how I paid off my debt
Balanced Finances

How I Paid Off $40k in Debt as a Young Mom

Have you ever found yourself in a place financially where you’re just terrified?

Your next paycheck is still days away and your bank account is slowly creeping its way down to zero.  You work hard, but nothing seems to change. You feel like you’ll never get ahead.

I’ve been there too.

My Getting-Into-Debt Story

How I paid off debt as a young mom

I got married at 22, just out of college. While we were very happy and worked hard at full-time jobs, we were also naive about money. We bought a home (with nearly nothing down), filled it up with stuff that we couldn’t afford, and dug ourselves into a financial hole.

Meanwhile, we had no idea what it was like to pay real bills, what it meant to stock a house with basic supplies, or what it was like to depend on ourselves to eat.

I had no clue how to budget. I paid our bills and checked our bank account daily to see how much was left until our next paycheck. In between paydays, we relied on credit cards. Every month, I watched the balances rise and rise.

The Breaking Point

I remember at one point, every card we had was maxed out and we hardly had any money left after paying our bills. Payday was still a week away and we had no food.

How do you make a few dollars feed you and your husband for a week?

We are fortunate to have never gone hungry and I’m incredibly grateful for that. But something clicked in me at that store that day as I watched my husband try to plan out our week’s meals with $10.

I knew that I never wanted to do this again, not if I could help it.

Hard times are often what we need to help us wake up and realize that it’s time to change. And trust me, those first few years were hard. 

Fast Forward a Few Years

How I paid off debt as a young mom

A few years later, we now had two babies. We were both making better money, but we still couldn’t seem to get ahead. 

We could pay our bills and we never had to worry about food, but we had racked up $40,000 in debt. Much of that debt was from credit cards.

Things were looking better, but I still had no idea how we could go in the right direction.

If we were getting paid more than before, why didn’t it feel like we were in a better place? Why were we still living paycheck to paycheck? Why were we still struggling?

We continued to struggle because, whenever we made more money, we spent more money. We adjusted our lifestyle for our new income, instead of working towards paying off our debt.

I had no idea what it meant to live “below our means,” so we continued to spend, spend, spend.

For example, shortly after our wedding, I was working at a jewelry store and was promoted to store manager. I got a significant pay increase, so we decided it was time to buy a new car. I felt like I deserved it for working so hard, and after all, I was going to be making more money now.

No problem, right?

Well, no, big problem actually. My previous car had been paid off. I took on a $300 car payment which nearly negated my pay increase. Not smart (insert face smack here).

Yet Another Mistake

At another point, I made the mistake of consolidating our credit card debt with a larger loan. I took out the $10k loan and paid off all my credit cards. It felt so good to see $0 balances on those credit statements, but my joy was short-lived.

I now had a $325 monthly payment. And I hadn’t changed any of my behavior.

I didn’t learn how to budget (at least not well) and my family hadn’t started living any differently. So, as you may expect, our credit card debt began to grow back again, now on top of a $325 monthly loan obligation.

So, there we were, my husband and me, and a newborn baby and a toddler. Both with full-time jobs, still living paycheck to paycheck and going deeper into debt each passing month.

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I knew that we had to change– and fast!

Here are the steps we took that helped us to pay off $40k in debt in two years:

1. I Changed My Mindset About Money

When I started writing this post, I had “Develop a Plan” as step number 1, but I had to rethink that. The first step that I took on my journey to change my family’s finances, was to change my mindset.

Dave Ramsey’s book, The Total Money Makeover, was an absolute game-changer for me, as it has been for millions of others. It changed my mindset about debt, consumerism, and how to live right financially.

Seriously, you need to read this book!

The mindset change is crucial. You’ll have to re-think the “American Way.”

Our culture teaches us that debt is a normal part of life. That may be true for some, but if struggling is normal, I didn’t want to be normal anymore. I wanted to be free. If you don’t have a radical mindset change, you won’t make radical changes, so this is Step One.

Three Key Mindset Shifts

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In addition to rethinking the “American Way” of borrowing, I also had to change my mindset in three other ways.

Learn to be content with what we had.

I had to learn to be content and stop wanting more of everything. We are aggressively marketed to daily and it can easily lead you astray if you’re not careful.

There will always be something you’re wanting to purchase. But if you can practice gratitude and learn to be content with what you already have, it will help you to save some big money by not giving in to those impulses.

No more “keeping up with Joneses.”

I also had to give up caring what my friends or neighbors were doing or buying. So what if everyone on your street has a brand new car and you’re driving around in a beater?

You have to let go of the opinions of others and start focusing on what you truly want. Do you want to impress people with your possessions or fancy trips? Or do you want to become financially free?

Money is a personal matter, so you probably don’t know if your neighbors own that new car or if they’re in debt up to their eyeballs. All you see is the new car, right?

So, it’s easy to think that they’re doing better than you are. In the end, it doesn’t matter either way. Your situation is unique and you need to do what’s best for your family, regardless of how it looks to others.

how to pay off debt with kids

I had to decide that my goal with money was not to appear to live any certain lifestyle. I had to stop caring what things looked like from the outside and start caring more about our overall financial picture.

See my related post “How to Quit Comparing Yourself to Others.”

Ditched the entitlement mentality.

The last mindset shift I needed was to ditch the entitlement mentality. I used to think things like, “I work so hard, I deserve to buy this” (like my “new car” example from earlier).

That kind of thinking led me to debt.

While I still believe everyone should treat themselves from time to time, I no longer believe I’m entitled to purchasing anything until I’ve saved money and can pay cash for it.

There’s a difference between buying yourself a few new shirts for Spring and charging up a credit card to update your wardrobe. If you need to buy something, plan for it in your budget.

2. I Got My Husband On My Team

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My journey to debt freedom would have been nearly impossible if I didn’t have my husband on board with me. Fortunately, he’s always been pretty accommodating of my crazy ideas.

After I started reading the Total Money Makeover, I had him read it too. It was critical that we were both on the same page.

After all, we had gotten into debt together. It would take both of us working together to dig ourselves out.

Having my husband on my team meant that we agreed on our mission, our budget, and the need for short-term sacrifice. We would both work harder and not spend unnecessarily. We would also keep one another motivated and focused.

If you’re married, this step is a high priority. If your husband doesn’t get on board immediately, encourage him to read some books or blog posts that helped you change your mindset. There are also podcasts and YouTube videos available.

Better yet, you could both sign up for Financial Peace University at a local church or online. FPU is a Dave Ramsey program that will completely change your financial outlook and it will help you both to start believing that you can win with money.

Let your husband know what’s in it for him. Share your dreams with him. Let him know that you want him on your side for this journey.

Even if he doesn’t get it at first, he may come around eventually. Be persistent, but don’t be unkind.

3. We Developed a Plan

After changing my mindset and recruiting my husband, next we developed a plan.

The first thing we needed to do was gain control over the money we had coming in. That meant BUDGETING.

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I’m not going to go in-depth about budgeting until a future post, but at first, I kept it very simple. I started by listing out all of our expenses on paper.

Then I kept track of our bank account’s balance and subtracted the bills plus other expenses like groceries, gas, and babysitting. It was important to know how much money would be leftover (if there was any) so that we could begin putting money towards our debt.

Budgeting helped us to gain control of our income and stop needless spending before we could tackle our debt.

“A budget is telling your money where to go instead of wondering where it went.”
-John Maxwell

The Plan to Pay Off the Debt

Since I knew very little about how to handle money effectively, I turned to experts.

I had a friend who worked for Primerica. She met with me and went over the details of my finances and introduced me to the idea of debt stacking. Dave Ramsey teaches the same principle but he calls it “snowballing.”

What is Debt Stacking (or Debt Snowballing)?

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Both my friend at Primerica and Dave Ramsey (in the Total Money Makeover) recommended that I list out my debts from smallest to largest and begin by paying off the smallest debt first.

Once that debt is paid, you take all the money you’re used to paying on that debt and roll it into your next payment.

For example, if your smallest debt is a credit card with a $500 balance and a $50 minimum payment, then you pay it off as fast as possible. After its paid, you then take the $50 that you were used to paying on that card and pay it towards your next debt.

So, if your second debt is a credit card with a $1000 balance and a $100 payment, you can now throw at least $150 a month at that card. ($100 that you have been paying + $50 you were paying on the other card.)

Pretty simple, right?

By the end of this process, many people find that they’re able to pay over $1000/month towards large debts, such as student loans.

Imagine how much quicker you could pay off your student loan if you threw $1000 at it every month, instead of the $200 minimum.

Better yet, imagine how much time and interest you’ll save yourself by paying off your student loan early. That’s the whole point of debt stacking.

Our Plan

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Despite the sick feeling it gave me, I made my “debt list” and added it up. I truly had no idea how much debt we were in until I took this step.

We had a few credit cards with balances from $500 to $1000, plus the balance from the $10k I had regrettably borrowed to consolidate debt. We also had a car loan and a student loan on our list.

Seeing our debt totals on paper was scary, but it was also liberating. I knew this was it. This was as far as it was going to go. We were done digging the hole and we were ready to start the ascent to freedom.

We did as we were advised and decided to focus on our smallest debt first. After this step, we knew the order of our debt repayment plan. Honestly, it felt amazing just to have a plan!

4. Decreased Expenses

After I knew our plan to tackle the debt, I still had a problem. We were living paycheck to paycheck, so finding “extra money” to pay towards debt felt impossible.

How could we find extra money to put towards our first debt and get our “snowball rolling” (as Dave Ramsey says)? How do you get ahead when you feel like it’s a constant struggle just to get the bills paid?

I started by cutting all the expenses I could. Cable was the first casualty.

Cable is a luxury, not a necessity. And with today’s streaming services being offered at $10 or less per month, you can give up cable without giving up TV altogether. We mostly watched Netflix anyway (doesn’t everyone?) and I was able to keep up with my favorite shows by adding Hulu.

If you don’t want to cancel cable, at least give them a call and see if they can give you a better price.

I also shopped around for better prices on my insurance. We had been using big-name companies for our car and homeowners insurance, but I found that I was able to save a ton of money but switching to smaller, local companies.

I also shopped around for my electricity rates. In Pennsylvania (where I live), you can choose your electricity supplier. So, why wouldn’t you shop around and see who is offering the best rate?

Cutting Costs on Groceries

How I paid off debt as a young mom

One of our biggest monthly expenses was groceries. I didn’t want to on a rice and beans diet, but I didn’t want to spend a mortgage on groceries every month either.

Do you know how much your family spends monthly on food? I didn’t know exactly how much we spent (because I didn’t budget before this journey), but I knew it was too much.

Try to find a quality grocery store that has discounts. Personally, I love Aldi! You can get healthy foods at the fraction of the cost of other stores at Aldi.

They are able to cut costs but having their own brands and less selection (I see this as a big perk because I get in and out quicker than a normal grocery store).  They also have fewer hours than most stores (most close at 8 pm), and they have a smaller staff.

Because they have fewer employees, you have to bag your own groceries at Aldi. The whole concept is based on efficiency and low cost so they can keep their prices low without compromising on quality. You lose some of the convenience of traditional stores, but you save big.

I have a close friend who is great at couponing, so you could try that too. It takes time and commitment, but, if you do it well, it’s an excellent way to cut costs and help you get out of debt faster!

Find where you can save money in your budget. Get on the phone and negotiate rates on everything that you can!

Shop around. Don’t be loyal to companies that aren’t going to give you the best prices. Cut out unnecessary spending. Do whatever you can to get your monthly spending reduced.

Remember, freedom is on the other side.

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5. Increased Our Income

After I got our monthly expenses reduced as much as possible, I turned my focus towards increasing our income.

I took a promotion at my full-time job, even though it meant more hours.  I knew that if I was willing to sacrifice in the short-term, it would pay off in the long-term, so I did it. That meant working about 50 hours a week for a year before I paid off our last debt and was able to quit my job.

I won’t tell you it was easy.  I missed my babies terribly when I worked, but I knew that if I could just pay off that debt, I would free myself up to be able to be with them more than I ever had.

So, I made the sacrifice. And, three years later, I am still so glad that I did.

If You Don’t Want to Work Out of the Home

I don’t know your situation. You may not be willing to work extra hours and sacrifice the time with your kids right now. I totally get that.

There are lots of other options out there to increase your income. You could start a work-at-home gig (see my post 7 Work-At-Home Ideas for Busy Moms), although many will take time to start making decent money.

You could also sell things around the house (I have friends who make great livings by selling on Poshmark) or you could try babysitting. Get creative.

“There are no shortcuts to any place worth going.” -Beverly Sills

While I worked extra hard at my full-time job, I was also plugging away at my home business. I was in network marketing at the time, so when I wasn’t working at my job, I was waking up early and building my business on social media.

My goal was to pay off debt while creating a steady home income so that I could leave my full-time job, so again, I sacrificed.

I made time where I didn’t have it, I woke up early, worked on my lunch breaks, and stayed up late. I would never recommend working like this long-term (it’s extremely unbalanced), but in the short-term, it was exactly what I needed to do.

The Happy Ending

paying off debt with kids

In just about two years, my husband and I could officially say that we were debt-free except for our mortgage. I was able to leave that full-time job and start working very part-time.

I remember one summer afternoon I  was laying in the grass under the sunshine with my two girls. I thought to myself, “I think I’ve been able to spend more time with my girls this summer than I have all the other seasons of their lives combined.”

paying off debt with kids

Once our money was freed up and I was home more, we decided to try for baby number three.  She joined our family in May of 2017. When I was eight months pregnant, we moved into a larger home. Our lives look completely different than they did five years ago.

We have more than we could’ve ever hoped for.

I’m thankful to God for the opportunities we’ve been given, as well as for the guidance we’ve had along the way. It all started with a decision to change.

paying off debt with kids

Now It’s Your Turn

If you decide that it’s time for you to change to, be encouraged. It doesn’t matter where you are now, it only matters where you decide to go. You could have a completely different life in just a few short years. Decide, change your mindset, team up with your spouse, commit to a plan, and get to work!
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Recently, I told my story at an event called “A Wealth of Wisdom for Women.” You can see it here:


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