We can’t thank you enough for all of your support. We’ve had so many people cheering us on throughout this journey and now we’ve finally made it: we’re officially DEBT FREE! We just finished paying off $57,000 of student loan debt in 7.3 months. Eight months ago we wouldn’t have thought that this was possible. At that time, we weren’t being as intentional with our finances as we could have been. This changed when we were shown examples of other people getting out of debt quickly and the peace that they experienced as a result.

We were captivated by the stories and debt free screams that  we started listening to on the Dave Ramsey Show back in December 2017. Their stories were our stories. We could feel their success, hope and peace. We could feel the burden being lifted from their lives as they shared their journey. We wanted more than anything to have that for our life; no more payments in the world.

So we decided to become debt free once we believed that we actually could. Throughout this time, we identified three foundation steps that kept us secure and rooted in our journey:

1. Identify why we want to be debt free
2. Set financial goals
3. Use a strict zero-based monthly budget

In addition to our foundation steps, we also found  a wealth building plan that had a proven track record of getting others out of debt quickly. We found so many success stories from people using Dave Ramsey’s 7 baby steps that we just had to try it. Here is each baby step listed in order:

1. Save  a $1,000 emergency fund

In December we had $16,000 in an emergency fund that was our safety net in case we had an emergency. It was really tough to take this down to $1,000 but we eventually did it at the end of our 7 month journey. Once we started taking money out of our safety net, we were committed to getting rid of this debt as quickly as we could. 

If you are in the situation where you need to create an emergency fund, this is a great place to start. There are so many neat ways to generate some extra income to put your $1,000 together quickly.

The purpose behind the $1,000 emergency fund is to cover small emergencies that may occur during the short period of time that you are getting out of debt. This small emergency fund is supposed to break the cycle of using debt to cover the unexpected surprises that life WILL throw your way. In order to get out of debt you need to stop using debt.

2. Pay off all consumer debt using the debt snowball

If you are unfamiliar with the debt snowball, it’s a method of reducing debt by paying off your smallest loans before hammering out the largest ones (regardless of the interest applied to each debt). At the beginning, the minimum amount is paid on each debt. Once the smallest debt is paid off, the payment that was placed on that debt is “snowballed” together with the minimum payment on the next smallest debt. This trend continues until all debt is paid off.

The reason that the debt snowball is so effective is because there is immense hope that is experience when each individual debt is cleared. When our first two school loans were paid off, we were ecstatic! That energy and enthusiasm drove us to tackle the third largest loan with great intensity. If you focus on the math, it doesn’t make sense to pay off lower interest loans first. But, we were determined to get rid of these loans so quickly that leaving the higher interest loans for later wouldn’t really matter. We were finally seeing traction!

So, we listed all of our debts out from the smallest to the largest. Here’s what our list looked like:

We were definitely discouraged by this list but we started by knocking out the $3,768  and $8,203 loans with money from our $16,000 savings account during the very first month. This left $4,000 in our emergency fund. Also during the first month, we started using a zero-based budget which showed us that we had more than the minimum payment to pay toward the third loan. 

Oh my goodness, we were so excited to see the smallest two loans go away! Now with two of our loan payments gone, we were able to use that money to attack the third and scariest loan! We were so excited to see some traction that I decided to work a part time job on the weekend for three months to help throw more money on the loan. And, because we started a zero-based budget, we were freeing up a lot more of our income to pay off debt. Our debt snowball was on a roll and we could finally see the $45,453 balance plummeting. We were fired up!

By the 7th and final month, we finally mustered up the courage to take $3,000 from our emergency fund to pay off the rest of the last loan. That left us with $1,000 in our emergency fund and finally we were debt free! And we did it five months sooner than we originally planned!

3. Save an emergency fund of 3-6 month of expenses

Now, our journey continues as we build our $1,000 emergency fund to 3-6 months of our monthly expenses. According to the progress we have made paying off debt, we are projected to have our emergency fund fully funded by January 2019. Once the emergency fund is completed then we will continue to walk through these baby steps and we are so excited!

4. Save 15% of our household income into a 401K

5. Save for kids college

6. Pay off the house

7. Build wealth and give generously

We love this plan because it is so easy to follow and incredibly effective. With each step that we take, we are gaining a better perspective on how to live beyond our previous paycheck-to-paycheck lifestyle and how to  manage God’s money well. Getting out of debt is only the very first step to building wealth. You should give it a try! Following a plan like this will change everything.

Check out Dave Ramsey’s book: The Total Money Makeover for the complete guide on ditching debt and building wealth using Dave’s 7 baby steps. This book is worth reading and has shown millions how to live financially free! It’s definitely helped us!