How We’ll Pay off $190,000 in debt in 3 Years!
We knew that paying off that amount of debt, in a relatively short amount of time with compound interest working against us and living in a HCOL area, Hawaii, is crazy.
To get started on our debt free journey we had to understand the following and execute accordingly:
How we got into debt.
Why we decided to pay it all off.
How we plan to pay it off within 3 years.
Why we decided to pay off our debt instead of prioritizing investing.
How we got into debt
My wife and I are both under 40 years old originally from Southern California, lived in NYC, and currently reside in Hawaii. We’re both DINKs (dual income, no kids). I’m a civil engineer and she’s a physical therapist.
We both worked very hard in school, landed great entry-level careers in NYC, and felt that we deserved to play hard too living the city life in Manhattan and the island life in Hawaii with everything they had to offer the last 10 years.
Why we want to pay off all of our debt
We both don’t feel like we’re tired of the rat race, the ambition and drive are still there, but we realized we enjoy spending time with each other.
While we haven’t really got to the point where our debt wasn’t manageable, we aren’t living the life and time with each other we desire. In retrospect, we could’ve been living that life had we been responsible with our finances.
While I always had the desire to be debt free for the flexibility, my wife always thought that we’d be paying off debt for life.
Her thought was that this was the American thing to do. That this nation was built on debt. For years she had a hard time visualizing what life could be like without debt, until she came across patients who are financially independent and are living the lives we’ve always dreamed of. After encountering several real world examples over the years it came to the point, “Why not us?”
How we plan on paying off so much debt fast
A key strategy we’re going to use is by living on one income, and one of our incomes entirely to paying off debt. This is also a strategy we’ll deploy in the future on our journey to financial independence.
To successfully make this transition, we will need to be intentional with every dollar we have and set a new budget. We did a trial run the second half of 2022 with varying success and failure. After a few months of trial and error, we feel we’re ready to transition to our new reality for the foreseeable future.
We’ve had to cut expenses early and drastically. Starting with listing all of our monthly expenses, and cutting everything we could do without. This included/will include everything from canceling gym memberships, streaming services, to selling our second car and adapting our diet. This process took us months, so don’t wait to get started.
We’re projected to live off of $62,000 combined for 2023 with a budget of $75,000. Between the two of us we love buying quality and local ingredients at the grocery store, dining out with each other and with friends, and shopping. To mentally get through this journey we won’t stop doing those things, we will just do so within our budget.