6 genius tips from a couple who paid off $330,000 of debt in 5 years
Photo courtesy of Talaat and Tai McNeely
TaiMcNeely almost didn't marry her now-husband Talaat after discovering he had debt: he owed more than $30,000 from credit cards and vehicles.
Talaat wasn't alone in his financial struggles. The average American household carries $5,700 in credit card debt alone, and those who take out student loans have more than $37,000 to pay back on average.
After initially struggling to learn how to handle their money as a couple, the McNeelys were able to pay off that $30,000 in their first year as a married couple. This journey inspired them to start His & Her Money to help other couples manage their money as a team.
After getting rid of that debt, however, the McNeelys had a goal in mind that would bring them back too square one: buying a house.
By being super organized, turning their hobbies into side hustles, and using 13 bank accounts, the McNeelys bought their Illinois home in June 2013 and made their final payment five years later in June 2018 — that's 25 years ahead of schedule.
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More impressively, they managed to do it while living off a single income. Tai was a stay-at-home mom while Talaat worked as a special education teacher and then a school administrator, earning what they called a "middle-class salary."
Their strategies and lessons for getting out of such a massive amount of debt can apply to credit card debt, student loans, or just managing your day-to-day spending.
Here are their six simple, yet effective, strategies to help you pay off any amount of debt.
1. Open multiple bank accounts.
Comedy CentralTai and Talaat have 13 bank accounts. Yes, 13.
"We probably started off with three, then it grew to four, five, six, seven, eight, and now 13," Tai told INSIDER. "So we have an account for dining out... At the beginning of the month, we put money into that account and once the money's gone, it's gone."
They also have a vacation account, a car fund account, and an account for bills that are only paid once a year or once every six months. Tai also suggested having a "main hub" account.
"For us, it's our main household checking account," she said. "[Our direct deposit] comes in there and we don't have a debit card for that account because that it's simply a hub for the money to come in and the money to shoot out to all these different 13 bank accounts."
Separating everything made it much easier for them to budget their money, Tai said.
"We tell everybody to try it," she said. "It's just organization. It's just keeping order."
2. Make payments at least two times a month.
Billion Photos/ShutterstockTai and Talaat made a house payment once every two weeks instead of once a month.
"By doing that, we were able to pay the same amount of money each month, but it ended up being an extra payment a year," Tai said. "So that knocked off some years of our mortgage."
This strategy doesn't just apply to paying off a house.
Reyna Gobel, author of "CliffsNotes Graduation Debt: How to Manage Student Loans and Live Your Life," encourages student loan borrowers to make bi-weekly payments so that you're paying the equivalent of 13 monthly payments per year instead of 12.
3. When you get a raise, put it toward your debt instead of giving in to "lifestyle creep."
Shutterstock/AllianceBeware of lifestyle creep, or increasing your standard of living whenever you start making more money. Personal finance experts agree that it will keep you from ever becoming rich.
Tai said anytime her husband got a raise, they would put that extra money toward their house payment.
"We still maintained our lifestyle at his original pay," she said. "So every time we would get a raise, I would do the calculations, I would break it up by 12 months, and I would call our mortgage company and say, 'Hey, I need you all to increase our mortgage payment by XYZ.'"
See the rest of the story at Business Insider
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