the majority of people have no idea where they are in their financial lives.

It’s like driving around lost in your car in a bad neighborhood. You know you’re lost but you keep driving instead of stopping to ask for directions.

Figuring out your specific situation is imperative for starting your journey towards financial freedom. You can’t continue to ignore the problem once you figure out exactly where you are. If you’re anything like us, your numbers will probably overwhelm you at first.

Just keep in mind, if we were able to do this. You can do it too!

We began focusing on paying off debt shortly after my mother passed away. That experience showed us that we were not a good financial position and we would have to make major changes in order to fix that. We had been married for 3.5 years but had never gone completely through our finances together.

That was about to change.

In one day, went through ALL of our debts and expenses and created a Budget & Debt Tracking Tool that we could use to track our progress. We’ve tweaked it considerably over the years, but we’ll let you download it for FREE. That way, you can save yourself the trouble of creating your own.

Download Our Budget & Debt Tracking Spreadsheet!

We Created a DETAILED Budget

Working towards a goal can be difficult if you don’t know what the end result will be. This is why you need a complete listing of all of your debts. It’s the only way to be sure that you’re actually making real progress.

More important than listing all of your debts is creating a detailed budget. Your budget should be the guideline for how you spend your money. It should consist of your income, expenses, and all of your needs for the month.

Emphasis on needs. Put that $200 coat back on the rack and instead, add $200 to your savings account, or pay off a credit card!

When you first get started with following a budget, you may need extra motivation to keep up with it. We started out using the cash envelope system, but that didn’t last very long. We don’t typically carry cash, so it was hard to keep up with what we took out to use and what we actually had on us when we needed to spend.

We ended up switching to a digital version of the envelope system. Read our review of Goodbudget, the app that helped us manage our budget on the go.

Once you get the hang of budgeting, you’ll finally have the information you need to answer this question:

“Where is my money going every month?”

You’ll be able to see where you can cut expenses, increase your income, or even bulk up your savings. With the increased cash flow, you’ll finally be able to get serious about attacking your debts and saving/investing for your future.

We Started Paying Off Debt…Little By Little

There are about 1 billion methods for paying off debt these days. Ultimately, you’ll have to decide what will work best for you. We put our efforts towards the Debt Snowball Method that Dave Ramsey typically suggests to his listeners. We’ll be covering this is detail in a future article, but this method involves paying off your debts from smallest to largest.

It allows you to pay off your smaller debts and then take that momentum and begin applying it to some of your larger debts until they are all paid off. Psychologically, it keeps you focused because you can actually see and feel your progress every time that you pay off a debt.

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If you’ve read this far, you’re probably wondering if it’s possible to make the same type of progress that we’ve made. The answer is a resounding YES. Getting out of debt is not as hard as it sounds. It takes a mindset change, determination, and commitment. If you can do those things, you can get out of debt.

We’d love to help you with your debt free journey in any way that we can. Leave a comment below and let us know if you’ve started any of the steps we mentioned or if you have some tips that we haven’t covered yet. Also, don’t forget to download your FREE Budget & Debt Tracker to help you manage your progress!

Download Our Budget & Debt Tracking Spreadsheet!

— DJ