How We Paid Off Debt and Saved $20,000 in One Year

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Every year millions of people make New Year Resolutions that will change their lives.  How many of them actually stick to it? What if sticking to your resolution meant changing your life forever?

I remember in 2015 as we were getting ready for 2016 to roll in we had this crazy idea for a resolution.  We wanted to become debt free.  Not only that, we wanted to SAVE money too!

Our New Year Resolution for 2016, pay off Cassie’s almost $10,000 in school loans and save $20,000 all in one year.  That’s a really high goal but hey, we were young, a little crazy, and determined!  We knew we wanted to buy a house in 2017 and would need some cash to make that happen.

As soon as January started we hit the ground running.  At the time Cassie was in the last semester of her 4-year degree and we had about $10,000 left of student loans to pay off.

I mentioned we were a little crazy, right?

Yea, crazy about saving money.

We paid off the school loans by March!  That was the last of our debt; we were 50% of the way to our goal!

With the school loan weight off our shoulders, it was time to start saving.  We spent April through December saving up $20,000.  All of this on a combined income of about $75K after taxes.

We saved nearly half of our annual income to achieve our financial goals and I’m here to tell you that you can do it too.  Seriously, it’s not as crazy as it seems!

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Our Secrets to Paying Off Debt and Saving Money

You’re probably wondering if we used magic or robbed a bank to save up that much money in a year but the answer is no.  We made a couple really simple changes to our lifestyle that helped us get serious about saving.

Set A Goal And Stay Focused

When we set our goal we knew we had to have a way to see progress.  If you’re anything like us, you want to know your hard work is getting you somewhere.  Make a tracker and hang it on your fridge so you see it every day.

For paying off the debt and saving money we created very simple spreadsheets to track our progress.  The tracker was an Excel spreadsheet that had $0 at the top and our $20,000 goal at the bottom broken up in $500 increments. Every time we added money to the savings we marked it down on our sheet.

That day when we stood at the fridge and marked off the $20k mark was amazing! Whatever your goal is, write it down and hang it somewhere you will see it every day.  I can’t stress enough how important this is.

 

A Simple Budget Changed Our Lives

I know this might sound like common sense but creating a budget was the biggest factor in us saving money.  We went from saving hardly any money each month to saving over $2000 per month!

All with a simple budget system called the Cash Envelope Budget System.

This is by far our favorite budgeting system because it works and it’s so simple to use.  If you really want to save money I highly recommend you try the cash envelope budget system.  You won’t regret it!

Our budgets weren’t pretty at first so don’t expect yours to be perfect the first try.  We had managed our money before this but this was our first really deep dive into budgeting and saving a lot of money.

After we got it really dialed in, we found living on a budget to be fun. Cassie and I challenged each other to find new ways to save money each month.

The biggest piece of advice I can give you if you want to save a lot of money is create a budget and stick to it!  Find a budgeting method and run with it.

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Creative Ways To Save Money That Work

When we got really serious about budgeting, we found new and creative ways to save money each month. Cassie and I challenged each other month after month to find new ways to save money.  Here are a few of the ways we found to really cut back our monthly expenses.

  • Cut cable: This was the first thing we did. We were spending over $100 per month on TV that we weren’t watching.  We cut ties with the cable company and stuck with Hulu and Netflix.  This saved us a ton of money each month.  Guess what, we haven’t gone back!
  • Find alternative ways to commute: Depending on where you live, you should look or alternative ways to commute to work. When we lived in DC my work paid me to ride the Metro to work.  It took an extra 30 minutes to get to work each day but it was free so it made sense to me.  You could also ride a bike or walk to work if you live close enough.
  • Shop at discount stores: We love shopping at Aldi and the Dollar Tree. These stores have some great deals at really great prices.  Check them out and I am sure you will be surprised by what you find.
  • Don’t go out to eat: This is a big one that a lot of people don’t really think about. It’s so easy to stop at the drive-thru on your way home or go out for a quick lunch at work.  Every time you go out to eat it costs money and it adds up really fast.  Start bringing lunches to work or a snack for the ride home.
  • Adjust the thermostat: This one really made a surprising difference for us and it will for you too! In the winter we turn the heat down 2 degrees.  This made a huge difference in our heating bill for the winter.  You can do the same in the some with air conditioning.  A small change in temperature can make a big difference in your bills.
  • Do your own DIY projects: If you’re handy and have the tools you can save a lot of money by doing your own DIY projects.  We do all our own projects and repairs around the house to save a lot of money.
  • Use any bonuses or tax returns: I know it can be tempting to use those tax returns or end of year bonuses for a trip or nice gift but don’t do it. Save that money or use it to pay off debt.  We used our tax return to pay off some of the debt and jumpstart us towards our goal.

 

Find Free Fun

Just because you are living on a budget now and trying to save money doesn’t mean you can’t have fun.  You just have to find new ways to have fun that don’t cost you money.

I’m talking about no-spend weekends! When we set our goal of saving $20,000, almost every weekend was a no-spend weekend.  This is a great way to prevent overspending or impulse buying.

We continue to try and have no-spend weekends once or twice a month. It’s a lot of fun to get creative and find new, inexpensive ways to keep the kids entertained.

There are so many different ways to save money out there.  I just wanted to share with you the main ones we used to achieve our goals.

There wasn’t anything super-secret about how we were able to pay off $10,000 in debt and save $20,000 in one year.  We set a goal, created a budget, looked for ways to save extra money, and found ways to have a fun life that didn’t cost a thing.  Simple changes to our lifestyle made a huge difference.

I want you to know that with simple lifestyle changes you can save money, no matter your income level.  I know it can seem impossible but it isn’t!

Hi, we’re David and Cassie Pipp.  We’ve spent the last 7 years paying off $55,000 in school and auto loans and saving up well over $100,000 towards retirement.  This wouldn’t have been possible without our frugal lifestyle and strict budgeting.  We started Living Low Key so we could share our tips and tricks to help you with your finances and reach financial freedom!

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