This is one family’s plan for paying off $60,000 without sacrificing their lifestyle

Marie Rossiter

How does a married couple who earns more than $100,000 a year live most of the time on a paycheck-to-paycheck basis? It sounds kind of crazy, but I can tell you from personal experience it happens more often than you think. A debt-driven lifestyle has been robbing us of our peace of mind for years. And, a few months ago, we decided enough is enough.

When we started taking a serious look at our finances, we had more than $60,000 in debt. This included more than $10,000 in credit card accounts, with the rest being car loans and student loans (for our daughter’s education.) That doesn’t even include our home mortgage, on which we owe $145,000.

The Mystery Of The Disappearing Money

My husband and I live a wonderful life. We have a nice home and all the things in life that make us comfortable (cars, clothes, smartphones, etc.) He’s an electrical engineer and I’m a freelance writer. Between the two of us, we make more than $130,000 a year, before taxes. Doesn’t exactly sound like a couple who should be living paycheck to paycheck, right?

Yet every month we’d be sweating to make sure we weren’t going negative in our checking account. Some months, we’d have to use our credit cards to keep us afloat until payday. Eventually, we maxed out our cards. How does this happen?

The truth is: We really didn’t know. We don’t buy extravagant things or have a high-maintenance lifestyle. However, our money was obviously going somewhere every month.

And, there was our problem. We had no earthly idea where the heck it was going!

Marie Rossiter

Getting Control Of  Your Money

When I waved the white flag in December 2017, I decided it was time to see where we really stood with our money. My husband and I decided to enroll in a course called Financial Peace University. Developed and taught by money expert Dave Ramsey, this program is one of many ways you can get control of your money. And, that is the key to getting your finances under control. You have to control your money!

We chose Financial Peace University only because our church hosted the classes. However, there are many classes, methods and tools you can use to get whip your money muscles into shape. You can use anything from basic spreadsheets you create to track your spending and income, to online tools and mobile apps like Mint and even a professional financial advisor. It all depends on how much help you need and how much money you want to spend. It may seem silly to spend money to save money, but sometimes a small financial investment in your future helps keep you focused and disciplined.

Here are five steps to help you find where all your money is and then start using it to pay off those dreaded debts!

Getty Images | Alex Wong

Step One: Where Is Your Money Going?

You can’t fix something if you don’t know what the problem is, right? So, you need to take some time to sit down and really look at where your money is going.

Let’s start with my family’s debt inventory: We had about $22,500 in student loans, $18,800 in car loans, $7,000 in credit card debt, a $4,000 401(k) loan and a $275 medical bill.

If you’re curious, we took out the college loan to help supplement my daughter’s student loans, which is only about $5,500 a year. Some experts say I should not be helping my kid by taking out loans. My husband and I decided to let our daughter graduate with as little crushing debt as possible. The sooner we can pay those off, the less interest she (and I) will have to pay. Bottom line: this is a personal decision for each family. There is no “right” or “wrong” answer. I know many will disagree with me. But, I made the best choice for my family.

And, you may be wondering about that 401(k) loan. Here is my advice: Do not ever borrow against your 401(k)! We took a major risk borrowing that and I regret it. We were lucky we were able to pay ourselves back in a couple of years. So, now I’m warning others to NOT BORROW FROM YOUR RETIREMENT! Ok, off my soapbox now.

Just based on those debts, we had more than $1,000 going out of our checking account every month! And I wondered where all our money was going? Wow.

But, it only got worse before it started getting better.

Once you get together your list of debts, then take your last two or three months of bank statements (either paper or online) and track where everything went. Warning! This can be an eye-opener!

For example, remember when I said my family doesn’t live extravagantly? We discovered that while shopping for things wasn’t a concern for us, eating out was a big problem. How much? I’m talking about nearly $1,200 a month in spending!

WHAT?! And, we don’t go out for fancy meals. We just went out a lot. We’d always say it was because our schedules are crazy, etc. The bottom line? It was for convenience. When our dining out bills are more than our house payment, that is a major problem. And, it’s embarrassing, to be honest with you.

For you, it might be dining out, or buying clothes, going to the movies or a variety of things. When you don’t pay attention to where the money is going, it will get away from you quickly.

Every cent you bring in each month should be planned: bills, entertainment, memberships, whatever. Track it all! That will help you when we get to step two.

Once you get a solid idea of where you money goes each month, now you are ready for step two.


Step Two: Find Extra Money

Now that you know where your money is going, you can discover where to find the extra money you’d have all along.

I know what you may be thinking: extra money?! Are you crazy?! I’m having a hard time paying my bills each month and now you think I have extra piles of money in my monthly cash flow?

Remember my eating out example above? One of the big reasons we were cash-strapped at the end of each month was because of our eating out habits.

Once we saw the truth of what it was doing to our budget, we started by slashing that amount in half. Instead of spending $1,200 on dining out, we decided to go for $600. What happens to that other $600? We started using it to pay off our debts.

Where else can you find extra money?

  • Have a room full of stuff just collecting dust? Do a garage sale or sell it online!
  • Find some side work or a part-time job. Even a couple extra hundred dollars a month can make a difference.
  • Really take a hard look at your spending. We decided to cut back to one TV streaming service. That added another $25 to our cash flow each month. There were other little expenses each month that we knew could lower or eliminate. We found $30 here, $50 there. Little stuff that added up over the month. That added up to a couple hundred dollars just going out the door that wasn’t necessary.
  • How much are you contributing to your retirement? It might be in your best interest to cut back on those contributions until you get out of debt. Remember: I am NOT recommending you borrow against your retirement. I’m saying you should look at what’s coming out of your check each month and see if you can trim that cost and put some money back in your pocket. However, as you pay off your debts and build up some savings in your bank account, you can start to increase your retirement fund contributions. Eventually, all of that debt money going out can go right to your retirement or college savings fund!

What do you do with that money? First, let’s make sure we’re ready to avoid taking on more debt.

Step Three: Set Aside An Emergency Fund

One of the things we wanted to avoid as we started changing our money habits was not relying on our credit cards to bail us out of financial trouble. Have an unexpected doctor’s appointment? Put it on the card! Car needs a new tire? Here’s the plastic! The more we used our credit cards, the more debt we took on and our minimum payments skyrocketed.

We aren’t alone when it comes to credit card debt. The average U.S. household that carries credit card debt owes $15,654, according to NerdWallet. Ouch. And, we all know how difficult it is to get ahead on those high interest rates and payments.

However, before you can start taking a bite out of those debts, you need to make sure you have some money set aside to take care of those emergencies that always come up.

If you’re just starting out, try to find a way to come up with $1,000 as your emergency fund. This will help you avoid adding on more credit card debt if something suddenly happens.

Eventually, you’ll want to build that up to between three and six months worth of expenses. But, we’re starting small, remember?

Ok, now on to where the magic starts to happen.

Getty Images | Jeff J Mitchell

Step Four: Get The Snowball Rolling

To pay off our debts, we decided to use a method some people call the “debt snowball” method. It is a tried-and-true method for getting people out of debt. We all want a quick fix to getting those debts paid. However, the hard truth is that it takes time to pull yourself out of a deep hole.

The debt snowball starts out slow, but once it gets rolling, you’ll be amazed at what happens! In less than three months, we are on the verge of paying off more than $10,000 in debt!

Here’s how it works, based on some of my family’s numbers.

  • Medical bill: $275.00 (no minimum payment due)
  • Amazon credit card: $414.20 ($35/month minimum payment)
  • Home Depot credit card: $1,589.29 ($95/month minimum payment)
  • Mastercard: $4,959.44 ($200/month minimum payment)
  • 401(k) loan: $3,700 ($200/month )
  • Car loan: $18,772.20 ($312.87/month)
  • Student loan: $22,614 ($156/month)

My husband and I were able to take some of the money we saved from cutting our expenses and pay off our medical bill in full. Then, we took a deep breath and used some of the other savings we had, plus our Christmas gift money from relatives (thank you!), and paid off our Amazon and Home Depot cards, as well as our 401(k) loan.

So for the following month, we took what we would have been spending on the Amazon card, Home Depot card and 401(k) loan (an extra $330/month) and added it to the Mastercard payment. That extra money means we can pay $530 per month toward our Mastercard debt! Without any extra payments going to the Mastercard debt, it will be paid off in nine months.

This is a good time to mention, if we get a bigger sum of money (say a tax refund, income raise or gift), we put it right to the account we’re paying the most on from our list.

Once we pay the Mastercard off, we’ll start attacking the car loan. We’ll be able to make monthly payments of $842.87! And we’ll keep going from there. Once we pay off the car, we’ll go after the college loan.

The best part of the debt snowball method is that you’re not spending more money than you’ve already been putting out there, because you’ve been making those minimum payments on all those accounts as you go. You just keep making your monthly payments bigger as you pay off each account.

Flickr | 401(K) 2013

Step Five: Stay Focused Even Though It’s Difficult

I’m not going to lie to you. While the debt snowball is easy in theory, it’s not always easy to master. You will be tempted by many things to throw you off track. It can be a hassle to track everything, especially when you first start out and realize that you have expenses you didn’t even realize.

You might want to take your tax refund and go on vacation or buy a car. As your credit card balances get lower, you could be swayed to pick up the latest smartphone, computer or new furniture suite you’ve been dying to buy.

Remember how hard you are working to pay off the debt. Do you want to keep digging that hole you’re trying to fill?

No! Your goal is to get out of debt as quickly as possible. It takes focus and determination. But, believe me, it’s worth it. I sleep better at night. I don’t worry about if my bank account is going to run low at the end of the month. And, we’re even saving a little money, too.

Invest the time and energy in planning and tracking your income and spending, and you will reap the financial and emotional rewards in the months and years to come.

Have questions about my family’s journey? Let me know in the comments on Facebook!

About the Author

Marie Rossiter

Marie is a freelance writer and content creator with more than 20 years of experience in journalism. She lives in southwest Ohio with her husband and is almost a full-fledged empty nest mom of two daughters. She loves music, reading, word games, and Walt Disney World. You can find her writing about her personal health journey at and connect with her at More.

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