Paying Off Debt Slowly: My Strategy

Lindsay VanSomeren

By Lindsay VanSomeren
Lindsay VanSomeren is a personal finance and science writer. Check out more of her writing at Notorious D.E.B.T.
Posted on 03/15/2018

I have a confession to make. Despite running a blog for two years dedicated to paying off debt, I'm not very good at it myself. In fact, I'll be honest with you: right now, I'm still making the minimum payments on all of my debt. Three years ago when I got started on my journey to revolutionize my finances, I had no savings whatsoever. My husband and I owned a money pit of a home. We were spending tens of thousands of dollars in home repairs, while I was fresh out of college and earning the lowest salary of my adult life—all while starting to pay back my student loan debt. Things have changed, but they haven't necessarily gotten more stable since then. The house is out of the picture, but in true millennial fashion, I've had to switch from job to job to job while my husband has returned to school. As much as I want to be one of those "how to get out of debt quickly" stories, I'm not. And I don't think most other people are, either. But, I've learned to accept where I am in my financial journey. Here's how:

Focus on Other Metrics, Like My Savings Rate or Net Worth

Just because I'm taking my sweet time to get out of debt doesn't mean I don't have a plan. I'm earning more now, but I've been bitten too many times in the past with surprise expenses to know that I need to save first. So, I'm setting aside 22% of my budget just for savings. And I'll be honest with you, that feels pretty darn good, even if I'm not making a whole lot of progress towards my debt right now. I've realized I value building my savings rather than aggressively paying off my debt. Getting my priorities straight benefits not only my life, but my financial plan. Another thing that's helped me is focusing on my net worth. This can go up in two ways—by saving, or by paying off debt. Right now I'm focusing on one side of the equation, and I've seen a steady uptick in my net worth from saving so much. The higher our net worth, the better our financial position—even if we still have debt.

Make a Plan to Pay Off More Debt Later

We won't always be hoarding all our extra money towards savings. Once we get our three-month emergency fund topped off (something that does seem like it's been taking forever), then we'll be focusing on our other goals. Next on our priority list is paying off our debt, so we'll be entering into uber-debt-payoff mode. Once this happens, we'll be diverting the money we've been saving into our emergency fund towards our debt instead. We've chosen the debt avalanche method, which prioritizes the highest-interest-rate debt first so that we'll become debt-free in the shortest amount of time. We'll even pay less interest over time by using this strategy. Some people don't like the debt avalanche method since you don't get the quick wins like with its rival, the debt snowball method (where you prioritize paying off your loans with the lowest balance first, regardless of the interest rate). But by the time we start paying extra towards our debt, it will already feel like we've made a lot of progress when we cross that emergency fund goal off our list.

Feel Grateful for the Savings I Do Have

So here's why we've prioritized our emergency fund. Last year, my cat Beeker got a mystery illness. She's totally fine today thanks to the vet's hard work, but the total bill for saving her life was $3,500. Without that extra cash cushion that we've been prioritizing over paying off our debt, we would have either had to take on credit card debt or euthanize her. Our savings literally saved her life, and that's something I'm thankful for everyday. It's not just vet savings that we're preparing for. We've also got separate line items in our budget for these things, too:

  • A new car
  • Car repairs
  • Pets
  • Vacations
  • House down payment
  • Health
  • Holidays and birthdays
  • An upcoming move

I am done being caught unprepared, and that's why I'm saving for so many things. And if that means that we won't pay off our debt as quickly, then so be it. On the flipside, having this much cash in savings will help ensure we don't go back into debt.

Stop Comparing Myself to Others

I wish I could tell you some crazy success story that you see these days such as "I paid off $120,000 of debt in one year", but I'm never going to be able to match that. And I'm OK with that. I'm on my own personal—personal­—finance journey, and what's worked for others doesn't necessarily work in my situation. I've just been burned too many times in the past by not having enough savings, and I've got too many variables in my future to use up those savings just to pay off debt faster. But I've got a plan. And I'll get there in the end.