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How Two New Parents Paid off $31,000 in 12 Months

The four magic words: “Have you checked YNAB?”

Today, we meet Tanya who lives in Akron, Ohio, with her husband and their two-and-a-half-year-old son.

Like so many of us, Tanya and her husband each grew up thinking that debt is just an unavoidable part of life. But, now, after paying off nearly $31,000 in just 12 months, their attitudes—and life—have completely changed. It just goes to show how powerful our thoughts are in shaping our reality.

Tune in to this episode of Debt Stories to hear how their money transformation really clicked when Tanya uttered the four magic words, “Have you checked YNAB?”

Transcript

Jesse: Welcome, everyone, to another episode of Debt Stories: Real People Beating Debt & Winning Financially.

Today, we meet Tanya who lives in Akron, Ohio, with her husband and their two-and-a-half-year-old son.

Like so many of us, Tanya and her husband each grew up thinking that debt is just an unavoidable part of life. But, now, after paying off nearly $31,000 in just 12 months, their attitudes—and life—have completely changed. It just goes to show how powerful our thoughts are in shaping our reality.

… and Tanya has faced some difficult realities:

Tanya: My husband and I were both from families that debt was pretty common, so we just grew up thinking that was the norm. I had tons of student loan debt when I graduated college. We had credit card debt. We kept trying and trying, or thinking we were trying I guess, to get out of debt but we weren’t really ever making any headway. And then my husband ended up becoming disabled and not able to work anymore, so of course that was a big hit financially. And then we were dealing with his student loans, my student loans. We had fertility issues, his disability, just so many emotional things that got all tied with the money. So while we thought we were trying, we were never really making it as much of a focus as we should have, I think.

Jesse: The stress of so many big life events was a huge distraction from their growing debts.

Tanya: We had about $14,000 in credit cards, a $20,000 car loan and almost $9,000 home equity loan plus our mortgage. Thankfully our mortgage is small; it was only $47,000 when we really got focused on our debt. Pretty much [as we lived 08:30], we had debt for something. We even had to borrow money from family when I was on maternity leave because my company doesn’t have a great maternity package. We were just a mess!

Jesse: Add it all up, and they were looking at $190,000 of total debt. Plus interest. That’s quite a chunk of money.

… of course, they weren’t looking at it, yet. Tanya and her husband were avoiding it—they knew things weren’t pretty, and they felt helpless.

Tanya: We went through bankruptcy, thinking that that was going to be a fresh start, but of course that didn’t do anything to the student loans. We had some fertility issues and then in the summer of 2015, we, surprise, surprise, found out we were pregnant.

Amazing and exciting but we weren’t ready. We were still swimming in debt. We had no savings, nothing. It, kind of, blindsided us.

Jesse: And that’s when it clicked: they needed a budget … a budget that worked.

Tanya: At that point, we were trying to budget just using a spreadsheet and I used Quicken to track our expenses. So I always felt like I had a really good handle on things because I track everything, but we weren’t actually sticking to budgeted numbers. I would just track it after the fact and be like, oh well, we went over budget or we used the credit card again, oh well, and never really felt like we had a clear way to move forward.

Jesse: Realizing that her spreadsheet wasn’t doing the trick, Tanya went searching for a solution. She knew that, in order to stay on top of their finances, the budget needed to be as accessible as possible. (Life with a newborn isn’t easy, and neither is convincing your husband to hop on the budgeting bandwagon.)

Tanya: Since my husband can’t work, obviously I work full-time and so when I would get home from work, all I wanted to do was be with my baby. I didn’t care about do I have receipts or is something due or whatever. A friend of mine said, “You really need to find something that you can do from anywhere, not chained to your computer at home.” So that’s what got me started searching, like maybe if I could find something, I can do on my lunchbreak at work or even right at the store, if I enter my receipt right then. That’s how I came across YNAB and it just…honestly, it sounds corny, but it really completely changed our lives when I found it.

Jesse: The difference was dramatic. Before giving every dollar a job, Tanya recalls …

Tanya: There were times we were using our credit card simply because I didn’t know if our balance was accurate. I didn’t know what payments were still pending. I felt like I couldn’t trust our checking balance, so we were just using credit cards. Then there were a couple of times where I missed a payment for no reason other than not being on top of it. We had the money ready to pay the bill and I just was like, oh shoot that was due last week. Whoops!

I was like, something has to change. I’m stressed out at work; I’m emotional still from the pregnancy; our money is a mess; and I miss my baby all the time.  I knew we had to do something if we were going to be responsible and give him the kind of life we wanted to give him.

Jesse: It turns out that the kind of life they wanted for their new son involved a lot less dining out …

Like so many YNABers that came before them, Tanya and her husband soon realized that food was eating their budget.

Tanya: It’s great to have the app on our phones because when we’re out somewhere we can easily pull it up and check our categories and say, no we don’t have money left to eat out. In the past, we always felt we were so drowning that we thought what’s one more meal or what’s one more purchase? We’re so far gone anyway, is this really going to make a difference in the grand scheme of things? But when you see those numbers in your face and you actually hold yourself accountable and check the numbers before you spend, that’s huge.

Probably the first time I think it really clicked for my husband and I, we were at home hanging out and he said something about let’s go grab a bite to eat and I said, have you checked YNAB? He looked at me and he was like, what do you mean? And I said, take a look at YNAB and see where you think we can pull the money from so we can go out to eat.

That was like magic. Ever since then, he and I are so much more on the same page. We’re both more involved in it. It was a lot more of a conscious choice of, okay if we go out to eat tonight that means that we either have to cut back on our groceries or we have to really watch our gas closely or whatever it is. To have that thought process and that discussion ahead of time that was huge. It used to be we’d just go spend and then “figure it out later”, which usually meant well we’re carrying more of a balance on our credit card because we can’t pay it off.

Jesse: When their son was born, they pivoted. “Figuring it out later” was a thing of the past. Suddenly, they had crystal-clear priorities.

Tanya: We don’t want Landon growing up with parents that are stressed out all the time and too worried about money to enjoy time with him.

I don’t want to be stressed out. I want to relax and have fun with my baby.

Jesse: So, they did the work. They followed The Four Rules. And it paid off …

Tanya: I don’t know exactly when, but there was a point and I remember saying wow is this what it’s like to not be stressed about money. I hadn’t thought about it for a week and I was just…the money’s there. When the bills come, the money’s there. Our discretionary spending, we have categories and we check the categories; I just suddenly stopped worrying about it.

Jesse: They’d turned a corner …

Tanya: We had talked with each other, oh we really need to do better at this or do better at that. But we would still rationalize purchases to each other and we would, oh we’ll figure that out next payday. There was always that giving ourselves an out. Once Landon came along, we were like, no there is no letting ourselves off the hook anymore because he needs us and he needs us to provide for him, so we’ve got to get it together.

Jesse: With their new habits, suddenly they had money waiting for bills, instead of the other way around. That can seem like the impossible dream when you’re just getting started. So, how did they do it?

Tanya: One of the biggest things, honestly, was our attitudes and really taking an honest look at needs versus wants and focusing on our goals. I know it sounds easier said than done, but when you decide that your family is more important than getting a Starbucks every day, or something, we just started at looking ways that we felt like we were spending more than we should have been, and YNAB really brought a lot of clarity to that.

A perfect example was early on into our YNAB journey, our Keurig died; it just quit. Pre-YNAB, I would have been at the store in my lunchbreak. There were no question; we are getting another Keurig, non-negotiable. I said to my husband, well that’s not really in the budget, what do you think about just going back to a plain old regular coffee pot. He said, I was thinking the same thing. To think about that now…there’s no way we would have ever made that decision two or three years ago. Even though we were drowning in debt, we just felt like that would have been a necessity and there is no way we could have told ourselves no.

Jesse: They weren’t just saying no to a $150 Keurig machine …

Tanya: When you buy the K-cups, that’s more expensive than just buying regular old coffee. So cumulatively, we thought that might be an expense we could do without, but like I said, we never would have even considered that before. It’s just a real big attitude shift.

Jesse: So, now they’re cutting down on the cost of their coffee. Then there’s food …

Tanya: Dining out was a big one for us because with my husband’s disability and he’s stuck in the house all day. For us that was a lot of entertainment and a change of scenery for him; we would go out to eat all the time and not really think about it. And we knew that we were spending more than we wanted to but like I said, we didn’t have the living, breathing, budget that we have with YNAB now so it was just in the back of our minds like, yeah, we probably don’t have enough but we’ll figure it out. Now we really do set a budget and he and I sat down and talked about what do you think is a reasonable amount? Do you want to go out to eat once a week, twice a week, whatever? And we worked through that together, whereas in the past it was always me saying well we don’t have the money for that.

Jesse: Being on the same page with your spouse is one of the best things you can do to make your budget really work for you! If you don’t have a budget meeting scheduled, put one on the calendar every month, at least. It’s amazing how much more effective you can be when you prioritize your dollars, together.

Tanya and her husband also cut back on a couple of their other bills …

Tanya: We also started attacking some of our expenses and switched our cellphone plans and we changed insurance companies.

We had Verizon. We switched from them to AT&T prepaid, which was cheaper, and then just in the past month or so, we switched over to Red Pocket.

I hadn’t either. A co-worker of mine suggested it. It was a special deal that you bought the SIM card through eBay and you have to pay for the whole year in advance but it worked out to only being $20 a month.

Prior, we were paying easily $150 to $200 a month total, just for the two of us and now we’re paying $40 a month, essentially. And that’s something we would never have done before YNAB because, honestly, we didn’t trust ourselves to save the money for the next year. We know okay in a year from now, we’re going to have to have that money again, we wouldn’t have had it. But now with YNAB, I’m like okay, from the money we’re saving, we’re just setting aside for a true expense and in 12 months we’ll do it again.

Jesse: Even though they’ve tightened things up, Tanya and her husband still make room in the budget to enjoy eating out. But now, instead of spending $300+ per month …

Tanya: We’ve been between 100 and 200 a month.  When we get to the point where we think, okay, going out to eat means we’re stealing from our debt snowball, then it’s like, no, we’re going to eat peanut butter and jelly if we have to; we’re not doing that.

Jesse: PB&J tastes pretty good when your debt’s going down. And that one-to-two-hundred dollars makes it feel doable.

Tanya: We felt like some people maybe think that we shouldn’t be eating out at all when we have debt, but we know that we wouldn’t stick to it. If we had to be completely strict for three years straight, there’s no way we could stick to it.

Jesse: And their strategy is working …

Tanya: We’ve paid off almost 31,000 in the past 12 months.

Jesse: $31,000 in 12 months! How did they do it?

Tanya: We did have one tax return, and then I do get a bonus at work but the majority of it was not…I mean we’re not talking huge amounts of money, a couple of thousand here and there. The biggest part, honestly, has been realistic, budgeting, sticking to our budget, cutting expenses. Making those hard choices about, no we don’t need cable and no we don’t need the most expensive car insurance just because we’ve had it for 15 years. Once we got a handle on our money with YNAB and really wanted to get serious about the debt, I started questioning everything. Like why are we paying so much for this and could I get an extra 20 bucks out of this bill or that bill.

In the past, I would have thought oh it’s 20 bucks, it’s no big deal. But when you have the numbers in front of you and you can see, oh well, 10 from this bill, 20 from this bill, 10 from this bill, before you know it, you have a few hundred dollars that you can use towards just attacking the debt, it’s then crazy.

Jesse: Their plan is, within three years, to be completely debt-free ….

Tanya: It is. We want to move into a different school district before my son starts son, so that’s been our big push. As much as we can get paid off before he has to start school, then we can move and that’ll be our last house, hopefully. And we’ll do it a little bit smarter and not get ourselves back in the hole that we have been in for so long.

Jesse: If you feel trapped by your debt, Tanya says …

Tanya: Well absolutely don’t give up, and you have to give YNAB the time. In the beginning, it does take some time and really some commitment on your part to learn the system and really commit to doing it the way you should. And it will pay off. When we first started, I remember thinking I have to get all my accounts set up in YNAB and I’ve got to get a handle on all my balances and I blocked off maybe a couple of hours one Saturday morning and it was just the best thing I could have done.

It made such a difference and opened our eyes to how we were spending. It improved communication between me and my husband. He enters transactions on the go, so do I. It’s just so worth it.

Just keep at it. Take the classes. Reach out to customer support. I did in the beginning. I think literally the first day I signed up, I emailed customer support and they were amazing. The people there are so nice and so helpful. They don’t make you feel like you’re an idiot and they don’t give you a canned, cookie-cutter response. They actually talk to you and figure out your issue. I just can’t say enough about what YNAB had done for us. If people are willing to put in the time to learn it upfront, once you learn it there’s no looking back.

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Do You Have a Debt Story?

Wanna know what’s better than an amazing debt makeover story? Several debt makeover stories! If you’re a YNABer and you’d be willing to let Jesse interview you for a future episode, write to us at debtstories@ynab.com. In your email, include a short paragraph or a few bullets about your financial hurdles and how you overcame them.

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How Two New Parents Paid off $31,000 in 12 Months