Episode 062: How Allison and Her Husband Paid Off $111,000 of Debt

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Allison from InspiredBudget.com shares how she and her husband paid off $111,000 in Debt over the course of 4.5 years.  They reached this huge accomplishment while living on two teacher’s salaries, having two kids and paying for childcare which we all know is crazy expensive. 

Meet Allison

Allison Baggerly is a school teacher, wife, mother of two and creator of InspiredBudget.com.  She also managed to pay off $111,000 in debt!  After paying off this mountain of debt Allison decided to take her new passion of budgeting and share it using her blog, InspiredBudget.com.  She also runs the amazing Instagram account @InspiredBudget.

Paying Off Debt

After Allison and her husband realized that they were pregnant they sat down to figure out their finances.  This is when they realized how much debt they had actually accumulated.  I think this is such a relatable situation for most of us.  It’s not until you have some significant life event, good or bad, that we take the time to look at our finances.

Allison said that their debt was a combination of student and auto loans.  When she added everything up it totaled just over $111,000!  This came out to $1,400 per month just towards their debt, not counting the upcoming $700 per month in childcare.

Total Money Makeover

Allison said that it was the Total Money Makeover by Dave Ramsey that helped them make the transition and take control of their finances.  They started by writing down all of their expenses and developing their first budget, which failed by the way.  However, they learned and each budget they created was better than the last.

Debt Snowball

Together they used the Debt Snowball method to tackle their debt.  The debt snowball is the process of paying off your lowest debt balances first.  After you pay off one of these smaller accounts you take the money that was going towards that balance and move it to the next smallest account.  As you do this your payments towards the smallest debt grows, like a snowball rolling down a hill, until you have a large amount of money attacking your highest balance account.

You Need a Budget

Allison’s number one tip for those of you starting out is to make a budget.  She stresses that you shouldn’t just make a budget and then throw it in a drawer somewhere and never look at it again.  A budget is something that you should review regularly and make adjustments as needed.

Allison will even re-budget halfway through a month if she feels that things have not gone as planned.  This is a brilliant move because it prevents you from taking a bad situation and making it even worse. 

If you notice that you are overspending in a specific area, like food, then you may need to cut back in other areas or recreate your meal plan with less expensive options.  The important thing is that you don’t ignore your current situation.

Budgeting Basics

Over at InspiredBudget.com Allison is offering her Free Budgeting Basics Email Course to help you figure out this whole budgeting thing.  Allison will send you an email a day for six days to help walk you through everything you need to know to set up your first budget.

Plus you will get a bunch of free printable items to make things easy.  One item that I really like are the cash envelopes.  I recently started using them to help me stay organized.

Connect with me

@PopcornFinancePodcast

@PopcornFinance

Popcorn Finance

 

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