Hi, we're Hunter and Sarah, a husband-and-wife, luxury wedding photography team. We’re also educators, helping other photographers build profitable and sustainable photography businesses.
Hey friends! Earlier this Spring, Sarah and I announced on Facebook and Instagram that we are now 100% debt-free! When we got married in June of 2017, we had just over $27,000 in student debt. As of early April, less than 21 months later, we became 100% debt free!
When we posted that on social media, we had an overwhelming outpouring of congratulations from friends and past clients alike, which we were sincerely touched by and SO grateful for! However, we also had lots of people reach out to us and ask for details. “How did you do it?!”, “Have you written a blog yet?”, “When are you going to write a blog about how to get out of debt?”
We hadn’t planned on starting this series until later this month or next, but we’ve already had so many people thank us for the first three steps in this series that we’re so excited to finish it this month! So without further ado, here it is: our story of how we paid off $27,000 in student loans in less than 2 years!
Now that you’re super motivated to crush your debt, have a budget that’s both robust and specific, have a line-item called “CRUSH THE DEBT!” and it’s filled with all these “Extra Dollars”, and you’ve even worked hard to generate some more, what do you do with them!?
Well for starters, just because Sarah and I’s story is about paying off student debt, doesn’t mean that it’s the only (or worst) kind of debt out there. At 16% APR or more, credit card debt will often accumulate interest as much as 3-5 TIMES as quickly as student loans. So if you have any outstanding credit card debt, we would recommend attacking that first using every Extra Dollar at your disposal!
Once you’ve paid off any credit card debt, or if you don’t have any to begin with (way to go either way!!), take a close look at your student loans. Most people with federal loans actually have multiple loans. We had six of them, and each had a different interest rate and balance. At this point, you have two options.
Your first option is called the “Ramsey Snowball”, and this is straight from the pages of “Total Money Makeover”. Essentially, you start by making all the minimum payments each month for all of your various debts. Then, each month you take all of your Extra Dollars and, rather than spreading them evenly across all the debts, start paying them ALL towards your smallest debt. This way, you’ll pay off your first loan super quickly!
This will give you an incredible feeling of accomplishment, and it’ll double-down your motivation to keep going. But here’s where the “snowball” comes in. Take all the money you were previously paying to that smallest debt – it’s minimum payment PLUS the Extra Dollars – and put that towards the next smallest debt! As you keep doing this, your Extra Dollars will keep growing and growing while your number of minimum payments keep shrinking and shrinking. As you keep applying your Extra Dollars to loan after loan, your payments will pick up speed like a snowball rolling down a hill! Dave says that most people can be totally debt free (other than a mortgage) in 1-3 years with this method!
The Ramsey Snowball is great if you’re afraid that you might become easily discouraged and give up, because it gives you that boost of affirmation and momentum as quickly as possible! However, Sarah and I developed a slightly modified version we call the “Sheldon Snowball”. In our version, instead of starting with your smallest debt, you start with your most expensive debt – the one that is costing you the most money in interest each year.
A quick calculation will help you figure out which is the most expensive: for each of your loans, multiply the interest rate (ex: 5.7%) by the remaining balance (ex: $6,493.40) to find a rough approximation of what that debt is costing you each year without making any payments (ex: $370.12). This likely won’t be an accurate annual cost depending on how your lender calculates interest, but it will show you very quickly which of your loans is the most expensive.
In the Sheldon Snowball, you start spending all your Extra Dollars on that most expensive loan (rather than the smallest), and continue the Snowball as before. This method will actually save you the most money in the long run and will get you out of debt at approximately the same speed. But it will take longer to pay off your first loan.
It is REALLY important to know yourself here – if you are willing to wait for that gratification of paying off your first loan, the Sheldon Snowball might be best. If you think you might need that extra boost of excitement that will come after you pay off the first (and smallest) loan to keep you going strong, then use the Ramsey Snowball instead!
By the way, if you have debt on multiple credit cards, either of the snowball methods will work just as well on those! Figure out the balance and interest rate on each credit card debt, and start crushing your debt.
Now go get started on that snowball!
Hunter + Sarah