That’s right, this is the post I’ve been waiting to write since before I started FiscalGeek. We just sent off our final payoff to Wachovia Dealer Services on our VW Sportwagen. In just over 11 months we have managed to pay off $63,535.65 of credit cards, credit lines and two vehicle loans. Yes we still owe on the house but don’t rain on my parade. Since this is such a special day I’ve asked FiscalWife to help document our story sharing her insights on our journey to financial freedom because I certainly couldn’t be writing this post without her incredible help and support through this process.

What Made you Decide to Get Debt Free?

Paul: Honestly this was all Angela (FiscalWife) to start. We were sitting in church and they were doing ads for Dave Ramsey’s Financial Peace University. Later that day she mentioned that we should go because she was concerned about our finances. I halfheartedly agreed and we signed up. Up until this point in our marriage our finances were a relatively taboo subject. We just kind of avoided the issue because we felt relatively helpless and directionless. Plus I bought a lot of stuff but that’s neither here nor there. After that first session I was beyond gung ho. As my wife would tell you, when I’m focused on something my vision narrows and I throw myself at it with full force.

Ang: I had been concerned with the state of our finances for a couple of years before we started on the plan. I knew we were making way too much money to be going in and out of debt. Also, Paul and I had very different spending habits – he loves cars, gadgets, outdoor equipment and other toys. I enjoy outdoor equipment too, but I’m not much of a spender and agonize over purchases. Paul would literally come home with spreadsheets to show me why we “needed” this motorcycle or that recreational item… I was no match for him. If it was something I thought would be fun, I’d give in quickly. If it was something I wasn’t sure about… it was only a matter of time. My problem was that I was disorganized and over-committed with my time. We were spending a ton of money on eating out because I hated planning our meals. Basically, I knew that we were being wasteful of the money that God had so graciously providing for us through Paul’s employment. We were spending too much on things we didn’t need. I have had the wonderful opportunity to give some of my time to short-term, over-seas missions. I want to continue to serve over seas as God calls me. I also want to be able to give substantially to different ministries all around the world. I knew we weren’t going to be able to do that well if we continued to go into debt.

How Did We Get Started?

Ang: I had voiced my concerns a couple of times, but we didn’t really make any changes. We would just wait to pay off our debt when we would get a bonus. That would relieve my concerns a little, but then I would be frustrated again, because if we had stayed out of debt we could have had a nice little savings account. I didn’t really know how to bring this up in a way that didn’t make me come off as the nagging and disapproving wife, so I began to pray for Paul and myself. I prayed that God would help us to get our acts together and that if possible, He would send a mentor along for us. Especially for Paul, I really wanted to find someone whose opinions Paul could respect. Well, when we started Financial Peace University last January, I had nooo idea the impact Dave Ramsey would have on our family. Paul immediately read the materials and it’s like a switch was flipped in his heart. I’m sure Paul will tell you more, but from my perspective, I saw Paul mature in his role as a husband, father and provider. He has always been such a faithful, devoted and generous guy – but it’s like the “baby steps” were the just the right amount of tinder to set his passion aflame!

Paul: We started by raising a baby emergency fund of $1000. Some may argue that you want a larger cushion for emergencies but this is what Dave Ramsey recommends and I have to admit I’m a rule follower. What I would do though is once we got a budget going I’d save our large debt payment until the end of the month so we’d have our $1000 plus our debt payment as an extra buffer in case anything came up. Fortunately we didn’t have any super huge hangups other than my brakes in the truck.

We used the debt snowball method to order our debts from smallest to largest but with one modification. I had a much hated Citibank credit card that was in the middle of the snowball but since we had a tax return coming knocked that out first. That really kicked things off (that one had adjusted to a 29% APR that they offered to reduce once I paid it off, classy). We then just systematically moved through our debts from smallest to largest rolling our big old snowball. Every time we paid off a debt we were able to throw those payments on to the next one. It really does work, there is a great satisfaction in tackling one after the other. Be sure to take the small wins and celebrate on your way out.

The Breakdown of our Debt

  • 1st Credit Union Visa: $992.04
  • Wells Fargo Overdraft Credit Line: $1234.48
  • Citibank Mastercard: $6693.58
  • Credit Union Truck Loan: $10,139.17
  • 2nd Credit Union Visa: $11,505.17
  • Wachovia Car Loan: $32,971.21

Where Did You Get $63,000 in 11 Months?

Paul: Short answer all over the place. I have to admit I make a good wage at my day job. I’ve been in the tech industry going on 15 years as a network engineer. So we have a relatively large shovel with which to dig ourselves out. Although all of these payments and a large mortgage don’t help much. We worked really hard to get a good zero based budget going which was the very key for our success in my opinion. Angela worked a part time job which all went towards debt. I sold pretty much everything that we had laying around either on eBay or Craigslist. Most of it was my stuff. I admit it, I like to buy things especially gadgets. Fortunately newer gadgets have a decent resale value. My employer offers stock awards based on yearly performance so I was able to take the stock that vested and throw it at our snowball. I also received a yearly review bonus that also helped. This blog actually helped a bit, as the months have gone on I’ve been getting more and more traffic and revenue from the ads on this site (I hope you don’t find them too intrusive). Finally just this week I sold my motorcycle which is allowing us to hit our goal.

Ang: From my perspective, the best explanation is that we really did “give every dollar a name”! I actually love our monthly budget meetings. I knew that it was a time where I could lay out our needs (for my domain – house, kids, pets, etc.) and that we would work it out. We also talked about the fact that if we aren’t going to be eating out as often, I needed to know that I had Paul’s support to make meal planning a priority. No complaining about having to eat leftovers or “cheap” food. Most months we budgeted enough money for a dinner out every two weeks. There was also an “entertainment” budget for a date night or movie with the kids a couple of times a month. We weren’t stuck languishing at home every weekend! We also allocated money for things like gifts, hair care, school supplies, pet care and gas. Once we figured out our averages in these categories, we just stuck with them. We are very fortunate that we can live comfortably on about half of our income.

I think the biggest source of non-conventional income for our debt pay-off is learning contentment. I don’t feel the need to have a super nice, well decorated house and designer clothes. Our kids don’t participate in every sport or activity offered. We try to choose to do the things we love at affordable prices. We ski, but we don’t go on ski vacations. We pack a lunch, packets of hot cocoa and instant coffee. I actually had an argument with the lady at our local “ski resort” because she was going to try to charge me a dollar for a paper cup. We will continue to live like this as far as I’m concerned. If we are going to go to the beach, you better bet we’ll be packing along our tent and cooler. Living on less than you make, requires a little creativity. In the book of Philippians, the apostle Paul writes: “I have learned to be content whatever the circumstances. I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want. I can do everything through him who gives me strength…”. I try to tell our boys that we are fortunate, we have everything we need and most of the things we want. I am thankful, like the apostle Paul, for the perspective that comes from experiencing both ends of the spectrum. God is faithful and longs to walk closely with us no matter what our financial situation.

What Was the Most Crucial Thing You Learned Through This Process?

Paul: For me it was how to build and use a budget. Over the last year we’ve got a good and workable fiscal plan in place and we’re able to account for things that happen like car repair. Also this year we were able to pay cash for our entire Christmas for the first time ever. Along with that we have adopted cash envelope budgeting which makes it really easy to keep track of your spending. If there’s no cash, you don’t buy anything.

Ang: The most crucial thing for me was to learn how to communicate with Paul about our finances. Early in our marriage, I did the finances. But then I had two little guys to take care of and we were moving to a new area. I was overwhelmed and handed them back to Paul. I knew things weren’t going well, but I didn’t want to just take them back, like a mother scolding a child. I wanted to work through them with Paul – with him taking the initiative. I wanted him to lead our family into this area of growth. Taking the Financial Peace University class gave us tools we needed to start the conversation. Dave Ramsey’s perspective gave us insight into how men and women look at money and broke down some of the communication barriers. Now we just keep the lines open.

What Was the Hardest Thing About Paying Off This Debt?

Ang: The hardest part for me was keeping my time organized so that I could properly plan our household needs. I needed to carve out time to have food in the house and make dinner, so we weren’t tempted to eat out. I also needed to be organized so that I could accurately predict our needs at budget meetings. It’s hard to remember things like school pictures and teachers’ gifts without taking some time to think the month over.

Paul: This would be the budget. I’ll tell you the first 2-3 months was rough trying to get a workable budget going. If you haven’t been operating on one it takes awhile to figure out how much you really can live on in your various categories. It also takes some negotiation as to what stays and what goes. I got pretty frustrated early on being the geek and wanting to account for every penny. This is where the envelope budgeting was so helpful because Angela could manage her stuff without feeling like I was watching her every move. There needs to be some give and take if you are going through this with a significant other. Like weight loss or working out you need to stick with it and get through the first month or two of difficulties. It will really pay off in the end.

What Did you Find Surprisingly Easy About Paying Off Your Debt?

Paul: conspicuous consumption. I like stuff. I love gadgets, tools, cars, motorcycles. Over the years I’ve acquired a lot of stuff, most of it on credit. So I was incredibly surprised to find out that I really didn’t need that stuff. Along this process I found something I never knew I was looking for: contentment. I am very blessed and this process helped me to realize that fact. I got rid of many things I didn’t really need and feel much better about it. I promise I have sworn off new cars entirely. Truthfully I feel like the scales are lifted from my eyes and I look forward to the future where we can invest and give freely without the burdens of debt around our necks.

Ang: Sticking to the budget once we agreed to it. I felt we did a pretty job of talking things through. I loved hearing Paul tell me that he had sent another big chunk of money off to some credit card at the end of the month. He would send me spreadsheets (you think I’m kidding, but no) of our debt pay-off progress. I loved seeing more and more zeros at the bottom of our different loan balances.

Now What?

Ang: Well, I’m thrilled to think that we will have our emergency savings fully funded by the end of summer. Then we are thinking of taking a trip to see our friends in Australia. Then, I suppose we move on to paying off the house and getting the boys all set up for college (at least for tuition,books and housing – I’m thinking they should have a part-time job to support some of their expenses). I get excited thinking that if we maintain our current lifestyle, we can really begin to “give like no one else”. I want us to be set up for a good retirement, of course, but I really want to know that we are being good stewards of God’s provision in our life.

Paul: stay the course. We’ve got our budget in place, that will remain relatively the same and those payments that would have gone to our debt are going to fund a large emergency fund based on six months of expenses. Once that is complete we’re kicking off our 401k retirement investing as well as funding a Coverdell ESA for our two boys college. We will then cap that off with a trip to Australia and finally to paying off the house. That’s our plan and I’ll keep you posted as we go right here on FiscalGeek. Thanks for reading, this indeed is a happy day in the FiscalGeek household and it’s great fun to share it with you.

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Jake Stichler 2010/01/15 at 1:10 am

Only 11 months! Holy mackerel, congratulations! Being debt free is one thing, but in such a short amount of time (of course your big shovel helps a lot) is simply astounding. Sure wish I had a bigger shovel… 4 years 4 months to go! 😀
.-= Jake Stichler´s last blog ..Happenings =-.

Ron 2010/01/15 at 4:08 am

Awesome! Congratulations on hitting a very big goal! I’ve only got a student loan left, but it should be hammered out in a few more months and I’ll be writing an article like this one. Thanks for some inspiration today!

FFB 2010/01/15 at 4:48 am

Congrats! Awesome achievement and an inspiration to others with debt.
.-= FFB´s last blog ..Is Shopping Online For Insurance A Myth? =-.

Paul Williams 2010/01/15 at 6:14 am

Awesome, Paul!!! I’m so happy for you all. That’s a huge accomplishment, and this post will help motivate others to do the same. Blessings as you go forward in God’s direction for your life!
.-= Paul Williams´s last blog ..Gone to Haiti ““ Be Back on January 28th =-.

Rhonda 2010/01/15 at 6:47 am

Congratulations! That’s amazing!! My husband and I have been debt free (other than a mortgage) our entire married life. Everyone thinks it’s wonderful and it is, but it can be challenging to know the best way to save. Putting money in the bank as cash is good to a point, but you don’t want hundreds of thousands of dollars in a savings account. I get very confused reading people’s thoughts on the subject. I hope you will keep us all updated on how you invest this “free” (free as in liberated from debt) cash.

The Casual Observer 2010/01/15 at 6:59 am

Very impressive. Congrats.
.-= The Casual Observer´s last blog ..Member Exclusive: The Professional =-.

[email protected] 2010/01/15 at 7:32 am

63k in less than one year! Has it all sunk in yet? Now you’ll be able to take out the mortgage in no time, since you have no other debt to compete for funds.

I really liked Angela’s comment, “I think the biggest source of non-conventional income for our debt pay-off is learning contentment.” Wow, that speaks volumes.

We live in a culture that feeds non-contentment, because that’s how we’re enticed into buying things we don’t really need. Most of our needs are manufactured by the advertising culture, and if you can break free of that cycle you’ve as good as found financial independence.

Congratulations to both of you!
.-= [email protected]´s last blog ..The High Cost of Convenience =-.

My Frugal Miser 2010/01/15 at 7:49 am

Wow…congratulations on this milestone. I bet it feels great to know these are all paid off. How soon until the house is paid for?

paul 2010/01/15 at 7:57 am

We’ve targeted about 7 years for the house, but we have a long way to go for that one unfortunately.

The Lost Goat 2010/01/15 at 8:02 am

.-= The Lost Goat´s last blog ..Used Cars Part 2 – Gas, Insurance, and Cost to Own =-.

Four Pillars 2010/01/15 at 8:02 am

What a great success story – thanks for sharing.

I’m still chuckling over the “spreadsheet to justify a motorcycle” line. Lol.


Mrs. Micah 2010/01/15 at 8:11 am

Love the spreadsheets idea, I’ll have to remember that when we’re debt free. “Here honey, this spreadsheet shows exactly why my new quilting frame is a great investment.”

So the next question is–are you going to save $63k in 2010?
.-= Mrs. Micah´s last blog ..What Are Opportunity Costs? ““ Textbook Personal Finance =-.

paul 2010/01/15 at 8:48 am

You can show all sorts of useful stuff via spreadsheets. In my own defense it was to show that the 12mpg that my truck got versus the 60mpg the motorcycle got justified it’s cost in only 2 years. FYI that’s the motorcycle I just sold on Tuesday. I’m a reformed man. You bet we’re saving 63k in 2010 maybe slightly less since we’ll be kicking in college saving and retirement but you bet. House is next. Yeah I’m talking to you 1979 split level!

Jake Stichler 2010/01/15 at 12:24 pm

Heh, Paul, I did the exact same thing to buy mine! It was one of the many tools I used to convince dear mother to finance it for me, only my numbers were 12 and 75.
.-= Jake Stichler´s last blog ..Happenings =-.

Dan Dameron 2010/01/17 at 2:07 pm

Buck, I think that your and Ang’s story is great, and hopefully will inspire a lot of people to do likewise. Why did you sell the bike, though. Gas mileage really is one of the big reasons that I ride a motorcycle (along with fun, and ease of parking), and I think it has long since paid itself off.

PT 2010/01/15 at 8:26 am

Great job and thanks for sharing the story. Here I was thinking we had a nice year. You guys crushed it, big time. Congrats and here’s to savings $65K in 2010.
.-= PT´s last blog ..Tax Preparation Checklist =-.

Money Funk 2010/01/15 at 8:27 am

Congratulations Paul & Angela! You’ve done quite an amazing job – quite an inspiration for many of us.

I agree that getting the budget going in the beginning took me 2-3 months til it found some sort of zen. It’s nice to see a success story. Many future wishes of building your wealth now. 😉
.-= Money Funk´s last blog ..Could I be cutting myself short? =-.

Patrick 2010/01/15 at 8:32 am

Simply amazing progress! 🙂

The cool thing is that if you put similar efforts into saving money, you will watch your savings and investments grow in a way you never thought possibly – remember, now you have compound interest working in your favor, which is a beautiful thing! 😉
.-= Patrick´s last blog ..How You Can Help the Relief Efforts in Haiti =-.

MoneyEnergy 2010/01/15 at 9:27 am

That’s a massive amount to pay off in just one year!! Congrats. I hope to do something similar with my student loans – I’m paying them off as I can, even while still in grad school.
.-= MoneyEnergy´s last blog ..Survival Skills To Barter With In Case of Financial Ruin, Unemployment, or Economic Collapse =-.

Tom @ Canadian Finance Blog 2010/01/15 at 9:31 am

Congrats Paul and Ang! That’s a great accomplishment in a short period of time!
.-= Tom @ Canadian Finance Blog´s last blog ..How To Make Your Household Appliances Last Longer =-.

Jason @ MyMoneyMinute 2010/01/15 at 9:49 am

You guys ROCK!! I’m very proud of you. $63k in a year is insane – we need to get on the ball and do the same. Thanks for s
the inspiration to keep plugging away!
.-= Jason @ MyMoneyMinute´s last blog ..Text Donations for Haiti: 90-Day Wait? =-.

Peter 2010/01/15 at 10:25 am

Congratulations you guys, I’m so proud of you! Paying off that much debt in one year is truly an impressive feat! My wife and I have a similar story – attending a Dave Ramsey FPU class and banging out about 15-20k. Not as much but still we’re proud of it!

By the way Paul, your wife writes really well – you should have her on here more often! 🙂
.-= Peter´s last blog ..2010 Tax Credits For Energy Efficient Vehicles: Tax Incentives For Electric Cars, Hybrids And Conversions =-.

LAL 2010/01/15 at 10:42 am

What percentage of income went towards debt? Congrats on the accomplishment.

Kaye 2010/01/15 at 11:07 am

Amazing job! Congratulations on your new-found freedom!
.-= Kaye´s last blog ..Friday Faves – Gross. Just. Gross. =-.

Daniel 2010/01/15 at 11:29 am

My guest post at Money Relationship may calm you, but this excites me! I’m beyond amazed, congratulations!
.-= Daniel´s last blog ..FSA to the Rescue! =-.

Matt Jabs 2010/01/15 at 11:57 am

The best thing I read in this post is not the money you paid off. It is not the budget you formed. It is not the termination of your gadget fetish.

The best thing is that you both mentioned learning to be content with whatever you have… be it much, or little.

You simply cannot put a price on that. Awesome work Paul & Angela!
.-= Matt Jabs´s last blog ..Credit Financing and Deferred Billing ““ Kate Answered =-.

LeanLifeCoach 2010/01/15 at 12:26 pm

Fantastic… Congratulations!

Sounds to me like a great excuse to splurge ( a little! ) on a piece of beautiful wood so that you can create a plaque for yourself commemorating this event!

Keep up the great work and focus on your long-term financial health. This was the toughest part, but it’s only the beginning of a new journey!
.-= LeanLifeCoach´s last blog ..Knowledge Feels Good ““ And Makes A Difference! =-.

paul 2010/01/15 at 1:05 pm

Ooh that’s a fantastic idea, I’ve already got some wood out in the shape, I just may do that.

Joe Plemon 2010/01/15 at 12:59 pm

Congratulations! Great story told really well and a great encouragement. I loved reading both husband and wife perspectives. And I, like Matt, realized the real achievement: contentment.
.-= Joe Plemon´s last blog ..Serving, Blogging, Money and Motives =-.

paul 2010/01/15 at 1:07 pm

Yeah it’s fun to read them together, I gave her the questions I was asking myself and we wrote independently, if you ask me we’re pretty in synch. She’s quite a lady, and it’s amazing that paying off debt could be something to bring us together in many different ways.

Jason @ Redeeming Riches 2010/01/15 at 1:38 pm

Wow! That is truly awesome Paul – that’s a HUGE chunka debt! I won’t rehash, but just reiterate what the others are saying about contentment! Great job!!
.-= Jason @ Redeeming Riches´s last blog ..This Week in Personal Finance ““ January 15, 2010 =-.

Brian 2010/01/15 at 1:49 pm

Paul and Ang,

This is such a great and inspiring story. Its not just about getting out of debt, but about love and support. Going through the trials and tribulations caused by debt in a marriage could be terrible. I am really happy that it finally clicked for Paul, and that you guys went ahead at discarding the debt with gusto.

Kudos to you both!

paul 2010/01/15 at 1:55 pm

Thank you Brian much appreciated. BTW listened to your podcast on consumerism commentary, very cool! Everyone be sure to check out My Next Buck and not just because my financial foul up is on there today.

[email protected] 2010/01/15 at 2:09 pm

Congratulations to you both! 🙂

Brad Chaffee 2010/01/15 at 2:22 pm

Congratulations man! Awesome awesome job! You really killed it too! I know your vehicle drives a lot better now that it’s paid for.

P.S. Maybe you should consider adding my “Proud to be Debt Free badge to your site. 🙂
.-= Brad Chaffee´s last blog ..The 50 Plates In 50 States Project =-.

Len Penzo 2010/01/15 at 4:21 pm

Congratulations, Paul! That is a very impressive accomplishment. Imagine, the savings you accrue from here on out are going to pay YOU, not your creditors.


All the best,

Len Penzo dot Com
.-= Len Penzo´s last blog ..Drive-By Movie Review: The Taking of Pelham 1 2 3 =-.

Bob Horn 2010/01/15 at 5:37 pm

Way to go Paul and Angela! It was a privilege being a part of your story and having you both in my FPU class at Eastside Foursquare Church (shout-out!). You’re both an inspiration!

paul 2010/01/15 at 8:56 pm

Thanks Bob! It was our pleasure, happy to be celebrating with you today, we’ll come back to FPU and visit to share our story.

April B 2010/01/15 at 7:39 pm

What an inspirational story! My family is currently drowning in debt, we cut up the cards last month and are just starting the journey. Thank you – I need to hear success stories. 🙂
.-= April B´s last blog ..End of the Month Blues =-.

paul 2010/01/15 at 8:56 pm

Thank you April all the best to you and your family.

Financial Samurai 2010/01/15 at 7:46 pm

Wow, that’s HUGE bucks in such a short time! Well done! Now, don’t ever get into that much debt again, you’ll be smooth sailing 4 life! whoo hoo
.-= Financial Samurai´s last blog ..Where Americans Pay The Most To Live And Why =-.

paul 2010/01/15 at 8:56 pm

Thanks Sam, nope we are done with debt for sure.

Evolution Of Wealth 2010/01/15 at 8:00 pm

Congratulations! Awesome job accomplishing your goal.
.-= Evolution Of Wealth´s last blog ..Diversifying Your Income Streams =-.

Ben B 2010/01/15 at 8:44 pm

Awesome job both of you! Its really inspiring to see the team effort.

My fiance and I are working towards the debt-free goal. A sizable amount of student loans is all we have left. We’ve decided to pass on the home purchase for the time being as we’re attracted to the idea of mobility.

We’re trying to brainstorm ideas on how to accelerate our current payoff schedule from 2.5 years down to 1.5 or less.

Best wishes for 2010!

paul 2010/01/15 at 8:58 pm

Great plan, we did the same thing we were originally going to be 18-24 months but sat down and said “You know what? We can bust this quicker if we really focus and get rid of a bunch of stuff we never really needed anyways.” All the best to you and your fiance.

Wojciech Kulicki 2010/01/16 at 10:56 am

First, congratulations! Secondly, your answers were very insighful and a great template for anyone still trying to take control of their finances.

You guys have truly done a remarkable job over the last 12 months. You should be proud of yourselves.
.-= Wojciech Kulicki´s last blog ..5 Good Reasons Not To Save Money =-.

DR 2010/01/16 at 2:52 pm

That’s an amazing amount of debt to pay off in just 11 months. Congrats!
.-= DR´s last blog ..5 Financial Goals Every Baby Boomer Should Set =-.

Kelly 2010/01/16 at 6:14 pm

Congratulations Paul and Angela!
You are such an inspiration!

I only wish we had as big of a shovel as you. We’re on our way, but our timeline is more like 2-3 years. I almost wish we had more gadgets and purchases to sell to help us get out of debt, but most of out debt wasn’t used to buy stuff.

I’m bookmarking this to remind me how it can be done if we work hard enough.

paul 2010/01/16 at 9:13 pm

Thanks Kelly. In some way it was healing to offload some of my stuff, the perfect antidote to stuffitis.

Ray B 2010/01/16 at 11:26 pm

What a powerful testimony as to how the debt snowball works. By having a plan, discipline and working together towards the same goal, you and Angela have set a great example for many families that are in similar situations. Way to go and thanks for sharing.
Ray B, The Wealth Coach

Ken 2010/01/17 at 4:42 am

Congratulations! We’re starting FPU at our church in a few weeks! What a testimony of gazelle intensity!
.-= Ken´s last blog ..Money Secrets? Spill the Beans =-.

Amy 2010/01/17 at 1:52 pm

Unfortunately, Dave’s snowball plan of attack on credit cards has one major flaw – it tells you to attack the credit cards beginning with the one with the lowest balance first. That may psychologically make you feel good, but it costs you money. The proper method of attack is the debt with the highest interest rate goes first and all others get the minimum payment. When that’s paid off, then the next with the highest interest rate. Any other method of attack results in you paying more during your repayment period.

I’m all for making myself feel good with small wins along the way, however, paying the highest interest rate first will allow you to be debt free that much sooner.

Not meaning to take away from your accomplishment, just putting it out there for others who may be looking to do the same.

Wojciech Kulicki 2010/01/17 at 2:43 pm

“The proper method of attack is the debt with the highest interest rate first…paying the highest interest rate first will allow you to be debt free that much sooner.”

Amy–If Dave’s plan or any other approach is what motivates you to get rid of your debt in the most effective way, is that not the method that will have you out of debt sooner? I can attest to this first-hand, having failed many times at paying down balances by interest rate first, but having done it much faster by balances…

I just don’t think we can label too many things in personal finance as the “proper” anything since everyone’s situation and personality is so unique. But that’s just my two cents…
.-= Wojciech Kulicki´s last blog ..“Get Financially Naked” (Thakor/Kedar) =-.

paul 2010/01/17 at 9:37 pm

It seems many have already responded but thought I would add my two cents. I wish it were as simple as math, because I probably wouldn’t have even had to write this post. It has everything to do with behavior. If it didn’t I’d be retiring early and I’d weight about 50 pounds less. I ran the numbers on multiple scenarios for our exact payment schedule and when you come down to it there is a difference of about $286 from one method to the other. Sure that’s money but if I’d never made it this far then it wouldn’t mattered if it was $2000. D.R.’s plan is built around the idea that you need to see some success to keep on with the battle, and my wife and I are a testament to that fact. If you are able to keep at it paying those high interest rates first, then good for you, and I will cheer you along to the very end. The goal is the same.

I would have responded earlier but I was skiing today with my family driving in our paid for car! Woot!

Bob Horn 2010/01/17 at 4:49 pm

Amy, I agree with Wojciech. While mathematically, you are correct–pay the highest interest rate first–as Dave Ramsey says on this point, “If you were doing math, you wouldn’t be in debt in the first place!” It’s really all about behavior modification. So many people have found success with the Debt Snowball because of that psychological win early in the process when you pay off that first small debt. It begins that change in behavior. Call it a “major flaw” if you want, but if it’s helping people change their behavior and begin to win with money, I call that a success!
.-= Bob Horn´s last blog ..The Ride for Impact Recap =-.

Tara 2010/01/17 at 8:09 pm

I also agree with Wojciech. It’s much more important to just get debt paid off, and the how is less important. Sure, by attacking the smallest amount first you may pay less interest over time, but only if you can stick with it, and that won’t necessarily happen (especially for people who like crossing things off of lists).

Eric 2010/01/18 at 4:56 pm

Fantastic. Your story gives me hope/courage.

seattle 2010/01/19 at 9:59 am

Wow, I am so impressed! We are just starting our journey to get out of debt and this is really inspiring! Thank you for sharing.
.-= seattle´s last blog ..The check’s in the mail =-.

Broke by Choice 2010/01/20 at 2:26 am

Congrats! Thanks for sharing your story. I hope to be there one day.

Karen 2010/01/20 at 11:19 am

Congratulations, you two, on an awesome achievement! I knew you were close so it’s great to read that you actually did it! Hoping ours will be as easy – wish it didn’t feel so far off. Thanks for the encouragement your website gives us. Love you guys!


paul 2010/01/20 at 12:03 pm

Thanks Karen, maybe you’ll share your story here when you’re done?

Ingrid 2010/01/21 at 7:18 am

That’s AMAZING! It feels so good to be debt free. It’s funny how it’s so easy to get into debt, whether it’s 10K or 100K, and sooooo hard to get out of it.

When I got out of debt this is how I celebrated

It might be a strange way to celebrate but it seriously felt amazing!

paul 2010/01/21 at 8:32 am

Thanks Ingrid, and congratulations to you too.

[email protected] 2010/01/21 at 4:04 pm

Wow, that’s awesome! You made great progress in such a short amount of time.
.-= [email protected]´s last blog ..How To Take Good Pictures: Christmas Lights, Birthday Candles and More =-.

John 2010/01/21 at 9:33 pm

Great to hear about a successful debt annihilation story.

I bought a motorcycle about 2 years ago. Unfortunately it makes absolutely no financial sense. By the time you figure in the cost of tires and other maintenance it costs about the same to operate as my 20 mpg truck. Buying the bike was my celebration for paying off the truck. Both are now paid off, but I have other debts that require my attention. I should be down to mortgage and student loan by this time next year. Then I can start saving for a new(er) bike!

Maxine 2010/01/25 at 7:18 pm


Just a suggestion for paying off your house–if you have a target date in mind, go to an amortization calculator and find out how much you have to pay each month to accomplish your goal. We wanted our home paid for by my husband’s 60th birthday, and this was relatively painless. He got transferred when we were in the middle of it, but we put ALL of our equity into the new house, took out a 10-year mortgage (the shortest they would write) and amortized it for 7 years.

We also started his 401(k) with 1% of his income–all we could afford at the time–and with annual raises quickly ratcheted it up to 6% (the amount of the company match). Once we paid off our credit cards, we kept going. Within a few years he was contributing the maximum to the 401(k) as well as the maximum to our Roth IRAs. The freedom of being debt-free, including the house, is PRICELESS.

paul 2010/01/25 at 9:41 pm

Maxine thanks for your awesome suggestions. I’ve already got a great spreadsheet for doing exactly what you suggest, playing with a variety of scenarios to see if we can hit our goal in 7-8 years.

Deb 2010/01/26 at 6:43 pm

Your history together sounds so much like me and my husbands and I am very happy to hear that you had such a good outcome. Now to get my “geek” husband onboard to a debt snowball is something that I have been working on. He isn’t so much into tech, but toys! Car collecting, motorcycles, atv’s, boats, and yes he had the income to accumulate such, but with job tranfers and such, well not so good anymore, so we are going to have to work on a solution. which brings me to my point. How do I get him interested in this debt snowball program? He also did the spreadsheets to justify his purchases, and I also did the same as your wife and went along with it, simply because it was easier than fighting over it. I have to admit that my husband can get anything he wants most times because he can convince me that we have funds “on paper” to justify said purchase. I know that we really don’t since I was doing most of the finances then, so I, like your wife had him take over. It wasn’t long before he realized that he had made some real boo-boo’s. He is trying to change, and that says volumes. But he isn’t ready to risk going to a credit counselor so what to do?????
Thanks for any input

paul 2010/01/26 at 8:02 pm

Hi Deb,
First off thanks for coming by and hope you subscribe via email or RSS and thanks for your comment. I got an email right after this post with a dire plea for help and it’s focused largely on the topic you mentioned. Give it a read Retired Early, In Debt, No Job: When the American Dream becomes a Nightmare and I think my suggestions would apply here as well. Hopefully that’s helpful and if not let me know I’ll do everything I can to help.

paige 2010/01/27 at 9:55 am

Thanks for the encouraging story. My husband and I are also doing the debt snowball after I read about it on Simple Mom. We have about 30k in consumer debt (no house yet) and posts like these are giving me the encouragement to keep it up, as I too am the compulsive spender of the two. (Thanks, Dad…)

Also I’m a total geek too and I LOVE your spreadsheet at the top. I’m on my way to make my own right now.

Anyway, thanks again!
.-= paige´s last blog ..WIP Sunday =-.

paul 2010/01/27 at 11:16 am

Great job Paige and keep on it.

James Boerner 2010/02/06 at 11:31 am

Congratulations Paul and Angela, this is a marvelous achievement! Angela, in my opinion you get extra kudos for having to deal with Paul’s spreadsheets and overall ultra-focused nature. We’re on a similar journey in our household as well, just paying off the house. Here’s to debt freedom, and living life on your terms!

-James and Fedra Boerner

paul 2010/02/06 at 10:03 pm

Thanks James, but clearly ultra-focus rulz!

James Boerner 2010/02/07 at 9:40 am

I believe the quote you’re looking for is “I rock. AND roll! All day long, sweet Suzy!” Now that the cards are paid off did you Krav Maga them? 😉

Mama Koala 2010/02/12 at 2:18 pm

Impressive and Inspiring. Thanks for sharing the story–enjoyed hearing both perspectives on the journey.

Alanna 2010/03/14 at 10:41 am

Okay, silly question, but what did you use to create the graph?

paul 2010/03/14 at 1:10 pm

Oh it’s never silly to ask the FiscalGeek about graphs and spreadsheets. :-). That’s actually a clip from my Excel 2007 spreadsheet graph that I used to track our debt paydown. It’s pretty slick huh? If you want a full run down on how to put a dynamic graph on your webpage I wrote up a complete walkthrough: Graph you Debt Snowball with Google Chart another slick method.

Belmont Thornton 2010/06/01 at 9:41 pm

Thanks for this inspirational and informative blog post. Keeping aside bonuses and incentives to pay off debts is a great idea. Even if you are not in debt save that extra amount and accumulate that so that it bail you out in rough financial conditions.

hermes handbags 2010/07/07 at 8:23 pm

Awesome job both of you! Its really inspiring to see the team effort.

My fiance and I are working towards the debt-free goal. A sizable amount of student loans is all we have left. We’ve decided to pass on the home purchase for the time being as we’re attracted to the idea of mobility.

We’re trying to brainstorm ideas on how to accelerate our current payoff schedule from 2.5 years down to 1.5 or less.

Best wishes for 2010!

claim 2010/09/14 at 4:19 pm

Everyone wants to be debt free and for some it’s not easy, this is usch an informative practical artcile that I will bookmark this.

My wife and I years ago found ourselves in a debt situation and it was a real struggle so anything that can help instruct people is great.

Glad I found it, thank you.

Ed 2010/12/10 at 3:48 pm

Very impressive. Congratulations. I wish I was debt free, but I won’t see that for a lot of years still.

Richard Stooker 2011/01/12 at 8:52 pm

Hi, Paul and Angela,

Congratulations. I did miss the radio show scream of joy, but you made up for it by including much more depth and detail than Dave has time for on the air.

I’m glad to see you’re making plans to keep up the momentum. Much as I like DR’s show, sometimes I feel he short changes what should happen post-debt. After his bankruptcy he went on to build businesses and become wealthy, so it’d be nice to hold that vision out to others.

Debt-free should be the beginning, not the end.

Sometimes I suspect that some of those debt-free people are now just plodding along, perhaps saving a little money, hopefully remaining debt-free, but still not going anyplace. They’re no longer digging a hole, but they’re not building anything either.

If you’re now aiming at paying off your mortgage, I hope you’re saving the money in a money market account rather than making extra payments as some people advise.

I wouldn’t trust mortgage owners to be keeping good records of every payment — or of their computer programs being able to track the changes in your principle and interest every time you pay an extra $50.

So my suggestion is to keep it all in a money market fund until you have enough to pay the mortgage off. That way you don’t have to trust their records, and if you would need the money for an emergency, it’d be available.

If your income stopped suddenly due to a job loss, you’d find it hard to get a home equity loan to tap into your home equity.

You’re lucky to be able to work together as a couple. Debt was one of the two major reasons for my divorce.

Getty Realty Corp

Sunil from The Extra Money Blog 2011/03/11 at 9:21 am

Paul – this is great stuff and wished more followed your lead. I can’t believe I have just now stumbled upon your blog. You are doing great work. keep it up and all the best staying debt free

J.B. 2011/07/23 at 1:37 am

Congratulations for meeting your financial goal. Thank you for sharing your personal story so that others can learn.

Ronald A 2011/07/29 at 2:07 pm

To pay off $63,000 in one year is quite a feat and yes you must make pretty good money to pay that off.

I really like the snowball debt repayment method, I think the pychological benefits of this method are what really make it work. By paying off a small bill quickly you get positive re-inforcement and more free cash flow. Then by using the saved money to pay the next small bill in a short time you get more positive re-inforcement.

Some commenters such as Amy do not agree with the snowball method because you are not paying off the most expensive debt first, but the point is to start and paying off the smallest amount fast and this shows you that paying off debt is possible.

Marty 2012/03/17 at 11:11 am

Ok, I love the graph at the beginning of this article. How would I set up a chart in excel to make the same graph?

Power 2012/05/10 at 10:25 am

I hate paying bills so I try to pay cash for everything I buy.

paul 2010/01/17 at 9:38 pm

We had set a reach goal to be done by the end of January and to make that happen the bike had to go. Yes it did get great gas mileage, that was on my spreadsheet justifying the original purchase :-). I will miss it, but I’ll have another someday and this time I’ll pay cash for it.

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