We Have Debt – 10 Things You Need to do to Get Out of Debt

Debt squeezes your finances

What are you going to do about that debt? In this post, I will outline steps for getting out of debt and show our plan.

In my last blog post, I mentioned debt. It pains me to admit this: we have debt. We have credit card debt. We have student loans (all mine). We have a mortgage.

Why do we want to get rid of this debt? There are two main reasons.

  • Avoid interest
  • Increase our savings rate

We want to get rid of the credit card debt and student loans ASAP.

Debt Type AmountInterest Rate
Credit Cards$4,80018%
Student Loans$18,5007-9%
Non-Mortgage Total$23,300N/A
Mortgage$190,2003.125%
All of our debt

When and how will we get rid of this debt? An easy answer-  pay it off with our income. Since we have consumer debt, we are not contributing any money to our retirement accounts (besides up to my wife’s 4% match, because it’s free money and our timeline to pay this debt completely off is relatively short). 

We have a plan to pay the student loans and credit cards off by February 2021.

Here are the 10 steps we are taking and you should follow.

  1. Understand why you want to pay off the debt
    • If you’re like me, you probably want to pay it off so that you can increase your savings rate and get you to financial independence sooner. However, you may have different goals like buying a nice car or new house.
  2. Determine all of your debts and interest rates
    • You will need to know what debts you have, the interest rates, and of course the amount of debt. Write down all of the debt totals. Study them. Know them. Add all the debts together. That number is your goal to pay off. Exclude your mortgage.
  3. Make a budget
    • Determine ALL of your monthly expenses and how much money you have leftover.
  4. Limit excess spending and unnecessary purchases
    • Excess spending prevents you from paying off your debt fast. Do you really need that new phone or go out to eat 3 times a week?
  5. Be Frugal
    • Spend less of the hard-earned cash and put the extra saved on the debt.
    • Use coupons, buy the generic brands, grow your own vegetables, reuse what you can.
    • Buy used. Check out local thrift shops, you might be surprised what gems you could find. Also try eBay or Facebook marketplace.
  6. Don’t pay the minimum payment, pay the maximum payment. 
    • The maximum payment is everything you can afford after necessary expenses.
  7. Make a plan to pay the debt off
    • Do you want to pay the smallest debts first? Then start by paying the smallest debt first. Get that satisfaction of knocking out one debt! Woohoo!
    • Do you want to avoid the most interest possible? Then start by paying off the debt with the highest interest rate first. Get the satisfaction of dodging the interest!
  8. Temporarily limit contributions to retirement account and use it to pay debt instead
    • Are you contributing excess funds to your 401k, 403b, Roth IRA, IRA, or other type of retirement account and have high interest debt? Perhaps temporarily reducing or eliminating contributions would help you get out of debt faster. Besides your high interest debt might be costing you more money than what you could make on your investment.
  9. Use any extra money to pay off debt
    • Getting a bonus check, tax return, inheritance? Use the extra money to pay off the debt.
  10. Make a schedule to pay off the debt
    • Having a monthly or weekly goal of how much you will pay will help you visualize paying off the debt and keep you on track

We will be paying off our credit cards first. Why? First reason is because the interest rate is higher, second reason is because the amount is lower, and third (and most important) reason is because the federal student loans are interest free until 2021. 

The Coronavirus relief package and it’s extension by executive order suspended federal student loans without until through the remainder of 2020. Since there is no interest on the federal student loans, we will pay the credit cards off first. 

Everyone’s situation is unique. The first step to paying off your debt is to focus.

Paying off the smallest to largest debts first may be more psychologically thrilling to you, or if you’re like me- paying off the highest interest rate debt may be more appealing.

Whether you need to be able to check-off smaller debts first to see progress and keep you motivated or save money on interest to keep you slugging away the debt, either way the goal is clear- PAY IT and PAY IT ASAP! 


Since January 2020, we paid off $27k worth of debt (car loan, credit cards, phone finance, fence for our backyard) and got married. We were able to accomplish this by creating a budget and sticking to it. We have been putting 95% of our extra money towards debt. We use a Google Sheet template I developed to budget, track our debt, and plan how to pay it.

We are on a roll and have no doubts we will hack off the remaining $23k. 

When will we pay it off? I have our plan outline below:

Oct 2020 Income (after tax)$9,100
Oct 2020 Expenses$4,800
Oct 2020 CC Payment$4,100
Nov 2020 Income (after tax)$9,100
Nov 2020 Expenses$4,350
Nov 2020 CC Payment$700
Dec 2020 Income (after tax)$11,400
Dec 2020 Expenses$5,400
Dec 2020 Student Loan  Payment$6,000
Jan 2021 Income (after tax)$9,100
Jan 2021 Expenses$4,350
Jan 2021 Student Loan Payment$4,750
Feb 2021 Income (after tax)$9,100 (potential $5k bonus)
Feb 2021 Expenses$4,350
Feb 2021 Student Loan Payment$4,750
Mar 2021 Income (after tax)$9,100 
Mar 2021 Expenses$4,350
Mar 2021 Student Loan Payment$3,100
Debt Payoff Schedule

In December, I will receive a 2% holiday bonus and my wife will get paid for her part-time/side job teaching at a local university. We will use some of the extra money for holiday gifts and the remainder onto the student loan debt to try to decrease the balance as fast as possible before the interest kicks back in. 

If I get a bonus in February 2021 (this would be my 2020 bonus if my performance is good), I can get $5k or more. If I do, the student loans will be paid off completely in February, if not it will have to wait until March. 

After paying off this debt, we will be able to save more aggressively and pay a bit extra on our mortgage. 

We can do this. You can do it too. Pay off your debt like it’s not good for you (hint: it isn’t).

How much debt do you have and when will you pay it off?

The next blog update will be our first Monthly Milestone! Our financial goals and progress with a detailed outline will be shared. 

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