Budgets are tight for many families these days, and saving can be difficult, but the story of a young Middle Tennessee couple might give hope to the rest of us.
Amy and Mathew Kroezen paid off more than $100,000 in student debt in just a few years, and they are now sharing their tips with you.
Amy Kroezen said their debt story is a familiar one. Long after earning their diplomas, the student loan bills just kept coming.
"When the first bill came in, it was for $990 a month. And that is devastating considering that when I went to school, they told me my maximum payment would be $50," she said.
Amy Kroezen graduated from design school in 2009, during the height of the recession. At that time, she had racked up more than $100,000 in student loans.
"I'm looking for other people in my situation, and I'm getting advice like, 'flee the country and don't come back. You won't have to pay it,'" she said. "I wasn't looking to get out of the debt. This is my debt. I begged these people to give me money, and I wanted to take responsibility for it."
"Once you're married, it's not her debt anymore. It's the family's debt," Mathew Kroezen said.
Instead of paying the debt back gradually, she and her husband decided to bite the bullet. Each month, they put as much as they could towards reducing that debt.
"We decided to make little tiny goals with the major goal being we think we can pay this off in four years," Amy Kroezen said.
After looking over their finances, they decided to use one of their paychecks for essentials. The other check would be dedicated to only paying off the college loans.
They started with what talk radio money man Dave Ramsey calls "the envelope system." That means cashing your check, dividing the money into separate envelopes and sticking to your budget no matter what.
"Each month, we had an envelope, the rent, water, electricity, groceries, utilities, gas, insurance, whatever bills we had and savings. We always made savings a part of that. And we put it all in the envelopes," Amy Kroezen said. "That means that if you're at the grocery store and you run out of money, you put something back. And if you didn't budget enough for your utility bill, you take that money from somewhere else."
The Kroezens had to dramatically scale back their spending by moving to a cheaper apartment, switching to generic products and starting a coupon system.
They also shopped at thrift stores, fixed things instead of replacing them and stopped going out to eat altogether.
"We went to parks, we went to museums, we went to art galleries, anything we could do that was free," Amy Kroezen said.
"You don't have to spend money to have a good time. That's one of the things that's hardest to get used to," Mathew Kroezen said.
Some of the cost-cutting measures were a little more dramatic.
"We had an IKEA cheap queen-size bed. I sold that for $150, and it cost almost exactly $150 for the lumber to make a king-size farmhouse really good quality bed that would run about $2,000," Amy Kroezen said.
While browsing the website Pinterest, Amy Kroezen found instructions on how to build her own furniture.
The couple also doesn't buy cleaning products, shampoo or even deodorant. Instead, they make their own all from scratch.
"I just jump on the Internet and type in 'homemade blah blah blah,'" Amy Kroezen said.
They said they realize not every family has the luxury of using an entire paycheck to reduce debt, but they say there are small changes most everyone can make.
"If the only thing you can do is give up buying lunch, that'll go a long way," Mathew Kroezen said.
"You gotta go with what you have to work with and just set small achievable goals so that you feel like you're making progress," Amy Kroezen said.
The Kroezens say, on average, they paid about $2,500 per month on the student loan starting in the spring of 2009.
They have a little girl and another baby on the way, and have saved money by using cloth diapers and breastfeeding.
And the couple says the secret to their success was always putting money aside for savings so unexpected bills didn't turn into more debt.
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