064 | 6 Lessons from Paying Off Half a Million Dollars of Debt

My husband and I recently finished paying off almost $500,000 of student loan debt, which is a goal we’ve been working on for nearly 5 years.

As I reflect on our journey, I’ve identified 6 lessons from our story that are applicable to money goals across the board.

In this episode, I’m sharing some of the details of our journey to pay off almost half a million dollars of debt, 6 lessons from our story, and how you can apply them to your own money goals.

Lightly edited transcript appears after the show notes.

Topics Discussed

• our journey to pay off almost half a million dollars of debt
• lessons from our story that are applicable to money goals across the board
• how you can apply these lessons to your own money goals

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Resources mentioned

Lifestyle Freedom Starter Guide

The Ramsey Show (fka The Dave Ramsey Show)

The Total Money Makeover by Dave Ramsey

The His and Her Money Show

Couple who paid their house off in 5 years

No More Harvard Debt (used to be a blog, but the author has now made the blog posts into an e-book)

Episode 29: What to Do When You Struggle to Reach Your Goals

Work With Me

If you’re ready to go deeper with this work, click here and let’s set up a call to talk about how coaching can help.

Connect with me

Social media: @iamrhothomas on Instagram, Facebook, Twitter, LinkedIn

Email: hello@rhothomas.com

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Lightly Edited Transcript

Hey friend. Welcome back to the show. I hope you are doing well, and having an amazing day so far. So, as you may know, my husband and I recently finished paying off almost $500,000 of student loan debt, which is a goal we’ve been working on for almost five years now. It was the majority of the $670,000 of debt, we had when we first started our financial journey back in December, 2016, and it’s the same debt that I told you about all the way back in episode one. So, since we have paid off all the student loans. This week I’m sharing some lessons you can take from our journey, as you work on your own money goals. And if you’re on my email list you already got a preview of these lessons, but I’m going a bit deeper with them in this episode so don’t skip it, thinking, like you already know what I’m going to say, and if you’re not on my email list, you can join by going to the link that I say in the intro, every week, rho Thomas comm slash start that how you download my lifestyle freedom Starter Guide, which gives you an overview of my philosophy around changing your mindset and money strategies to achieve the freedom you want in life. So as I reflect on our debt journey, and this last payment. It’s really interesting because as long as I anticipated this moment, it felt natural. Right, I knew it was inevitable. My business coach talks about having done energy, which is where you’re in the place where your goal is already accomplished and you’re taking action from that space, and I fully understood what she meant by that. Or like you know what done energy feels like, as we made that last payment because I had gotten to the place in my mind already. Where it was done right, I knew we would pay it off, and it was just a matter of time. That was inevitable, and luckily I have a lot of the earlier moment in our journey document it from my old blog post so I can go back to when it didn’t feel so inevitable, right when it felt heavy and daunting and like it was never going to happen. And as I mentioned earlier, I’m sharing a few lessons here to help you reach your money goals as well. And these are applicable across the board, whether your goal is paying off debt or saving for a house or growing your net worth or whatever. So with that, let’s dive in lesson one. Look at your numbers. So many people avoid their finances, out of fear, but the feeling of fear is almost always worse than the thing we’re afraid of, when you shine a light on whatever that thing is, then you know what you’re dealing with and you can make a plan to handle it. So for us, we had gone years without looking at how much debt we actually had, we had a general idea about how much we each had but we never totaled it up. So paying off the nearly $500,000 started with taking that first step and actually looking at how much debt we had, and I’ve told you before, looking at that total for the first time felt like a gut punch, but when we did, we were able to formulate a plan and start working on it. Right. If you’re like we were and you have no idea what’s going on with your money. Take a look at your numbers, that gives you some concrete data to work with, so you can start working toward your goal. Get that starting debt balance. Look at how much you have in savings, calculate your net worth. Whatever your money goal is, you can’t get where you want to go unless you know where you’re starting. Lesson Two is believe it’s possible to achieve your goal. When we added up our debt balance, I thought paying it off would be impossible. I thought it was such a huge number, and I felt really overwhelmed. And we didn’t know what to do. I was like okay, so we know we’ve got all this debt now what, right. We started researching how to pay off debt and we came across all kinds of resources and blogs and such course, you know, we, I came across Dave Ramsey’s book and podcast and then there’s another podcast that I liked called the his and her money show, and both of those feature or at least they used to feature stories of people who have paid off their debt. So I would listen to those stories a lot and I feel really inspired. And then there were countless blogs where people were sharing their personal stories with paying off debt and building wealth. And as we found more and more stories of people paying off their debt. We started to believe it could be possible for us to, especially when the people made less than we do, like I know I’ve shared with you before the story of the couple, at least one of whom was a teacher, and they lived on the teacher salary and paid off their house in five years, and there was another guy who paid off like $90,000 of debt from Harvard in seven months. And so if they could do it I knew we could do it too. So seeing those stories and building our belief is what got us started with making those first extra payments on our debt. So find stories of people doing what you want to do, you may not be able to find examples of your exact situation right we didn’t find a doctor and a lawyer with $670,000 of debt and a new baby, but we were able to look at people who were paying off or had paid off debt, even if it was only 90,000 or 50,000 or whatever, and find the parallels and draw inspiration from their stories. Don’t use the stories you find against yourself. And don’t view yourself as a special snowflake and think it’s easy for them because they don’t have, you know x y z factor or characteristic in their story like you do. Instead, look at them as examples of what’s possible for you build your belief that you can do the same things and then use that belief to start making progress on your goal. Lesson three is to start where you are. So when we first started working on this goal, we were paying $150 Extra toward our debt each month, because that’s what we could afford. Or at least that’s what we were willing to afford at firstli. It wasn’t a lot compared with how much debt we had but it got us started. And then as we committed more to the goal we made different moves. My husband even got a second job early on he was already a resident, which meant he was doing overnight shifts at the hospital and working a lot of weekends but then he started moonlighting at an urgent care clinic on some of his weekends off. Mind you we had an infant at the time, her first child, and I was a junior associate so it wasn’t always fun, but it helped us on our journey. And it was also helpful for him professionally because he wanted to gain more experience with practicing medicine so it’s not like the only reason was financial. But we also tweaked our budget to pay more and of course as we made more over the years, then we will put more toward the extra debt payment, but it all started with that first $150 So start where you are. You don’t have to go from zero to Beyonce as I talked about back in episode 29 But take a small step that easily doable that you know you can commit to and don’t discount the impact of even the smallest first step, because that step will move you closer to your goal, and it’ll help you build up to the bigger steps that propel you forward. Lesson four is to break your goal into smaller more manageable pieces. So when we saw the huge number, it felt really overwhelming. But when we looked at the individual loans they were generally more manageable. Aside from my husband’s loan that was almost $350,000 by itself, and then blew up to 370,000 or so over time. But our smallest one was like 1500, right and then the next one after that was 2000 to 2500 and so on. I had 14 different student loans and my husband had like a smallish private loan. And then the big consolidated one, and we approached each loan, one at a time. And for the most part we focused on the smallest one until it was gone. There were some times where we would get like a lump sum, and decide to knock out one of the bigger ones, but for the typical extra payments each month, we just put them toward the smallest loan and taking it step by step like that and focusing on one loan at a time helped us to not spin out or give up. This is a big reason why I like the Debt Snowball Method, because it makes paying off debt, feel more manageable, you’re focused on only the smallest loan, which feels doable, and then that gives you momentum, because as you get to the bigger ones you already have evidence that your plan is working and you keep going. Sometimes your ultimate goal is so big that you don’t truly believe you can accomplish it, which leads to you not taking action at all, but when you break the goal into smaller more manageable goals, Then you can wrap your mind around accomplishing those and actually take the necessary steps to do so. And as you accomplish those smaller goals, they build up to the ultimate goal that you want to achieve. Lesson five is, make a plan work the plan and keep going. So we created our plan to pay off our debt almost five years ago, and there were many times when our payments didn’t seem to be making a dent, especially early on with the $150 a month payments I told you about before, or when we got to the really big consolidated loan that was multiple hundreds of 1000s of dollars by itself. Everything just felt like it was taking so long, and like we’d never finish. But we kept going. We kept making the extra payments and we kept chipping away at the loans. And as we continued making those payments. We continue building the evidence and the belief that we would pay it off. So I went from obsessing over it. Five years ago, and comparing where we were in our financial journey to people who were further along, to, you know, knowing, without a doubt that we would pay it off and not really thinking about it anymore. We had our plan, and we’ve been working it for so long, I knew it would happen. We already had so much evidence from how far we had come from when we first started, so make a plan for how you will accomplish your goal. That plan will help guide you as you make decisions with your money, and then keep taking steps in line with that plan. And as you do, you’ll build evidence that you can achieve your goal, and you’ll believe deeply that you’ll do it. Okay, so the final lesson, Lesson Six is be patient. Getting into almost half a million dollars of student loan debt didn’t happen overnight, and paying it off didn’t either. It started with looking at our numbers and believing that we could actually do it. Then we took some serious action to make it happen. And it took almost five years and it happened. Little by little, one step at a time, but we did it. We have a tendency to want things immediately. And when we don’t get them immediately then we give up. But when you’re committed to reaching a particular goal. You’ll keep going. You’ll do what you need to do to achieve that goal. You’ll remain patient, and you’ll keep moving forward toward the goal. You don’t give up, because it’s not going as fast as you’d like. So, in this instance, make your plan, and then keep doing the work necessary to make it happen. Be patient, right as you keep doing the work and taking the necessary actions to move toward your goal, you’ll eventually achieve the result you want. It won’t happen overnight, but it will happen if you keep going and keep being patient and you don’t give up. So those are the lessons from our journey of paying off almost $500,000 of debt. I hope you will take them and apply them to your own money and achieve the goals you’ve set for yourself. And of course, if you want support on that journey. If this episode or any of the others on this podcast resonate with you, and you know I’m the coach for you, then I want you to reach out to me and let’s talk about your money goals and how I can help you achieve that, you can head to rho Thomas comm slash coaching, set up a complimentary call, and I look forward to talking to you. Alright so let’s continue this conversation, me me over on Instagram or LinkedIn and let’s talk some more. My handle on Instagram is at I am rho Thomas and I’m rho Thomas on LinkedIn. If you haven’t done so already, please take a second to subscribe to the show and leave a written review both of those things help get the show in front of more people so that we can spread this information and help more people achieve the freedom and flexibility they desire. Please also think of a friend or two who would benefit from this message and send this episode to them. I greatly appreciate it and I’m sure they would do, okay for now, as we close out, I pray that you will take some time to review your finances and set goals for your money. If you don’t already have them. I pray that you will apply the lessons from this episode to help you as you make progress toward your goal. And as always, I pray that you continue to take steps to regain control of your time, build wealth, and live the life of freedom and choice, you deserve. Talk to you later.