Our Approach to Paying Off $277k of Debt

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Photo by Towfiqu Barbhuiya

When I think about how much debt we have it’s still mind-blowing to me that we were allowed to take out loans of this size.

In May of 2022 we started out with $277k of debt and now we have $239k. It wasn’t all student loans, but most of it was (and is).

What a huge mountain to conquer.

For many of us, our debt feels like a weight that is hard to carry and something we will never be able to get rid of.

I now know someday we will pay it off if we continue on the current path we are on, but it is still a heavy burden to bear.

I remember sitting down at the beginning of our journey, knowing we had a lot of debt but not knowing where to begin. It was overwhelming and sometimes still is.

In this post, I want to dive into the things we considered at the start of our journey and share our plans for how we are going to pay off all this debt.

But first…why do we even want to pay off our debt?

I had previously subscribed to the belief that I was going to have my student loan debt until I died.

And if that is currently your belief, there is nothing wrong with that.

Contrary to popular belief, you don’t have to pay off all your debt if you don’t want to. I really love this article that goes into more detail about why people pay off their debt (student loans specifically) but also why you don’t have to if you don’t want to.

What has changed for me (and Bret) is learning that there are people out there who are retiring early and we WANT THAT. We want to explore the world and not have to worry about working to pay our bills.

We want to be able to work somewhere because we want to be there, not because we have to be. We want to be able to travel and see our family and friends whenever we want. We want to dive into hobbies.

We want time freedom.

It’s really that simple. We want to be in charge of our time and not work.

Sounds nice, right? ?

I also dream of being able to be more present with our kids while they are growing up (if we decide to have them).

And I know some of these things we want could possibly be the reality if I was an entrepreneur, but I currently don’t see that ever being my full-time gig. Who knows! But for now, I am not planning on it.

Are we “bad” because we have debt?

NO.

No, no, no. And you aren’t either.

One of my favorite people in the personal finance space, Alexa at the Avocado Toast Budget, subscribes to the belief (and I do too now) that debt is morally neutral.

That means that having debt (or not having it) doesn’t mean you are “good” or “bad”. She says, “And that basically means you are not a bad person for being in debt. Your debt is not reflective of how good you are with money or the kind of person you are” Bankrate.com.

I absolutely love that! Being able to let go of the shame and feeling like you are less than if you have debt is something that can be so freeing.

And don’t get me wrong… I still feel the shame and guilt sometimes, but I am able to move past it a lot quicker than I used to.

Now… onto the debt numbers.

Debt Overview

In May 2022, we started with $277,721.41 of debt.

This was our initial breakdown:

• $260,390.25 in student loans, Bret & I’s combined – various interest rates
• $10,676.24 Home Equity Line of Credit (HELOC) – 4-6% variable interest rate
• $5,430.76 is from credit card spending – 24.49% interest rate
• $449 for furniture – 0% interest rate
• $775.16 for Peloton bike – 0% interest rate

As of September 2023, our new balance is:

• $239,577.51 all student loans, Bret & I’s combined – various interest rates

So far, we have paid off $38,143.90 of debt. Woo!

We have made a big dent this year due to a student loan award I received and will continue to receive for the next year and a half (more on that later!)

Let’s get into what we considered and the things we were thinking about when we started this journey.

Where to start??

Like I said earlier, having debt is overwhelming and it is hard to know where to start!

I knew that we couldn’t make a debt payoff plan without figuring out how much we owed. So I sat down and wrote out all our debt.

This was an important first step to get organized and to fully understand our debt.

I wrote:

• Who we owed
• How much we owed them
• Monthly due date
• Monthly payment amount
• Interest rate

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Step 2: I then researched the main debt payoff plans: debt avalanche and debt snowball.

In short, the debt avalanche focuses on starting with aggressively paying the debts with the highest interest rates first while still paying the minimum payments of the other debts.

With the debt snowball, you focus on paying off the smallest debt first while still making your minimum payments on the other debts. After that debt is gone, you roll that minimum payment into the next debt.

They each have pros and cons of course, check out Debt Avalanche vs. Debt Snowball: What’s the Difference? to learn more about these methods.

It was helpful to read about these different approaches and we decided to do a combination of them both.

Step 3 was to make a mini debt payoff goal!

Setting goals but still having fun

Since we started this journey last May, we decided to focus on all of our debt except our student loans because of the COVID-19 pause.

Our payments weren’t due yet and the interest was not accruing.

We paid off our credit card with our HELOC because the credit card interest rate was so high (24.49%!).

This meant we had 3 accounts to focus on: the HELOC, furniture, and Peloton bike.

This totaled to a little over $17k of debt. So we made a goal to pay all of that off by the end of 2022.

We were close but short by about $300. This is the article where I talk in more detail about paying off that debt and what helped us do that.

Setting a small debt payoff goal helped us have something to work towards and it was nice to break up our debt into smaller chunks.

Because we have so much, I found making small goals helps us stay motivated because we can see progress towards those goals and celebrate when we reach them!

Another goal we made was to set aside money for us to still have fun and enjoy life while we are paying off all of this debt.

We have a long road ahead of us and we want to enjoy our lives too.

So, while we could be paying off our debt quicker by cutting out things like eating out, golfing (Bret), or buying plants (me), it’s not worth it to us.

How are we going to pay off the final $239k of student loans?

Good question! ?

I don’t normally use emojis in my blog posts, but this time I just felt like it needed some.

Anyway… here is our plan for how we are going to pay off the rest. The goal is to be debt-free by the end of 2028!

Right now Bret is in graduate school until 2025 which means his loans are on deferment. So, we are focusing on my loans.

I am receiving a large award from the Oregon Behavioral Health Student Loan Program which is going to give me a total of $88,580.24 to put towards my student loans over the next two years. I have received $22,000 of it so far this year.

This is my personal student loan breakdown:

• Federal loan — $27,493.83
• Private loan — $78,236.62
• Total: $105,730.45 (Bret has the other $133k of our total balance)

I will be left with about $40k (at the end of 2024) after this $88k of student loan assistance I am receiving.

For my federal loans, I am pursuing Public Service Loan Forgiveness, and the last time I checked the loan simulator on studentloans.gov, it estimated that I would get about $15k forgiven.

I still have 5 years left of public service and won’t be eligible for forgiveness until 2028.

In the summer of 2025, Bret will be graduating and likely would start a new job around late summer/early fall and he is expected to be making about $70k a year.

By this time, I expect us to have about $173k left in student loans.

Our goal will be to put his entire salary towards our debts since we have proven we can live on my salary alone. We have been doing it since June 2020.

We are likely going to have to supplement our incomes to reach the goal of being debt-free by the end of 2028. I can see us continuing to rent out a room in our house for extra income which brings in about $12k a year.

Final thoughts

So that is the rundown of our past debt payoff success and our plans for the future!

I like having a goal date to aim for because like I said earlier, having financial goals keeps us motivated and if we don’t quite hit it, that’s okay!

Sharing our journey with you all has also been surprisingly motivating as well.

Being debt free by 2028 seems like a long way away sometimes, but one thing I have learned throughout our journey so far is that money changes and progress take time.