Disclaimer: This post may contain affiliate links. I would earn a little money with no extra cost to you. The opinions expressed are my own. Read my disclaimer to learn more.
I’m here to tell you that you can have your cake and eat it too. I know, it’s not supposed to be true, but it is. In one year, my wife and I paid off a crap ton of debt and saved enough money to buy a house. In that year, we learned how to get out of debt and save money.
A few years ago we met with a friend of ours who also happens to be a financial advisor. We told him we were working like crazy to become debt free and were pouring every dollar into extra student loan payments. It didn’t make sense to put money toward savings if we had a mountain of debt.
He countered with a short story. When you get into debt, you dig yourself into a whole. While you work relentlessly to pay off your debt, you shovel dirt back into the whole. The faster you fill in the whole, the faster you’ll be debt free and back to level ground.
But then you’ll just be standing on level ground with nothing to really show for it. Instead of putting every shovel full of dirt into the hole, why not throw a a shovel or two off to the side to grow your savings? Then when you’re debt free, you have a pile of savings or investments waiting for you.
That’s the path we took and I’m so glad we did. We paid off $29,500 of student loan debt in one year, and saved enough money to put a down payment on our house. Here’s how we did it.
We Made a Debt Snowball Spreadsheet
I’m not going to get into all the details of creating a debt snowball spreadsheet here. If you want a step by step guide to creating your own debt snowball spreadsheet, you can find it here. You can also download one with complete instructions here.
When we first started dating, Jenna and I combined for five student loans with loan payments totaling $921.91 a month, and that was just the minimum payment. And because I’m super nerdy, I calculated that this amount was 21% of our monthly income.
If you’ve been following me for a while, you might already know that I’m a huge fan of Dave Ramsey’s debt snowball spreadsheet. The debt snowball helped us get out of debt way faster than we thought possible. It also helped that we threw every spare dollar toward our student loans.
In the early months of repayment, the debt snowball spreadsheet helped us develop mental toughness to “just get it done.” One by one, our debts were paid in full and every time it accelerated the process of becoming debt free. Plus we starting trusting the our plan to get out of debt fast.
To give you an idea of the dramatic impact, our giant student loan went from $30,500 to $13,100 between May and December! Talk about accelerated repayment!!!
Now we definitely had some other factors that played a role, but even so, it helped us kick some serious butt!
We Made More Money Teaching
As teachers, we don’t get many raises other than about 2% to keep up with increased costs of living. Sometimes we don’t even get that. However, since Jenna is a science teacher, she got a much bigger raise. In Minnesota, there’s a shortage of highly qualified science teachers, so the Department of Education gave raises to science teachers due to it being a “hard to place” position.
As a result, she got an extra $3,500 added to her salary just for being a science teacher. (Sadly, social studies teachers didn’t get the same love) That had a huge impact on our monthly take home pay!
Another contributor to our income was taking on extra positions at our school. We both helped coach our school’s middle school volleyball team, and I coached the boys basketball team.
I truly love being a coach, so most of the time this didn’t feel like extra work for me. Being a middle school coach isn’t a glamorous position with a big paycheck, but through all of the coaching we pulled in an extra $1,800 total.
The key word being extra, because it all went towards paying down our loans. In addition to coaching, Jenna took on a leadership role planning school events, curriculum for our core values, and running assemblies. She did a lot of work to help make our school a better place and was rewarded with about $1,000.
Again, it isn’t a lot, but every little bit helps!
Our Side Hustles Helped Us Make More Money
One of the biggest differences from our first year of marriage to the second year was working at a restaurant and earning cash tips. Last year (our third year of marriage) was no different. The restaurant we work at is in the touristy part of town and attracts loads of guests in the summer season.
The first year, we worked at the restaurant for eight months, raking in $13,360.45 (again, this is all extra that goes towards our loans!).
One big difference this year is that Jenna got promoted to a night server. Previously, she was a day server and a host, so this was a huge promotion, because night serving is where the money is at.
The restaurant is busier at night, and the food costs more on the dinner menu compared to lunch. This promotion alone led to an extra $6,000 to tack onto our student loan payments, bringing our second job total income to $22,320.84 (the rest of the increase came from working an entire 12 months, compared to 8).
With this kind of income, it’s safe to say our second job has been instrumental to paying off our loans in such a short amount of time! If you don’t have a second job or side hustle, I highly recommend getting into the restaurant business! It is worth it!
We Saved Money by Meal Prepping
When we started dating, we made a radical decision to stop going out to eat.
Instead, we choose to meal prep on Sundays and cook meals for the entire week. I hate cooking, so this is a really good thing for me. If I can suck it up and cook everything in one day, it means I don’t have to cook at all the rest of the week. All I need is a microwave and I’m set to enjoy a hot, delicious meal!
It’s really made it easier to avoid going out to eat too. It’s hard to justify spending $30-50 eating out when I have a complete meal waiting in the fridge. Each month we save between $50-150 by not dining out. We also only spend $60 a week on food, which according to our friends is barely anything.
We’ve found that our money stretches farther when we buy in bulk at SAMs club, and buy a lot of the same things every week. If you’re looking to save money on your food budget, I wrote a whole post on the topic.
Oh, and We Bought a House While Paying Off Debt
I know what you’re thinking, buying a house isn’t paying off debt. You’re right, it isn’t, and it did deter from our ability to pay off even more debt. But remember what I said about having your cake and eating it too? This was a sweet victory for us.
We’d slowly been saving a little each month to buy a house for years, and then went into overdrive when our dream home went up for sale.
In the end, we sacrificed about $4,500 from our debt repayment, and could’ve become debt free a couple months sooner. But we love our house and wouldn’t change a thing.
Even though we weren’t completely debt free when we bought our house, we worked extremely hard and delayed this purchase for several years.
It was a tough decision to make, but for us, I think it was the right choice. It may have slowed down our goal of paying off debt, but it also helped use achieve another goal of being homeowners and finally getting a dog! 🙂
How to Get Out of Debt and Save Money
It’s still hard to believe that we paid off $29,500 on our loans. In the grand scheme of things, that was 39.6% of our total income (did I mention I’m nerdy and love spreadsheets?).
It’s even harder to believe that at the same time we saved enough money to put a down payment on our dream home. It was a great year for us and I’m thankful for the advice from our financial advisor. He gave us inspiration to learn how to get out of debt and save money.
Let Me Know in the Comments
What do you think? Can you save money while getting out of debt?
Our budget and goals changed our lives and it can change yours too.
If you want the same debt snowball spreadsheet we used to pay off $73,000 of student loan debt in 4 years, tap the button.
As an Educator and Personal Finance Blogger, Jamie has helped hundreds of families learn how to budget, save money, and pay off debt (go here to subscribe and start your debt free journey). Read our debt free story, “How We Paid Off $73,000 of Debt in Less Than Four Years”.