How I Left My Debt: Vacation Bills Shatter a Couple’s Budget
In this series, NerdWallet interviews people who have triumphed over debt by combining commitment, budgeting, and smart financial choices. Answers have been edited for length and clarity.
A Christmas brought a breaking point for Anthony and Jhanilka Hartzog.
The young couple had just racked up a few thousand dollars in credit card fees to fund gifts for friends and family. This debt, in addition to a car loan and a student loan, has grown too large.
So the two came up with a plan: Earn more, spend less, free yourself from debt. Working in tandem, the couple combined a new budget, higher income, and fiscal discipline to achieve their goal while enjoying things like traveling along the way.
The couple, who earn about $ 190,000 a year between their day jobs and side activities, moved from New York to Dallas in 2016. The move was a win-win: Anthony, who works in IT, got a increase and the cost of living was lower in Texas. These factors made their payment journey easier when they hit that breaking point.
Anthony, 32, and Jhanilka, 30, who works in mental health, recently logged on to NerdWallet to share their story, which may inspire your own journey through pay off the debt.
What was your debt when you started?
We had a debt of just over $ 114,000 and we paid it off in 23 months.
About $ 2,600 on credit cards, which came mainly from groceries and thefts. Then a $ 24,000 car loan, which was probably more than I needed for my car. My student loans were $ 24,000 more and my wife also had $ 63,500 in student loans.
When did you realize you wanted to get out of debt?
The exact time was Christmas 2016.
We used credit cards like everyone else, where we usually used the card for rewards and paid it off at the end of the month.
But that Christmas we went over a few thousand dollars and couldn’t pay it back, so we had to dip into our savings to pay it back. So in January 2017 we had to get serious.
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What was your first step in getting rid of your debt?
In February 2017, we took a financial education course. Our big takeaway is that we don’t even realize how we’re spending our money.
Budgeting was the most important thing we figured out how to manage. A budget is not something that controls your money, it lets you tell your money how you want to spend it.
Did you use a specific strategy to pay off your debt?
In addition to our budget, we started with the debt snowball method, paying off debt from smallest to largest, and recording it on an amortization spreadsheet.
Have you encountered any difficulties?
Some of our biggest struggles have been debates between my wife and I about how to manage our money. Jhanilka is very fond of traveling and did not want to put her life on hold to pay off debts.
So we did both. We got more money through side activities to allow us to travel to see our family.
And for Christmas every year, we still have to adjust the course. The holidays have always confused us, so this year we saved $ 100 a month, so we had $ 1,200 to spare for Christmas.
What kind of jostling did you pick up?
We did a lot of side pushing so we could pay off our debt faster while still getting the things we wanted. I started working out in a gym. We observed dogs and rented my car on a peer-to-peer app. These jobs all added up.
Everyone wants a sexy side. But the best way to make more money is to work more. So we just worked more.
What motivated you?
Each other. We were focused on what we wanted from our marriage and we were motivated by it.
To stay focused, we had spreadsheets and even a thermometer on our fridge that we could fill up when we paid an extra thousand dollars. And we’ve talked a lot about our goals.
I have also listened to a lot of personal finance podcasts. Hearing what people can do with their money when they don’t give it to others really motivated me.
How to get rid of your own debt
Maybe you’re getting out of a hangover on vacation yourself, or just want to sort out what you owe for good. Here are some benchmarks:
Take stock of your debt: On a spreadsheet or just a sheet of paper, write down what you owe. List each account, its balance and the interest rate.
Know what you can pay: Go over your budget (or start one) and see what you can actually pay on your debt monthly.
Find a strategy: The debt snowball can keep you motivated with quick wins because you pay off the small accounts first. But avalanche of debt can save you money overall and get you out of debt faster.
Consider a side activity: Taking a shift at a local store or becoming a rideshare driver can give you a little extra cash to pay off your debt faster and easier.
Knowing when to look for a new start: If you’re struggling to pay your minimum balances and meet your needs, you may want to consider debt relief. Credit counseling and bankruptcy, for example, can help you pay off debt instead of standing still.
Photo courtesy of Anthony Hartzog.