We paid off $310,000 in debt in just four years with little-known tricks (2024)

MARRIED couple Josh and Lauren Hastings used to drown in debt - having racked up $310,000 in mainly student and car loans.

The Savannah, Georgia-based pair, aged 36 and 34, found themselves paying more than $2,000 towards debt a month.

Lauren had the biggest liability, owing around $270,000, due to a doctorate in physical therapy, while Josh’s amounted to $40,000 after a teaching degree.

It got to a point that Lauren never thought she would pay them off, having dived into the red during eight years of school.

Josh, who teaches full-time and runs a small marketing company, told The U.S. Sun: “When she got out of school, she didn't think [she would pay them off]."

“She’s like, oh, man, what do I do?”

Fast forward to eight years later, they have cleared the mountains of loans with determination and clever tricks.

They now travel frequently and live comfortably with their two kids Kaden and Coleman, who are two years old, and two months old respectively.

TACKLING THE DEBT

Despite the bulk of the debt technically being Lauren’s, the couple were in it together and Josh considered Lauren’s debt his as much as it was hers.

At first, they were just making the minimum payments, which occurred once per month.

However, they quickly realized it would take them too long - 10 years to pay off $300,000.

It also would have cost them an extra $24,000-plus in interest based on the eight percent rate they were originally paying.

“We were kind of putting a little money towards my car one month, and then maybe towards my student loans the next month, and then go back to her car, and then maybe back to her student loan,” Josh said of the failed strategy.

Instead, it took a turn in 2015 when Lauren came across the book Total Money Makeover by personal finance guru Dave Ramsey in the library while was studying for her medical boards.

“She kept talking about the book, and I was like, we'll just get it. Let's read it,” Josh said.

The book made them realize that they needed to come up with a better plan aside from just making the minimum monthly payments.

FREEING UP CASH FLOW

To tackle the big student debt balance, Josh and Lauren decided to free up cash flow, which is something that Ramsey highlighted in his book.

At the time, they were getting started in their careers and money was tight.

They had total expenses of around $2,600 a month and were determined to find $300 to $400 in the budget each month to pay off more debt.

They started identifying various costs to cut, including wants that weren’t essential needs including cable and traveling.

But the real game-changer came a year later in September 2016 when, they got in contact with Bill Westrom, co-founder of financial education firm TruthinEquity, after recommendations from a friend.

The first thing they were taught was to focus on paying off one debt area at a time.

For example, Josh and Lauren had car loans, multiple student loans, and needed to save money for a wedding.

He recommended the couple to take out a home equity line of credit (HELOC) to pay off both their cars and Josh’s remaining student debt of $18,000.

This type of credit, secured by the ownership of your home, allows you to consolidate high-interest debt.

At the time, Josh owned and lived in a townhome during the fall of 2016.

The couple was paying $1,150 per month for it.

“You’re taking the equity in your home and using that to pay down or get rid of other debts,” Josh said.

The move helped lower their interest rate from eight percent to about 3.5 percent.

It helped Josh free up $2,000 in cash flow and their $300,000-plus balance went down to $262,000 in November.

Of course, they had to pay off the line of credit – but the cash flow allowed them to pay it off in 2017.

It’s important to know the risks before you take out any financial product, including HELOC.

The latter means you put up your home as collateral, meaning you could lose it if you miss multiple payments.

You may also end up paying more than you originally signed up for due to unpredictable interest rates.

In other words, if you don’t have a stable income, you’re better off avoiding it.

It’s always worth consulting with a financial advisor before making any big financial decisions.

OTHER WAYS THEY FREED UP CASH FLOW

The couple also made other sacrifices to get out of the red.

They cut expenses including gym memberships, traveling, eating out, and their DirecTV service.

Cutting back on these helped Josh and Lauren save close to $900 per month.

Additionally, the couple had a roommate, which provided them with an extra $500 to $650 per month.

While it was a difficult few months to make sacrifices (especially traveling), they knew that they would be only temporary.

Most importantly, the cuts and restructuring helped the duo free up to $6,000 in cash flow per month.

After paying off their first HELOC, they continued the same process with other large loans that Lauren had.

By December 2017, the amount they owed to creditors was down to $200,000.

They continued repeating the process and at the end of 2017 and 2018, their borrowing to creditors was down to $130,000 and $73,000, respectively.

By July 2020, Josh and Lauren were student loan free.

While it was a steep hill to climb, Josh said it wasn’t that “big of a deal” once they made the final payment in June 2020.

He added: “Things we had been delaying like a kitchen table and a new computer were nice to purchase, but our financial habits had been so engrained we really just kept rolling as if we had debt.”

FINAL PIECE OF ADVICE

The best way to deal with a large amount of debt depends on your situation.

Above all else, Josh recommends having a plan and sticking with it, and trying to get rid of it as soon as possible.

"There are a lot of distractions. You got to do what’s best for you,” he said.

“But I would say if you can live below your means for two to three years and just get rid of it,” implying that it’s worth it.

At some point you’re going to wind up having to pay it off anyways – but the sooner it’s paid off the quicker you achieve financial freedom to spend money elsewhere.

For example, Josh said it’s enabled the duo to increase their investment portfolio.

In addition, they have gone back to traveling and taking vacations.

He added: “We're doing very well, because of some of these principles, we were able to create and teach ourselves.

"So that's, that's kind of how I, we viewed it, we were willing to do the sacrifice.”

“We've had a lot of blessings from getting debt-free,” Josh concluded.

OTHER STRATEGIES TO PAY OFF DEBT

If you are struggling with debt, you might want to consider using a couple of other strategies.

Personal finance expert Seth Godwinrecommends making two paymentsevery month instead of one.

So, if your loan payment is $500, you’ll want to make two payments of $250 each month.

Specifically, Seth noted that you can make one payment 15 days before the due date while making the other three days before the date.

This exact schedule does not need to be followed, however, as long as you aren’t making one lump sum payment every month, he added.

A big reason why this works is because most mortgages and loans today are simple interest loans.

It means they are calculated on your balance on your payment date.

Most importantly, the borrower isn’t charged additional interest on top of what’s already due.

This is also known as interest not compounding.

“Interest occurs on a daily basis called a per diem,” Seth said.

“The less time that passes between each payment, the less interest accrues so more of your money goes towards the principal balance.”

Also, The U.S. Sun has revealed a list of waysto pay off your student loan debt quickly to save you thousands.

This includes applying the 24-hour rule to purchases, sticking to a50/30/20budget, and paying more than the minimum if you can afford it.

For more on student loans, see four statesofferingAmericans assistance worth up to 300,000.

And see thedifferencebetween federal and private student loans.