Practical Budgeting Tips

How Paying Off 25% of Our Debt Cut Our Monthly Payment in Half

One of the most exciting moments in our debt free journey was paying off our first major loan of $20,000. As mentioned here, our monthly loan payment dropped from debt 25_50. blog$986/month to less than $500!! Our initial debt was $76,000, so $20,000 was just under 25% of the total. HOWEVER, notice how our monthly payment was basically cut in half. Crazy, right?! Only 25% of our debt was paid but the monthly payment dropped by 50%.

This was a huge motivation to keep going!

Prior to paying off this first major loan, we were intentional to pay the minimum payment for each loan and then place additional money towards this loan which had higher interest.

A few months after we paid it off, we decided to step out in faith and have Drew quit his job to pursue a career change. We estimated this switch would take about 6-12 months of living on my income. Had we still been paying $986/month, we probably wouldn’t have considered it.

We only paid the minimum payment for our remaining loans while living on one income. However, if you try this strategy and your income doesn’t change, this is where you can really crush your debt! Ideally,  we would’ve used the $486 we were used to paying on the $20,000 loan towards the next loan we planned to tackle. Dave Ramsey refers to this as the “snowball effect.”

Once Drew transitioned careers, exactly one year later, we continued to primarily live on one income and put one of our incomes toward the remaining debt.

I share this with you for 2 reasons:

  1. Tackling one loan at a time with the highest interest can make a huge dent in your debt. Again, paying off 25% cut our payments in half.
  2. Paying off debt and creating financial margin provides opportunities! Drew made a career change to pursue his passion and talents! He now works from home, doing his “dream job.”

Here’s my challenge for you:

  • Consider all of your debt and which one loan you can tackle.
  • Remember your “why” for motivation.
  • Determine how much money you’ll save each month once it’s paid off. Remember that number!
  • Start here and stay focused on the goal.
  • Pay that sucker off and celebrate!!
  • Keep the momentum going and tackle your next loan!

If you initially have $1,000/month in debt and pay off a loan that costs $200/month, start adding the $200 on to the next loan.

If it’s difficult to keep up with your initial “pace,” you can always loosen up your budget to help you stick with it. We definitely increased our monthly budget a little as our debt decreased and we got closer to the finish line. The important thing is to push yourself but pick a pace you can stick to!

It took us about a year of intentional, disciplined budgeting to pay off $20,000. This first year felt a little stagnant, but we kept with it. We were so relieved and motivated once it was paid off and this is really when we began to feel momentum to tackle the rest!

There were definitely waves of difficult times when we really wanted to spend more money and have more “splurges,” but I’m so glad we stuck it out in the end.


So there you have it. I hope this strategy encourages you to start tackling one source of debt!

What’s stopping you from pursuing a debt free life today? I’d love to know how I can help, so please comment below!



Em ❤

2 thoughts on “How Paying Off 25% of Our Debt Cut Our Monthly Payment in Half

  1. Em, thanks so much for doing this! It is having a big affect on my thinking! I also enjoy getting your blog, I look forward to it.


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