Paying Off Debt Fast – How I Paid Off 240k In Less Than 2 Years

Howdy, Seth here. Today’s post is a pretty crucial one- you could say it’s part of the backbone to the whole FI philosophy. It’s all about paying off debt fast. The faster you’re not spending hundreds a month on credit card bills and loan payments, the faster you can start saving, investing, and making that money work for you.

Not long ago, I was in an interesting situation with debt and personal finances. This is my story of how I utilized the Bullet Journal (BuJo) to get out of debt and onto the path of financial independence.

Along this journey you’ll learn my perspective on paying off debt fast, finances, simple living, and how the living intentionally pretty much changed my life.

My goal at the end of this is for you to understand how to set financial goals, track your spending daily and/or monthly, and track your net worth – all through the principle of simplicity.

My Financial Mishaps

Wake up, go to work, look forward to the weekend plans, rinse and repeat.

Like many, this was my schedule after I graduated college. In short, I was living a pretty common life. A life that went with the flow and did what I was “supposed” to do.

Looking back, I would reframe this and call it an “unconscious” life.

Even though I studied accounting, I found myself succumbing to the pressures of the real world in my early 20s. From 21 to 24, this was my reality. Despite being a frugal person my entire life, suddenly having a large sum of disposable income left over after bills each month was a foreign concept. One that I did not yet have any control over.

One where I would mindlessly spend, finance non-necessary items on credit cards, and upgrade items because “I deserve this” or “I worked hard for this” or I needed to maintain my expensive lifestyle habits.

Shortly after my 24th birthday, my son was born, I got a new job, and I purchased a home. All of these sound amazing, and they are in their own right – right?

But from a financial perspective, each of those changed my financial landscape drastically. And when these types of things are not planned or well thought through, they negatively impact the bottom line quickly. I literally saved $0 during this time – a huge missed opportunity. 

Since I was already living an excessive lifestyle, adding a kid into the mix was a nightmare on our finances.

Diapers, formula, latest loud plastic toy – check.

Thankfully the new career paid slightly better, but that was negated quickly by increasing our rent by over 50% (WTF?).

I know exactly what you’re thinking… “Seth, you’re an accountant! How in the world could you be so bad with money!?”

Just as the doctor who smokes knows it is bad for them, I knew my spending habits were out of control. But how could I stop?

I was addicted to the conveniences of life and the path of least resistance.

The major shift in my life was when I began thinking about my son (who is from a past relationship, he’s not Cara’s), his future, and my future in general. If I continued to do everything exactly the same, how would our lives turn out? And more importantly, is this the life we choose to live?

Looking back, this self-assessment saved my life.

One day a friend of mine sent me an article by Mr Money Mustache called, Your Debt is an Emergency! I told him I liked it a lot, so he sent me a few more, one of which was Dave Ramsey, specifically talking about his Snowball Method. Within less than a month I had consumed every piece of material I could get my hands on from these two.

Something clicked. My perspective wasn’t completely shifted yet, but it was beginning to tilt.

I began to see my faults and where I could begin making improvements. After acquiring all of that knowledge, I could no longer blame external factors, and came to the conclusion that I was going to do something about my situation, no matter what – for me and my son. For roughly the next two years I was relentlessly focused on one thing… PAYING OFF DEBT FAST.

Unfortunately for me, I was sitting on top of $240,000 of debt!


Enter the Bullet Journal

I quickly became obsessed with daily task lists. These kept me from deviating into spending spirals, kept me on track and consistent with my financial decisions. Cara took note (or got tired of) all my Post-It notes around the house and random spiral notebooks everywhere. Luckily for me, not long ago she decided to try a method called the BuJo method.

(Quick note here – between the realization and this part of the story, I split with my son’s Mom. Shortly after I met Cara.)

She pestered me to try it. She kept saying how it would change my life and fit into my philosophy on living. Finally, I gave in and bought an official Bullet Journal. 

Up until now I was literally writing down on a Post-It note how much I got paid, and then I’d subtract out my expenses through the next two weeks. It didn’t take long for me to realize the BuJo was the perfect place for a few financial spreads and trackers.

If you don’t have a BuJo, literally anything else will do. A piece of paper, any type of notebook, a spreadsheet, software, apps, or even just your brain if you’re smart enough. I’m not, so I went with a notebook and a spreadsheet.

I made a commitment on July 1, 2015 to make conscious decisions (like paying off my debt fast) and live with intent.

This was when I began my journey to paying off my debt as fast as possible, and in just under two years, I did it. I completely changed my life and got on the path to financial independence. Paying off debt fast, like super fast, was the first step on the long road to financial independence (or freedom, whatever you want to call it). 

The reason I was so focused on paying off debt fast is because of the opportunity cost. I was already 26 years old. If I hadn’t made all these mistakes I would be well on my way to financial freedom, probably about half way there. So to me paying off debt fast was my way to accelerate the process and shorten the overall timeline.

Anyways, here’s a few of the methods I’ve utilized to help me along the way…


Income vs Expense

Before we do anything else, we need a basic income vs expense calculation to see where we’re at financially.

Luckily, this is very simple. You can see below I simply wrote what my income was for each paycheck, and between those, I wrote out the expenses as they came due throughout the month. 

I know what you’re thinking… “Look at all that crap! What a waste of money! $50 on gas a week?! $90 for a phone bill?! TV service?!” 

And to that I say, I know… But don’t worry, I’ve come a long, long way. As you can see the first half of the picture is me in 2014 and the bottom half is me more recently here in 2018. Note that my take home pay is less because 1. I pay child support and 2. I max out my 401k.

These changes in spending will be in a post of their own, but just take a quick look at my life after getting out of debt fast. Internet only package, renting instead of buying a house, choosing a cheaper cell phone service like Google FI, negotiating cheaper car insurance… and some major ones most people don’t think about: LIVING CLOSER TO WORK and SPLITTING RENT WITH A ROOMMATE!!

When making your own, you can choose to chunk it all into 1 month if you’d like to keep it even more simple. For me it was necessary because I had a lot of expenses coming due at the first of the month, so I wanted to ensure I had enough to cover that.

Here you can see the simplicity. Date, Item, + (income), – (expenses), Total. That’s it!

Tracking my income and expenses in my bullet journal was crucial to paying off debt fast.
income vs expense

Now, what are we going to do with this information? We’re going to scrutinize it and really access where we can do better.


Reducing Your Spending Is Key To Paying Off Debt Fast

I saved money by cutting out things like cable TV, martial arts classes, gym memberships (invested in a home gym instead), chiropractor, and other online services such as Netflix. The two biggest things for me were quitting smoking and cutting back to almost never drinking. I estimate that those two things alone saved me from financial disaster and skyrocketed my money and helped me with paying off my debt faster than I could’ve imaged. Oh, and the health benefits long-run. I feel freaking amazing compared to when I was doing those things!

Another thing I did was negotiate or find cheaper options for things such as cell phone, car insurance, electricity and gas, and food. I’ve already mentioned some of this above, and again, I think this needs to be a separate future post so I can go into greater detail on how to kick these expenses OUT.

Once you’ve identified some areas to cut back on, begin by taking action! Paying off debt FAST requires you to be willing to take action… Like calling the cable company to cancel your TV service, or whatever it is you need to do to get rid of that monthly payment. Maybe you need to refinance a student loan, if so you can apply online within minutes. 

The key here is to take action towards the reduction of expenses. This is the only way to accelerate the debt payoff schedule.

Well, technically you could focus your efforts on making more and more money… but you don’t have your life under control at this point. This really IS an emergency! In this case you’ll most likely experience what’s called hedonic adaptation, or lifestyle inflation, and just continue to be screwed. Then you’ll come back to the blog post three years later wondering if paying off debt fast can still change your life.

If you’re lucky (or smart) enough to have some extra cash at the end of the month you have two options: Save it to build a small emergency fund or put it towards your debt.

Side note: There is debate on if you should put it towards the highest balance or the highest interest rate. Paying off the loans with the highest rates makes the most sense mathematically, and this is what I ended up doing. But I say, do whatever will give you the best psychological win. And if that means paying down a $300 credit card and snowballing that payment into a $10,000 balance, then do it!

Having a positive mindset towards your journey makes paying off debt fast a lot easier and more rewarding.Click To Tweet

Action items:

  • List all your income and expenses
  • Try to identify areas where you can cut back
  • Divert extra cash to selected debts or savings goals


Setting Goals For Paying Off Debt Fast

Now that we understand our present situation a little better, let’s take a look at the future.

It’s impossible to hit the mark when there’s no target in sight. When you set goals, you naturally set yourself up for success. But the real key is breaking your goals down.

First, begin with the end in mind. Maybe your goal is to save a certain amount of money, paying off debt fast, or become financially independent. Regardless, the scenario below (paying off debt fast) will show the process that will work in either situation.

My original goal was to reach financial independence. The magic place where you no longer need to rely on money anymore. 

How could I accomplish that? Pay off my debt! Then… either make more money or spend less. I had just switched jobs at the time and commanded a slightly higher salary now, so I decided to focus on spending less (as we went over above).

In December of 2015, I finally sold my house for a loss, because it was better than holding on to it any longer. This was a huge financial and psychological win for me (it took 6 months to sell). So this put me right around $40,000 left to pay off.

Now, some people will stop and complain that the title of this post is misleading at this point… “Seth! You said you had $240k of debt! A mortgage is an investment and therefore you’re tricking us with your internet-marketing-hype-title- you really only paid down $40k you dirty millenial!”

And to that I say… you’re absolutely wrong. Selling a house you can’t afford is essential to paying off debt fast. In fact, it freed up so much income for me that I think it might be one of the top factors in helping me become debt free. And as far as a house being an investment goes… I don’t buy it. At least not yet. This house was a money suck that I couldn’t afford, the end.

I decided to break down each debt, as you can see below, there were quite a few. Each with varying balances and interest rates. Notice the (!!) note next to the 22% rate which is absofuckinglutely ridiculous!

Again, this may be a future post of its own, but balance transfers also saved my ass more than once. Actually one time they hurt me more than helped, but that’s a story for another time…

This image shows a simple way to break down your debts to show how long you have to pay them off. It serves as motivation to pay them off early.
simple debt breakdown

While there’s many ways you can do this, I simply just listed them out in no particular order and left some room to take notes below.

Simplicity is key here. You just need to know what you’re up against.

When I speak of daily goals, these are usually things like, “don’t buy a $5 latte and instead prepare your own coffee from home”. This is something I’d consider a habit breaker, which we’ll talk about a little later down this post.

Monthly goals are easy because most things come with monthly payments. So to break down your overall goal, take a deep look at the total balance divided by the monthly payment to get the remaining months left.

Now you have a full picture of how long this is going to take with just the minimum payments. This is a good time to look at what you can put extra cash towards first.

Don’t be alarmed if some things calculate out to multiple years. You’ll throw extra cash at these eventually because you are now laser focused on paying off debt fast – right?! And once a debt is paid off, we’ll roll that payment into other debts (snowballing it).

If your goal is to save more, then apply the same principles (also, why are you reading about debt if you’re trying to save more? pay off that debt first!). Take the total you want to save and divide it by how much you can save a month to get how long until you meet your goal. Then see where you can cut back and divert more money towards your goal so you meet that goal quicker.

Don’t be overwhelmed! Now that you’ve got a vision of your financial timeline and goals, we can start digging into the details of tracking this stuff!

Another quick chart I did when I first began was to create a timeline for the absolute maximum amount of time it would take me to pay off the $40,000. Seeing that I wouldn’t pay off my last debt until 2023 made me have a whole new sense of urgency!

This is just a simple way to show the timeline of my debt payoff visually. Again, it's motivation for me to see this on paper so I want to pay it down even faster and be free!

Action Items:

  • Set a long-term financial goal (like paying off debt fast and getting on the path to financial independence)
  • Begin to break that down into monthly and/or daily goals 


Tracking Your Spending Is Essential For Paying Off Debt Fast

Now you know how much money is coming in and how much is going out. You know where you want your future self to be financially. You’ve broken it down into daily or monthly goals.

How do we go about tracking this kind of stuff?

Here’s a fun way I found to track daily habits I wanted to break. This helped me to not spend so much money per day, which seriously adds up!

You can also use this type of daily tracker for motivation and rewards! So, if you can successfully go 6 days without a latte, then you reward yourself with one on the 7th – or not. Make your damn coffee at home.

Looking back the W and Ls weren’t that great of a system but in a pinch it worked. Just remember that however you decide to go about this – a castle is built one stone at a time. Building positive daily habits is life changing.

A simple habit tracker is worth more than you can imagine. Daily habits build a successful life. You build a castle one stone at a time.
simple habit tracker

Most of my tracking however is on a month to month basis. The above graph is about as complicated as I get. My monthly stuff is pretty boring in comparison.

All I do is dedicate a single page in my BuJo to this. I write when I get paid, and then every single time I purchase something I pull out the BuJo shortly after and record it. It’s really similar to the above page that shows income vs expense. Except it has everything that I actually bought, not just my income and bills. Below is an example of my actual spending back in 2017. Outside of necessities I didn’t really buy much at all… Ah, now that feels good!

Recognizing where your income is going is crucial to paying off debt fast, therefore tracking your spending is key.
monthly spending tracker

You’ll probably realize how much you actually spend on a daily basis. This is a great opportunity to see how many “No Spend” days you can do! Feel free to set up a graph like the one I showed above for this type of goal.

Again, this is super simple, but highly effective. At the end of the month, before I flip to another page and begin recording that month’s income, I take the remaining cash and either pay down debts or save it. Well, I’m debt free now so I invest the rest!


Net Worth Chart

Now that you’ve been tracking your spending on a monthly basis, something fun to do every now and then is check in on your net worth.

One of the coolest things to see if your NW going from the red and into the black.

When first starting decide if you want to track quarterly or monthly. I default to quarterly. At the end of each quarter, I can quickly scan my assets and my liabilities and see where I’m at.

A simple net worth tracker. Extremely motivating. Now watching it grow in the green is the BEST part about tracking my net worth.
net worth


I’m Out of Debt – Now What?

A quick thought here. Eventually you’ll be out of debt and you’ll want to know how much money to save up or what to do next.

I’m here to tell you about this magic concept called financial independence. Sometimes referred to online as “FIRE” for “Financial Independence Early Retirement”. The “RE” part is cool if you don’t like your job, but I’m just going to tell you about the “FI” part – the rest is up to you. FI = mandatory. RE = optional.

In my opinion, financial independence is all about freedom. Freedom from money and freedom of choice. For me, it’s about being able to make decisions in my life based off of the value I can provide to someone and not how much money am I going to get for this?

In short, to calculate how much money you’d need to be FI, take your total yearly expenses and multiply that by 25. Don’t forget to include expenses like healthcare, groceries, gas, etc.

Again, we go back to setting goals and breaking them down. If my FI number is $1M then I can begin to break that down and see how long it’ll take me to hit that number.

Sometimes this will lead to thinking outside the box. I wanted to find ways to become FI faster, so I did something I never thought I’d do: I started a business. Whether or not it helps me along my journey, I know I’ll learn important lessons along the way from it. 

Lastly, you’ll want to invest all this extra cash instead of just keeping it in a bank account. But how to invest all this extra cash is beyond this article and will be great future content. All I’ll say for now is max out any pre-tax account options you can and invest them in “total market index funds” or an index fund that follows the S&P 500. Then do the same for post-tax accounts (like the Roth IRA or just a regular investment brokerage account). Oh, and the index funds should have an expense ratio of .04% or less. That’s literally it. Maybe I don’t need to write the post after all… 


Parting Thoughts

I hope the above advice was sufficient in getting you started on your journey to financial independence and paying off debt fast. It’s been a rewarding path so far!

After nearly two years of this, on May 15, 2017 I paid off my last debt. That was a great feeling submitting that last payment!

Without the intent and organization of the BuJo, I think it would’ve taken a lot longer.

Living with intent is the real key here. And while this blog’s underlying premise is personal finances, you’ll probably see that word and theme pop up a lot around here. Without those principles and concepts I would probably still be in debt and struggling a lot.

Once you’re living with intent and you have more of a purpose, little things like the spending and habit trackers do wonders for increasing your output and happiness. At the end of the day isn’t that what this is all about? I think so. My life goal includes things like living a more fulfilled, happy, and enjoyable life.

Personal finance in and of itself can lead to a lot of fulfillment and happiness. When you get into the habit of tracking your spending and living more intentionally, you’ll begin to realize how much more abundance you have without actually spending an extra dollar at the end of the day. That’s liberating! Seeing your net worth or a savings goal increase and reaping the long-term rewards of that is also very enjoyable.

Remember to live the life you choose to live. Spend less, live more.


Note: This post was originally written for and you can read that version here.


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