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How We Paid Off $21,000 of Debt in 3 years (On a low income)

So you’re in debt. That sucks. A lot. I know because we were too. But, I’m going to show you how we paid off over $21,000 of debt in 3 years.  And we did it without being gazillionaires.

How we paid of $21,000 of debt in 3 years with man and woman looking at mountain

This isn’t the typical debt payoff article you’ve been reading where the writer and their spouse make $200,000 a year.  

Where they just sold their massive house, bought a tiny house that “only” cost $60,000, moved out of an expensive area (since they can work remotely) & parked it on a friend’s land for free for a year.  

If that’s your situation, good for you! 

But if it’s not, you got this too!

This debt payoff story is about two average people, working average jobs, who collectively brought home about $55,000 a year and were over $21,000 in debt, not including our mortgage. 

It’s about two people who dug in deep, and with dogged determination, clawed their way back out of the hole and in three years, came out not only having not only paid off their debt, but with extra money in the bank.

Given that you’re reading The Frugal Hippie, you’re likely unsurprised that those two people are the Farmboy & I.  

A Brief History

We’ve never been spending freaks, but we did enjoy our fair share of entertainment, dining out, and a lot of home improvement work. 

Until, due to some weird & unexpected physical ailments, I found myself unable to work.

I had an online side business that helped to sustain us for a bit, until a big ‘ol fight between google and amazon sent that crashing down.

Which is when we found ourselves in pretty serious trouble.  We were down to one income.

Farmboy made ok money…but not enough for us to live on easily.  

Cutting Back

When you’re in debt, you have two options to pull yourself out of it: Cutting back your spending, or making more money.

We’d already cut out entertainment and dining out, but it wasn’t enough.

The first time the electric company guy came to shut off our electric, I was scared.  In fact, it was a pretty harsh slap in the face by reality.  

Fortunately, he was kind & said he’d leave and go on break for an hour if I promised to call and pay the electric bill while he was gone.  I did, but that left us without enough money to pay for groceries.

We seriously needed to cut back.

I wasn’t able to make more money at the time, but we had to do something. So cutting back was the logical place to start. 

Avoiding Late Fees

I hadn’t ever been particularly good at paying bills on time, so late fees were a regular thing. Despite a sincere desire to not be the sheriff of responsible land, I bought a $2.00 bill book at Dollar General and decided it was time for a change.  

That one, simple move provided a massive reduction in late fees. 

We’d still get a late fee now and then…we were broke…but since I had begun to show consistency of payments to the utility companies, they’d usually waive the fee if I called.

Monthly bill book with checkbook and pencil
My handy dandy bill book.

A bill book was a great place to begin. But I didn’t know for sure when, or if I’d be able to work again…and I knew if I would, I couldn’t go back to making the amount of money I did before.  

There had to be a lifestyle change too.

So I decided that if we were going to make it out of this without losing our house, Budget Girl Extraordinaire was going to be my new job title.  

The Bare Bones Budget

Unbeknownst to me at the time, I enacted what is called a Bare Bones Budget.  It’s just what it sounds like…your budget only allows for spending exactly what you need.  No extras.

In a bare bones budget, you account for your necessities, (shelter & food), your utilities (electric, phone, gas), insurances (car/health) & transportation.

That’s it. Nothing else.  

But, we still fell behind.

Reducing Bills

We still weren’t making it, even with the bare bones budget in place. So I started saving more money by reducing our biggest controllable expense, food.

Farmboy can eat. A lot. 

I have no clue where it goes, because he’s built like a very attractive tank, but man can he eat. 

And to him, going without meat would be akin to asking him if he’d mind simply removing his own leg with a spoon. 

So, our food bill was often over $600.00 a month. For freakin’ two of us. 

That simply wouldn’t do.  

Starting From Scratch

Cooking is one of my very least favorite things to do.  But, given the situation, I had to make it my mission. 

We started by heading down to our local dry goods store.  We bought flour, sugar, oats, rice, pasta, dried fruits, nuts & beans in bulk. 

While we already made most of our meals from scratch, I started making snacks too. I made homemade tortillas & tortilla chips, oatmeal breakfast cookies, granola bars & trail mix.

And I found the joy of the crock pot. Because crock potting is easy cooking. You just throw a bunch of food in it and a few hours later, voila!, dinner.

I also discovered that if you filled a crock pot with veggies & beans or potatoes or pasta, you didn’t need to add as much meat.

Saving at the Store

Most coupons are for junk…be it junk food or junk chemical cleaners. So, unfortunately we couldn’t save money at the store by couponing.

But…we could save money based on our store choice.  We found our local butcher, our local farmer’s market, Produce Junction, and Aldi.  

We comparison shopped each place, & stocked our freezer when we found anything on special.

By making all of our food from scratch, switching up stores, & bargain shopping, we were able to cut our grocery bill by almost half.

Saving Money on Your Utilities

Generally, utilities are hard to cut down…but not impossible.

Electric, gas & water companies usually have budget billing.  They average your cost out for the year & bill you the same rate monthly, which means no huge bill surprises.

mini power strip with switch in outlet

I became an electric nazi too.  All of our electronics were on power strips, so I started a daily cycle of shutting turning them off when they weren’t in use or charging.  We love these Single Port Power Adapters to use in places that you don’t need a big hockin’ full strip; like for our cell phones, the blender, etc.

Electric items that are plugged in draw electricity even when they’re not in use.  They’re called energy vampires.  

Cutting the Cord

We hadn’t had cable for a number of years prior to our financial crash, so that wasn’t a place I could cut.  

Vintage TV with no cable

But, if you’re still using cable, take a look at our post about Cutting the Cord.

You’ll save a ton of money & it’s truly not as bad as you might think.

Saving Money on Your Internet Bill

If we were truly, deeply going bare bones as bare bones could be, I could have cut out the internet and gone to the library instead.  But…part of my physical ailment was pretty serious vertigo, so driving was an issue.  

I did need the internet to continue my (albeit extremely meager) income from my online business.  

So the internet stayed.  But that didn’t mean we couldn’t cut it back.  

I decided to cut back to the slowest speed they had available & got a special that ended up cutting our bill by two thirds. We’re not heavy device users, so we never even noticed the speed change.

And so we lived on our Bare Bones Budget for two years. 

We survived, our electric stayed on and we didn’t lose our house. 

But despite our cutbacks, we still amassed debt.  Our taxes fell behind & we had several vehicle and pet emergencies.  

Making More Money

So two years later…I finally found a part time job close to home (a rarity as we live in the country) that I could drive to despite the vertigo, that also met my limited, though improved other physical abilities.

Finally!  Relief. It wasn’t much, but it did mean we could start the second part of getting out of debt…the making more money part.

We could’ve gone on a vacation…could’ve told ourselves we deserved it with all the stress we’d dealt with.  

We could’ve gone out and finally bought new underwear (they were all pretty holey by then).  

Staying the Course

But we kept to our get out of debt mindset.

Farmboy & I decided that since we made it for two years on a bare bones budget, we may as well pretend that the money that came in from my job didn’t exist.  

The majority of the money I earned at my new part time job would be allocated to paying off our debt. The extra income wasn’t a lot, but it was forward progress.

Creating an Emergency Fund

But first, we created an emergency fund. We saved every penny I made for two months while continuing to pay minimums on our credit cards. 

VW Bug on the beach with hood open

An emergency fund should be your first priority when you’re ready to climb out of debt.  Your whole plan can quickly be thrown off by a surprise car or medical bill if you don’t have a slush fund.   

Get a grand or two in the bank & then start….

Attacking Your Debt with a Debt Snowball

The Debt Snowball technique is simple. 

You make a list of all of your debts including interest. Any extra wiggle room you have in your budget, any work bonuses, Christmas or Birthday money…any extra cash goes as extra payments on the smallest debt you have.

Woman holding snowball in hands

When you’re done paying off the smallest debt you have, you take whatever money you were paying towards that monthly, and apply it to the second smallest debt you have. 

These were our totals when we started the debt snowball.

Taxes 3500

Car Payment 3200

New engine for car (one of the emergencies) 4400

Truck Loan 4800

Credit Cards 5000+

As they were a priority (keeping our house was kind of important), I started by paying off the taxes first while paying minimums on the rest.

Next up was the monthly payments. I started with the car payment, which was $140.00 per month.  The extra money from my paychecks & any surprise bonuses went towards that.

Once we paid it off (and damn did that feel good!), I began applying that $140.00 plus any extra towards the engine loan.  

After the engine loan was paid off, we moved on down the line.

Finally Debt Free

It took about 2 ½ years of dedication and unfaltering determination, but we did it. 

Hippie girl in field with hands out

We climbed out of our terrible, stressful debt hole!  And, because of our new mindset and lifestyle change, by the end of the third year, we also had enough money in savings to cover several new emergencies that cropped up.

Because Murphy’s Law…

And boy did they crop up!

The difference was, this time, when we had 2,500 dollars worth of car emergencies, a mold issue in our home that required the installation of a french drain, mold remediation & the purchase of several new air conditioner/dehumidifiers bringing us to a total of a surprise $5,000…we had the money.

I’m thankful that we changed our debt mindset and our lifestyle because if we hadn’t, those emergencies, instead of being annoying inconveniences, would have sunk us.

Your Getting Out of Debt Journey

You can do it too.  Your story will be different.  It may take you longer, or it may not. 

Your income, your expenses, your debt, & your emergencies will vary.  But with the application of the debt mindset & serious determination the outcome will be the same.  

You can have less stress and you can be debt free. So go get at it…you got this!

How we paid of $21,000 of debt in 3 years with man and woman looking at a mountain

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