How We Paid Off $60,000 in Debt and Built a $90,000 Nest Egg in 3 Years

Chris is the author of the personal finance site Apathy Ends.

Today he shares how his household was able to pay off $60,000 in debt and build up a nest egg of $90,000 in just three years.

A lot has changed in the last three years.

We have gone from the typical “Little savings and debt-ridden” American household that dominates the headlines to a debt-dominating, money-saving machine.

Specifically, over the last three years, we have paid off $60,000 in non-mortgage debt principal and added just over $90,000 to various savings and investment accounts.

What changed?

We started taking action. We started putting all the reading and research to use instead of just thinking about it. One small change led to another and our snowball started to roll itself.

Breaking Down Our Debt

We have paid off over $60,000 of principal non-mortgage debt in the last three years, the bulk of it being from my student loan accumulation.

Honestly, paying off debt feels OK, but I am way more excited about the cash flow that comes after it’s gone.

Here is a detailed breakdown for the money nerds that are interested:

  • Sallie Mae/Navient – $15,362.73 – This was pre-student loan refinance, and was pure hell (you can read about all the fun in my full student loan story).
  • SoFi  – $29,487.49 – This is post student loan refinance with SoFi about half way through 2015, one of the best decisions I have ever made (more on this later)
  • Honda – $14,883 – The last piece of non-mortgage debt we accumulated was just over three years ago in the form of a new car. We probably won’t buy new again, but I must say that having a new car after rocking a complete P.O.S. (think no air-conditioning and one working door) for five years is pretty great.

Taking a Peek at Our Nest Egg

We have saved and invested over $90,000 in the last three years. It blows my mind to look at a relatively short timeline and see that much accumulation.

I am actually more proud of the growth in our savings and investment accounts than our debt payoff. Since I am 30 and Mrs. AE is 28, our money has a long time to work for us.

Here is a full breakdown pf the nest egg:

Before we get into the How, I want to highlight some information about us. I have decided that being fully transparent with our situation is the only way to get the message across in a way that will motivate the majority of the people without taking away from our accomplishments:

  • We are a dual-income, college-educated household
  • Our incomes are well above average
    • Today, we make roughly 2.5x the average household income of $55,775, but that hasn’t always been the case. Plus that came with $85,000 in student loan debt.
  • We live in Minnesota, which means housing is cheaper than on the coasts, but we are just above the average cost of living in the U.S.
  • We put off having kids until we were financially secure (we now have one child)

The reason I want to be transparent with the above information is because I believe anyone can do what we have done, but depending on your situation it may take longer or you may have to sacrifice more. If I wrote this and didn’t tell you we were making 2.5x the average income, you wouldn’t have anything to compare your situation to.

I want to motivate, and I think that posts like this can actually do the opposite if they aren’t honest about how they do something.

For example, I could write a post called “How I paid off $30,000 in debt in 1 month” and leave out the fact that I drained my Emergency Fund to do so. 

I promise there is no bull shit in this post, and I can back up anything if I need to 🙂

How We Paid $60,000 in Debt while building a $90,000 Nest Egg

We have made a lot of changes over years to make this happen, but I want to highlight the ones that have had the biggest impact. I won’t tell you that “The Latte Factor” did this – it helps, but it doesn’t do $60,000 in debt and a $90,000 Nest Egg in three years.

How We Dominated Debt

We have focused more on investing than paying off our debts. If we wanted to be debt-free outside of our mortgage we could have been early last year. That doesn’t mean we have been making minimum payments either. We have expedited our debt payoff using the debt domination strategies below.

If you are curious about why we focus on investing over debt payoff, you can read my full write-up here. The short story is that I would rather invest for the long term than pay off debt under a 5% interest rate.

Lower Interest Rates

None of our existent (rapidly dwindling) debt is above 5%, but that wasn’t the case in 2015.

My massive pile of student loan debt had an average over 6% after graduation, and $85,000 at 6% is nasty. It resulted in me paying over $5,000 worth of interest on my student loans in a single year. Setting $5,000 on fire was the wake-up call I needed to take control and do something about our situation.

Thankfully I discovered SoFi and dropped that interest rate initially under 4.3% (now at 4.8%, variable rate), which has saved us thousands of dollars and sped up our repayment timeline.

Here are other ways we have saved:

Accelerate payoff

Make use of Financial Windfalls. Over the years we have used ESPP stock sales, Tax Returns (not lately, unfortunately), the occasional (small) bonus, and raises to expedite accelerate our payoff. Principal-only payments kill debt. Make a short-term sacrifice and get rid of your debt.

Swear Off Consumer Debt

That car loan over three years ago was the last debt we have taken on and I don’t see us changing that in the near future. We may replace our second car once our current loan is paid off, but that is not going to be a priority for a while.

We do use a credit card for the majority of our purchases, but pay it off every month, in full.

Focus on Increasing  your Income

I believe this is the most important thing that you can do to expedite your path to Financial Independence. Cutting costs is important, but since we are not an ultra-frugal household, increasing our income has allowed us to maintain a comfortable lifestyle while kicking up our savings rate every year.

Below is our income progression over the last six years:

  • 2012 – Mr. AE’s income only
  • 2013 – Mrs. AE Starts FT work
  • 2014 – 16.77% Increase
  • 2015 – 15.75% Increase
  • 2016 – 19.25% Increase (Some overtime contributed to this jump)
  • 2017 – 8.8% Increase

We won’t be able to keep the above percentages going much longer, but we will be building on a solid income base moving forward.

Strategies we used to increase our income

Step 1: pursue a career with high-income potential. I know that seems like pretty straightforward advice, but there are a lot of naysayers out there who say they can’t earn more. That may be true today, but it doesn’t have to be forever. If you are in a dead-end career, you are the only one stopping you from changing that.

Steps 2-4: rinse and repeat the below strategies.

  • Promotions – Growing company = Opportunity. Push yourself, then push your employer to reward you.
  • Yearly Raise – We get solid yearly raises most years (3.5 – 6%) due to having great performance reviews.
  • Negotiate – You don’t get what you don’t ask for. Know your worth, and get what you earned.

I haven’t had a single promotion or non-annual raise just fall into my lap unexpectedly. I had to ask for them.

A second income helps a ton, so find a significant other and shack up 😉

Keep the big costs low

I believe in spending purposefully, but before you even get to cutting out day-to-day expenses, take a look at the major monthly costs. Primarily, housing and transportation are sneaky little devils that can steal up to 38% of your income.

Lenders use a standard rule that your monthly mortgage payment should not be more than 28% of your pre-tax income. To me, that is fricken crazy. We spend less than 14% of our pre-tax income on our home (interest, principal, insurance, taxes).

That is less than half of the rule of thumb, and we have a decent home. Don’t be house poor.

Transportation is the second highest average household cost. Unfortunately, people aren’t spending money to travel back and forth to places they want to be. They are spending a ton of money going back and forth to work. We save over $3,500 a year taking public transportation to and from work. That money goes straight into our investment accounts.

Pay Yourself First

The advice from Rich Dad Poor Dad to pay yourself first is often repeated, but for good reason: it is 100% spot on.

Our Anti-Budget philosophy puts a priority on paying ourselves first. Every paycheck we save 39% of our take home pay before it has a chance to be spent (Thank you, The Automatic Millionaire).

It doesn’t happen overnight

I don’t know how many times I have said this over the years, but there is not a big bang approach that will make you wealthy or solve all your problems. It takes time and dedication. If you aren’t willing to make the change, nothing will work.

Republished with the permission of Apathy Ends.

Categories Uncategorized


Password Reset

An email has been set with password reset instructions. If you do not see this email within a few minutes, check your spam folder.

Not Allowed

Your current user level does not allow voting. Please contact the site administrator to upgrade.



Please login first