Paying off debt may seem like a straightforward strategy of taking what you don’t spend, and using it to pay off bills. But what happens when you don’t have extra money to give? What happens if you need majority of your money just to make ends meet?
This is where Cody and Georgi Boorman found themselves in early 2014. The couple was drowning in debt, living paycheck to paycheck in pricey Seattle, Washington.
At this time, the Boormans the cost of living in Seattle was 9.3% higher than the U.S. as a whole. Rent prices were also 29.3% higher, according to the U.S. Bureau of Economic Analysis. These are shocking numbers to handle regardless of without any outstanding debt.
Cody and Georgi both were stuck with $56,000 of student loan debt accompanied by a $27,000 car loan. This put their debt at a total of a whopping $83,000. They could hardly keep up with rent in the tough financial climate they were in, let alone trying to pay off almost $100K worth of debt. They ended up where 1 in 5 millennials do; accepting that the debt would likely never be paid off.
Cody worked for a credit card company and Georgi was a baker and freelance writer.
“We were getting to a point where it didn’t matter if we were getting a little bit of a raise or a bonus,” Cody said. “We would look at our bank account at the end of the month and it would be the same number as when we started the month.”
The reality hit when Cody and Georgi decided they wanted to have children. They didn’t want to start a family with the amount of debt they had accumulated. Cody and Georgi decided to hit the gas and pay off all of their debt in just 20 months.
How did they do it?
Cody and Georgi made the decision to take it one step at a time in order for them to stay motivated. Looking at all the debt at once was overwhelming and made them want to quit before even starting.
Their first order of business: pay off the car.
The monthly bill for their 2012 Honda Civic was $465 and they owed $8,000 more than it was worth. They knew if they could overcome this payment, it would leave them in a good place to start saving for a baby.
They started by doing what most people do; quit frivolous spending, stopped eating out, bought cheaper groceries, etc. Switching cell phone carriers also helped them to lower monthly costs by nearly $100.
However, they realized paying off a car is not as simple as quitting frivolous spending and switching services. They struggled to rid themselves of their expensive car payment which led them to sell it back to the dealer and buy a Nissan Altima for $2,400. Not only did this get rid of their monthly payments, but they were also able to save an extra $50 per month on insurance.
Everything was going well with their savings plan and they were finally making some leaps with their debt payments. They made it like a fun game to see how much they could save each month. And then a major roadblock hit: Gerogi lost her job. This made things exponentially difficult. She was out of work for a month and took a job for 20% less than she was making before. It was definitely a setback and broke up the momentum they were finally gaining.
However, they didn’t let this stop them from achieving their financial goals. Georgi and Cody came back stronger from this setback. They said that it strangely motivated them even more to pay off their debt for good and they kicked into gear once again.
Their tips and advice:
- Set a strict budget and stuck to it
- Put any bonus, pay raise, or gift money towards the debt
- Moved to a cheaper apartment (Tip: they used the search term “ASAP” on craigslist since those apartments needed people to move in right away and were usually cheaper)
- Put 70% of their income towards debt (even in pricy seattle)
By August 2015, Cody and Georgi became debt-free. And in October 2016, their first daughter Eloise was born. They did what they thought they could never do in just 20 months.
Cody and Georgi didn’t stop once they met their goal. They decided to pursue financial independence and live on passive income to spend more time together as a family. The couple also co-wrote the book “Clocking Out Early” to teach others to cut expenses, invest well and retire early — no matter their income or cost of living in their city.
They continue to make new financial goals and strive to reach them as a family. The couple wants to encourage people to not let cost of living hold you back from paying off the debt that is holding you back.
Try the Starve & Stack method to help you pay off debt even faster!