Couple Money

How Much Debt Have We’ve Paid Off?

paying down debt

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It's been an interesting few years since my husband and I started dating. One of the biggest change has been our finances. We've managed to pay down our debt, save for emergencies and mutual goals, and bought a house.

I'm really proud of what we've achieved with reducing our debt. To give you an idea of the progress that has been made, I want to share the starting point for the debt reduction plan.

Since this is on Couple Money, I starting around the time we got engaged until today.

Paying Off the Credit Cards

One thing that helped me as I was paying down debt was getting work that paid better hourly wages than the norm for college students.

I had worked at a doctor's office handling insurance payment problems that offered flexible hours and offered performance bonuses.

I also applied for an internship that would not only provide hands on training and mentoring, but had better wages than anything offered on and around campus.

It meant working hard and learning new skills quickly, but the increase in my income was appreciate and redirected to paying down debt.

How Paying Off Credit Card Helped My Credit Score

Besides having less monthly payments to make, paying off my credit cards has helped my credit score rise up. How?

While I'm not obsessed with my credit score, it has played a part in our financial lives. If we didn't pay off the credit cards and the car loan before applying for a mortgage a higher score would've increased our interest rate. That not only  would have hurt us on a monthly basis, but it would've meant tens of thousands more dollars over the life of the loan with the interest payments.

Paying Off the Car Loan

Once we were married and figured out our combined budget, we set a goal of paying the car loan off early. With limited budget, here is a brief review of how we paid the car loan off quicker.

Future Car Plans

What are we doing now to prepare for our next car? We've started a car replacement fund and we're hoping to save and additional $5,000 this year. We've set up an automatic deposit of $400 each month for the car fund.

Paying Down on the Student Loans

As of today, we have one consolidated student loan between us and its our only non-mortgage debt left. We'd like to pay down our student loan principal by $3,000 this year.

To keep track with our higher priority goals, we’re not going to change our monthly payments. Instead we’re focusing on setting aside at least 50% of big and small windfalls through out the year towards paying down this debt.

Thoughts on Debt Reduction

Looking for strategies to reduce your debt? Please check out my debt reduction tips I've used as well as some strategies that have worked for other people. 

I'd love to hear from you about your progress. How much debt have you've paid off so far? What are your debt reduction goals for this year?

Photo Credit: Drewski Mac

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