How One Couple Paid Off Over $90k in Debt
In their mid-twenties, Larissa and Derek have paid off over $93,000 in debt in just a few years through a combination of focus, hard work and sacrifice. Simply put, they have had the wisdom to forego instant gratification in pursuit of long-term success and financial freedom. I'm so impressed by their journey and grateful that Larissa took the time to share more with me today.
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Tell me a little about yourself and background.
I am a 26 year old from small town Nebraska. I am the oldest of four kids and my siblings and I have quite the age gap. I am 26, I have a sister who is 21, another who is 15 and a brother who is nine. I loved living in a small town and watching my siblings grow up has been so much fun. I married my high school sweetheart, Derek, in 2015 and this July we will be celebrating 10 years of dating. I am a critical/progressive care nurse of four years at a hospital here in Lincoln, NE and Derek is a mechanic.
What was your relationship with money like before you began your quest for financial freedom?
Looking back, I am so disgusted with myself and how we handled money. My behavior in college is what led us to accumulate this much debt in the first place. I paid for college on my own with student loans. I would take out the maximum amount I could for the semester, then, instead of using it for rent and living expenses, I would spend it on new clothes or going out every weekend. To make matters worse, in college I worked as a bartender and I made so much money in cash yet at the end of the day I had nothing to show for it. I would make $200 on Friday night, then I would spend it by going out on Saturday night.
When I finally earned my nursing degree and starting really making an income, I was living paycheck to paycheck because of my poor financial decisions throughout college. My husband was lucky that his parents helped him pay for his schooling, but when it came to money, he was the same way. It was like the money was burning a hole in our pockets and we couldn’t spend it fast enough.
What was the your AHA moment that made you want to seek financial peace?
My AHA moment was more of an “oh crap” moment. The grace period [on my student loans] had come to an end and I was smacked with an almost $700 a month payment. I had way too much month left after spending my paycheck. I knew something had to change because we couldn’t continuing living this way. I had found Dave Ramsey because a good friend told me her sister followed his plan. I happened to be at Barnes and Noble picking up a Christmas gift and I saw his book on an endcap. I thought back to my massive student loan payment, and I figured I could spare 20 bucks to learn how to fix this mess I was in. I took the book home and started reading. I was amazed at how much the book spoke to me. I was so excited that I read the book in a weekend.
How much debt have you paid off?
Since January 2014 we have paid off $93,241.32.
- $6,823 on credit cards
- $1,200 car payments
- $30,306 on wedding and honeymoon
- $54,912.32 on student loans
Editor's note: If you are struggling with student debt and would like to learn how you could potentially lower your monthly payments and save thousands of dollars in interest, then visit this link to take a short questionnaire.
How do you stay motivated?
We have a sign on our fridge that has our goals written on it so we see it every day. I follow multiple people who are participating in the same journey as us on Instagram and Facebook. I listen to Dave Ramsey on the radio as often as I can (I love debt free screams). I have also found coworkers and friends who are Dave Ramsey followers. Surrounding myself with others who are on the same journey that we are helps us vent about our challenges, ask questions, and also celebrate our victories has been key. I work with a doctor who is on baby step 7 [which means he has a paid for house] and he says, “What is a couple years of sacrifice and saying no compared to a lifetime of yeses?”
What are 3 specific steps you've taken to completely change your relationship with money?
- The first thing we did was make a budget. Telling our money where to go made a huge difference. We were shocked to see how much money we were spending on little things here and there so having a budget really held us accountable.
- Secondly, we started working more hours. Derek would work every Saturday he could and I started picking up extra shifts as a nurse. I then got a 2nd job and was picking up as much as possible. I have been working 48 to 70 hour work weeks. Also, hospitals are notorious for handing out cash as incentive to get us nurses to the floor. You better believe I was taking advantage of that incentive.
- Third, we started saying no. No to going out to dinner, no to drinks every weekend, no to eating out, no to Starbucks, no to vacations, and no to spending money we don’t have. As mentioned above, “what’s a few years of no's compared to a lifetime of yeses?”
What's been the hardest part of your journey?
Learning to say no and being content with doing things for free. I go stir crazy at times when we spend weekends and nights at home. I am a social person and I love to be out and about. But I have found a new love for certain things at home. I try a lot of new recipes (that fit in the grocery budget) plus Derek and I have put together puzzles, watched so many movies and TV series. That said, we still budget for a monthly date night. We usually use them to celebrate our loan payoffs.
What has been the most surprising part of this experience?
The most surprising thing? How well it really works! The debt snowball is the best way to get motivated to keep going. Little wins are the key! I’m also surprised how many people come to us now and ask for help or advice on how they can get started on their journey. I have bought the Total Money Makeover book for a lot of my friends and I absolutely love when they call or text and tell me about their wins with money!
What book are you reading currently or what book have you read recently?
Currently, I am reading a book called “A Beginners Guide to Investing” by Alex Fray to prepare us for our baby step 4. Investing is something we know nothing about, so we thought we would start reading about it before we get to the step. I also recently re-read “Total Money Makeover” last weekend to refuel our fire to get rid of the last of our debt. I also recommend “Rhinoceros Success” by Scott Alexander.
“A rhinoceros charges with singleness of purpose. All energy is directed toward the attainment of one burning desire. The reason you are so dangerous is that once you set yourself charging at something, nothing can distract you. And you never charge two things at once. You concentrate on getting your first target and then you fix your concentration on your next goal. Never spread yourself thin. A magnifying glass will not start a fire until it remains in one spot continuously for a certain length of time. If it is constantly moved from spot to spot, nothing will get warmed up, much less start a fire.” – Scott Alexander
Any advice to the readers?
Keep your head up. Make sure to fit things to keep you sane in the budget. Find things you like to do for dirt cheap or free. Find a support system and talk about your goals often. Ask questions and seek answers. Help others and you will end up helping yourself!
For more info on Larissa and Derek's journey, be sure to check them out on Instagram @larissapalu!
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