How I Plan to Pay Off $34,000 In Debt In 12 Months

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No one really likes debt, but this 22 year old has a plan to be #debtfreebytwentythree

I always told myself that I was financially smart. There has always been some form of a budget. I have some savings. The only debt I had was student loans. I didn’t even get a credit card until the week before my 22nd birthday and I was irrationally proud of that.

Fast forward six months and I feel like I am drowning. Not that I am not making enough money, but that I realized how much debt I actually have.

$34,000 in student loans, credit cards, and a car payments. 90% of it being student loans.

I told myself I would never ever be like the rest of America, just running on credit.

But here I am.

I didn’t need my Jeep as bad as I just really wanted it. It is probably one of the nicest vehicles that I have ever owned, but I could have waited. Instead, I got a loan for it.

With the loan, came a credit card to help build my credit so my dad didn’t have to cosign a loan if I needed a loan again. Blah.

I did the math and just paying the minimum payments, I would be paying off my student loans for almost 22 years and that’s without the interest that would accumulate.

A month and a half later, after the Christmas shopping has been completed, I am feeling a little like every other American at this time.

The post Christmas- “I am broke” blues.

While “broke” may not be exactly the word that most people would use to describe a 22 year old that has a solid Army paycheck coming in two days, it’s definitely how I feel.

Here is what I am going to do about it.

Dave Ramsey has become my go-to-guy when it comes to finances, but over the last few months it has been hard to tell.  I just spent the morning of my snow day finishing  The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness by Dave Ramsey. I am ready to create my own Total Money Makeover story! Follow the link to get started with your own story!

His baby steps are pretty simple. He actually says that the first one is the hardest, but I would argue that I am struggling the most with the second one. I am currently on the second step after rebuilding my emergency fund that I used for a vehicle I didn’t necessarily need, but I have my Jeep and a little more debt to get rid of! I have struggled with paying off my debt because up until this point. For a while,  I felt like my savings were more important.

I would save and save and save, saying that I would use that money for student loans eventually.  At one point my savings, except my emergency fund, was gone and I had more debt than I started with!

That’s about to change. I plan on following Dave Ramsey’s The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness to get debt free! Here are the very basics of his book and how I plan to apply them to my life!

Baby Step 1 – $1,000 to start an Emergency Fund

This was completed years ago. I opened a separate bank account at a bank across town and I haven’t touched it. Until I decided that I needed a new car. I sold my old car and I will be putting the money from my old car back into my bank account. Emergency fund- Check.

An emergency fund is so important because it makes sure that if something happens, you aren’t adding to your debt.

Baby Step 2 – Pay off all debt using the Debt Snowball

This is the hardest one for me. People have told me not to pay off all of my student loans, but I am not planning on listening. My goal is to have everything paid off by January 1st, 2018. That gives me a little under a year to get it all taken care of, but there are a few expenses that I will have to get under control.

For more tips on paying off debt, check out my blog post about how I paid off $15,000+ in 12 months or any of my other money saving tips.

Here is the raw visual of my debt. Most people won’t reveal their numbers. I know that I am not the only one in this boat. This is something that most people in the world are either struggling with or working on fixing. I hope to inspire other people to talk about it and do something about it.

  •                Mary Kay Card: $275
  •                Bank Credit Card: $625.88
  •                Fedloan Student Loan #1: $2087.41
  •                Jeep Loan: $2,600
  •                Fedloan Student Loan #2: $3,550
  •                Nelnet Student Loan #3: $11,634.62
  •                Nelnet Student Loan #4: 13,218.78

Totaling out to $33,991.69

**Most people who know me well are probably questioning why I have student loan debt. A good portion of it is from living in the dorms for a year, traveling abroad for 3 weeks, and 1 semester of not getting my tuition assistance paperwork in because I was still at my initial training when it was due. Read more about why I don’t regret my student loans.

Baby Step 3 – 3 to 6 months of expenses in savings

For me, 3-6 months expenses is about $10,000. If I can pay off my student loans in a year, there is no doubt in my mind that I will have this emergency fund built in just a few months. After this is complete, I will be leaving my waitress job to work from home 100%.

At 22 years old, it seems a little crazy to me that I could be working from home, in just a year and a half. (Fingers crossed that it is actually sooner.) I don’t know if I will love it as much as I hope to. It would be easier to work from home with a family, but I am excited for the opportunities.

Dave Ramsey suggests 3-6 months because that is the average time that someone is without income if they get laid off/fired from their job.

Baby Step 4 – Invest 15% of household income into Roth IRAs and pre-tax retirement

I don’t know anything about investing right now, but I am stoked to learn next year. I already put a little bit of each military check that I get into my Thrift Savings Plan. Almost every American talks about retiring at a better standard of living than what they are at now, but a lot of them don’t have any plan for how they are going to do that. NOT ME! They dream about retirement on a beach or traveling the world, but don’t plan and save money to match their dreams. Most people have never figured out how much money it would take to retire at their current income, let alone more than their income.

Baby Step 5 – College funding for children

I don’t have children and they are no where near my 5 year plan, so I plan to skip this step for now, but it will be in the back of my mind for when I do settle down to have kids. I will raise my kids with strong work ethics, but I also don’t want them struggling in their early 20’s with student loan debt.

In an effort to pay for my college, I joined the military. While some things have changed since I joined, they have helped me avoid a good chunk of student loans, but not all of it. My whole story of how I ended up in 29K of student loan debt can be found here.

Baby Step 6 – Pay off home early

While I currently don’t own a home, in Baby Step # 3-6 I plan on aggressively putting away money for a home. I don’t want to rent forever. I refuse to get into more debt when having a place to live.

My plan is what Dave refers to as the 100% Down Plan. My goal is to own a home and buy it in cash by age 25. While the first home will be small, it will be mine and paid. I am super anxious about the process because it feels crazy that I would never have a mortgage when a ton of people my age (and older) are paying for houses way out of their budgets.

Baby Step 7 – Build wealth and give!

There are so many organizations that deserve more money. I do my best to give when I can, but I would love to have the money to give to people in need.  Even though I have a ways to go, I did have a friend who needed money for a lawyer for custody battles. I had no problem handing over the money for them to be able to be with their kid more often. The feeling that it gave me was unlike any other and I can’t wait to continually give in other situations.

The thought of having the money to freely give is exciting. The thought of owning a home is also very exciting. I can’t wait to paint and decorate however I want! I actually really look forward to having my own space to rip out cabinets and counters to make it my very own. My financial future is in my hands and nothing is going to hold me back from being 100% debt free.

I love the idea of being able to leave a $40 tip for my server if they are having a bad day or giving money to the Wounded Warrior project and other great organizations for soldiers.


The new motto for my life is DEBT FREE BY 23! My 23rd birthday is December 13, 2017. On that day, I will be making the last payment on my last student loan on my birthday! As crazy as it sounds, I am determined to make this the year that I will remember for the rest of my life.

**Update: I was crazy ambitious when I wrote this. While I didn’t make my goal, I paid off far more than I could have ever imagined. With a take home pay of just over $30,000 last year, I paid off over $15,000 in debt. You can read all about 2017 in my year in update!

What are you going to do with this year? What is it going to take to get you out of debt?

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5 thoughts on “How I Plan to Pay Off $34,000 In Debt In 12 Months

  1. NEVER take council from the realm of poverty,if you want to live in the realm of wealth.Do not let poverty take over
    you,neither your problems say it out and you will get solution for that problems,say it out and it will be solve you have anything to share with me feel free to message me on Facebook BABA OYO

    1. This was originally the plan, but it did not happen this way. You can see the monthly progress reports on my blog as well.

  2. I have 35K credit card debt, 2 child supports that I am paying and also a student loan balance of 6K and Car Loan balance of 15k. I make around 95K but I always have to borrow money to pay for my variable expenses as I have a fixed expenses that actually comes to with my Child support the Net Income value. If I pay off credit cards and if I do not make etc any purchase or spend nothing even to a McDonalds Trip, what I make will be correct, that does not include clothes this and that.

    How can I pay it off? As, whatever I make only helps me to keep my bills paid and nothing more.

    1. I would start looking at your expenses more closely. Every time you spend money, write it down. I would challenge you to go through your bank account and write down all of the automatic bills that get taken out. Are there things you can cancel (gym, cable, netflix, other subscriptions.). Then I would look at how much you are actually spending on food, clothes, gasoline. I would write everything down and figure out where your money is actually going.

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