Wanting to start a family motivated us to pay off $126K in a year
Name: Precious and Chaun Ares
Age: Precious, 31 and Chaun, 32
City/state: Inglewood, CA
Amount of debt: Approximately $126,000
Type of debt: A car loan of $3,751, student loan of $46,000, credit card loan of $10,000) and personal loans of $64,000 — of which, $24,000 was for IVF
How long it took to pay off: 13 months
Jobs held while paying the debt: FedEx warehouse package handler, artist, Postmates/UberEats driver, police officer, Amazon delivery driver, and consultant
My first introduction to debt was student loans, which both my wife and I had. We then accrued more debt by taking on private loans and credit card debt to fund our fertility journey. We also took out a personal loan to help my dad during the pandemic, and my wife also had a car loan, so it was a lot. When we started our journey to become debt-free, we decided to consolidate all of it so we could create a plan.
As a college student, I didn't realize the impact of debt. Debt is so normalized in our society, I didn't really think too much of it. Even as an adult, accruing debt for my fertility journey, I still didn't really conceptualize the amount I was taking on. We wanted to be really intentional and not give up our dreams, though, so we went for it.
My parents got divorced when I was two years old, so although my father was very active in my life, I learned a lot about money from my mom. She was a hard worker and saver. My brother and I lived in one room in my grandmother's house until I started sixth grade. My mom worked multiple jobs and lived very frugally until she was able to buy a three bedroom home in a nice community. My dad was the opposite; he made a lot of money but was a spender.
For me, the turning point for getting on top of my debt was starting a family. I wanted to leave a legacy for my child and never wanted our family to struggle. The first step in paying off the debt was creating a plan. My wife and I did a ton of research and utilized financial resources through our personal finance company SoFi, which allowed us to consult with a personal financial planner and attend financial classes all for free.
One class was about how couples can manage their finances together. At that class, they talked about the value of having money dates where you set aside time to discuss finances with your partner–doing this really helped us.
My largest debt, my student loan, had a pretty high interest rate, but I was able to refinance it at a much lower rate, which saved me about $200 per month. I used that savings to pay off my car completely, which I did within a year. I did not use credit cards at all at this time. After that, I became more mindful of interest rates and continued to get personal loans through SoFi, which enabled me to keep control of my finances and not let the debt get out of hand.
Money is connected to worries and stress and to combat that we started having meetings called “money dates,” which involved being vulnerable; they help us to open up with one another so we could plan and stay on track. We created a detailed budget and set scheduled weekly money dates where we would review the spreadsheet we created, discuss expenses and measure our progress. During those dates, we evaluated each expense and determined what we could cut down or eliminate and how we were doing against our goal.
Being able to discuss finances with my partner is important and freeing — why should money be off limits or taboo to talk about? After consulting and researching, we decided to do the Dave Ramsey’s "debt snowball method." With this method we aggressively paid down our lowest debt working up to our highest debt, using the payments of paid off debt for the next one.
In order to start the debt snowball, we decided to recreate our budget and significantly downsize our lifestyle. We cut down a lot of our spending, especially in the food and fun budget. We also sold our house and downsized to a smaller apartment in order to save money.
We cut out a lot of frivolous spending on clothes, jewelry, or things we just wanted but didn't need. I also came up with the "30-day rule," in which I wouldn’t buy anything new unless I used a version I already owned, for 30 days.
During the pandemic I was tempted to buy workout equipment, but I decided that I would have to workout for a month, straight using gym equipment I already owned or use free exercise videos before I would buy anything new. I did not make it to 30 days, and that showed me that buying new equipment would've been a waste.
I feel like a burden has been lifted. When I was in debt I didn't realize how stressed I was; it wasn't until I had accomplished my financial goals that I truly felt free and in control. I feel more confident than ever in my finances, and I am proud of what I am creating for my family.
It has changed my views completely. I am definitely more frugal, which is weird because you would think that after having more financial freedom that you would spend more, but it has been the opposite. I no longer wear "name brand clothing" and I pay close attention to marketing strategies. My whole mindset and views towards consumerism in America has completely changed. I now focus more intrinsically about what brings happiness, and can fully understand the "you can't buy happiness” sentiment.
When you are in a lot of debt like I was, it can seem impossible and overwhelming because you aren't sure how or where to start. But you just have to start with your smallest debt. Look at your most manageable debt and find an area in your budget that you can cut. Do your homework, make a plan, but don't get "analysis paralysis"; don't overthink it.
The message I would like to share is that if I can do it, anyone can do it. I am just your average citizen. I did not come from money. I was from a low-income area with a single mom. Even as an adult, statistically speaking, as a Black, lesbian woman, I am supposed to be a "low earner "and struggle with finances.
The fact that I was able to achieve this (creating a family through IVF, homeownership, financial freedom) lets me know that if you are disciplined and work hard, you can achieve your financial goals, whatever they might be.
