Johnny and Joanna Galbraith started their marriage with $20,000 in student loan debt. That’s still well below the average student loan balance of $30,100 for students who graduated in 2015, according to the Institute for College Access & Success, an independent nonprofit organization whose Project on Student Debt works to increase public understanding of student debt. Still, the newlyweds were determined to pay the debt off as soon as possible, even while living in notoriously expensive cities, such as Boston and New York City, and as friends lived more extravagantly.
The Galbraiths managed to zero out their debt in two years and launched a blog called Our Freaking Budget, where they share their story and humorous musings on money. They now live in Utah with two young daughters and are saving for a down payment on a house.
[See: 10 Easy Ways to Pay Off Debt.]
U.S. News recently spoke to Johnny and Joanna about why they prioritized debt repayment, how they paid it all off and what they’re doing next. The following excerpts have been edited.
Tell us about your decision to accelerate loan payments while many of your friends were likely deferring or paying the minimums.
Johnny: Our story is similar to millions of young Americans who want to get an education, and end up with a lot of student loan debt. Joanna and I met in college and decided to get married. By the time we graduated around the same time, we had racked up about $20,000 in student loan debt. We were collecting paychecks, but none of that money really ever felt like it was ours. We always felt like it was owed to someone else, which it was.
We read some books, and we had a lot of late-night chats about what we wanted in our marriage and in our lives, and we made the decision to pay it off as quickly as possible. To us, that looked like a two-and-a-half year road map, and we stuck to it. After some moves to New York City and Boston and some career shifts, we were still able to stick to the plan and paid it off within less than 24 months.
Joanna: We started our debt payoff at the beginning of 2010. In the beginning of December 2011, we finally submitted our last repayment.
While living in Boston and New York, how did you balance experiencing what the cities have to offer versus sticking to a budget?
Joanna: The biggest thing was that we made it a priority, and we knew going into it that we were going to be faced with challenges. Rent in New York City was almost twice what we had been paying before we moved there. A lot of people start paying off debt thinking that they need to be perfect at it, and it’s just not going to be perfect. At the beginning of each month, whether we’d had a perfect month of paying off debt or not, we’d regroup and we’d focus our attention and make sure we were doing it consistently.
We knew exactly what our income was each month, and we knew what our expenses should be each month. Every single dollar had a place where it needed to go at the end of the month. I think having debt repayment as a priority makes it easier to say no to expensive outings and experiences. There’s a lot of that you can do in big cities, but there’s actually also a lot of free options. We tried to find cultural experiences that were free, like free museum days and concerts.
[See: 10 Steps to Develop a Student Loan Repayment Plan.]
Anything that you agreed to cut from your budget?
Johnny: We ate out pretty infrequently, and if we knew that friends were going to eat out at an expensive restaurant, we would just meet up for dessert afterwards.
Do you think that coming straight out of college and not being used to taxi rides and dinners out gave you an advantage?
Johnny: I definitely think so. But also coming out of college, we felt sort of entitled to live an adult life. We’d put in our time and got our education and we were collecting a paycheck.
Joanna: We’d already been poor for over four years of schooling, so the first inclination was that we wanted to be able to finally spend some money. But it’s definitely easier being a poor college student, and then going from that to this. I think if we’d already been living a more expensive lifestyle, then it would have been harder to cut back.
Johnny: For each person it’s about figuring out what things matter most. Like Joanna said, not every month is going to be perfect, but if you tell yourself ahead of time where you want to end up every month, you’re going to be in a much better position than if you aimlessly go through the month and spend without really holding yourself accountable.
How has having kids impacted the way you think about money?
Johnny: It immediately felt palpable, as soon as we had our first daughter, that we now had a greater financial responsibility. We had our first daughter in our mid-20s, so we were hardly even adults, but we suddenly had financial goals that were kind of heavy for that age, like getting a life insurance policy and saving in a 529 for her eventual education. Now, we have a second daughter, and we’re still saving for a mortgage.
We’ve been renting for our entire marriage, and we’ve just been trying to figure out where we want to put down roots. I think the biggest thing has been making career choices that would complement both what we want in life financially, but also what we want within our family, such as jobs where I can be home and jobs where I can make a good salary to reach all of our financial goals. Our next financial priority is to try to do what we can to become financially independent in the next 20 years.
[See: 8 Financial Steps to Take After Paying Off a Debt.]
What budgeting approach do you use?
Johnny: Starting out, we used the envelope method, and I think that’s a really good way to start, because it’s so visual, and there is a psychological message to seeing real cash. Seeing an empty envelope is a lot more powerful than going on a computer screen and seeing just some arbitrary number. More important for us than budgeting systems is our tracking system. We’re big proponents of using technology that helps us stay in tune with each other and in sync with our finances.
More from U.S. News
Your Month-to-Month Guide to Savings
25 Ways to Fix Your Finances Fast
12 Ways to Be a More Mindful Spender
How This Millennial Couple Paid Off $20,000 in 2 Years originally appeared on usnews.com
