How This Couple Paid Off $83K of Debt in 20 Months Living in Pricy Seattle
The typical equation for paying off debt looks like this:
Income – Expenses = Amount you can pay toward debt
May the math be ever in your favor.
But for most people, it’s not. Especially if you’re living in one of the highest cost-of-living cities in America without the income to match.
That’s where Cody and Georgi Boorman found themselves in January 2014, living paycheck to paycheck in Seattle.
At that time, the cost of living in Seattle was 9.3% higher than the U.S. as a whole. Rent prices were a whopping 29.3% higher, according to the U.S. Bureau of Economic Analysis.
Cody and Georgi both had recently earned bachelor’s degrees from the University of Washington that left them with $56,000 of student loan debt. They also owed $27,000 on a car loan, putting their total debt at $83,000.
Cody was a quality control lead for a credit card payments company; Georgi was a baker and freelance writer.
“We were getting to a point where it didn’t matter if we were getting a little bit of a raise or a bonus,” Cody said. “We would look at our bank account at the end of the month and it would be the same number as when we started the month.”
But then they decided they wanted kids. They knew they couldn’t afford any in their current state.
The First Steps They Took to Crush Their Debt
The Boormans’ journey started with one goal: pay off the car.
The bill for their 2012 Honda Civic was $465 per month, and they owed $8,000 more than it was worth. If they could get rid of that payment, they’d have enough wiggle room to start saving for a baby.
So they started looking at unique opportunities that their city provided them to lower their expenses.
They switched cell phone carriers from Verizon, which they paid $120 per month, to Republic Wireless, which they now pay about $34 per month.
Groceries are another expense that typically cost more in big cities.
But Cody noticed that because there are so many options in each neighborhood, the stores are constantly competing. So they shopped for deals and used Costco to keep their grocery bill at $75 per week.
After five months, they paid the Civic down to value.
They realized the cost to drive their car was astronomical for the number of miles they traveled. They only drove to work, the grocery store and church, plus they made one trip per month to see family one to three hours away.
That’s another benefit of living in a city: Everything is close together.
So instead of continuing to pay the car off, they sold it back to the dealer and bought a Nissan Altima for $2,400.
And not only did they eliminate their car payment, but they were also able to lower their car insurance from full coverage to liability-only coverage, which saved them another $50 per month.
By the time they eliminated their car payment, they were on a roll. But they decided they didn’t just want to be car-payment free. They wanted to be completely debt-free.
“It almost started to become a game,” Cody said. “Like, ‘How quickly can we actually do this now that we have everything out in front of us?’”
And then, a week later, Georgi lost her job.
How They Paid Off $80,000 in 20 Months
Georgi was only unemployed for four weeks, but her new job paid 20% less. It was a hit. But it made them all the more motivated to finish paying off their student loans.
So they made and followed a budget every month. After every raise or bonus, they put more toward the debt, and eventually, 70% of their take-home pay was going to debt payments — which is impressive when you consider the exorbitant costs of rent in Seattle.
But because there are lots of rentals in a booming city, there are still opportunities to find a deal. Cody found their rental by searching Craigslist for the term “ASAP.”
“We knew people who needed to rent their units out ASAP would rent them out at a lower cost,” he said.
The Boormans paid $1,250 per month for their apartment, which was only a mile from their jobs.
And they didn’t stop there. This new financial picture gave them room to dream bigger than they ever could have even one year prior. They wanted to buy a house and were now in a position to do so… just not in Seattle.
The couple knew that when they started a family they wanted to be near family. So in the middle of their debt-free journey, they saved up $3,000 and moved three hours east to Moses Lake, Washington.
The move didn’t significantly lower their cost of living or help them pay off the debt faster. But because of all the work they’d done in the 13 months prior, they were able to seize the right opportunity at the right time.
In August 2015, six months after moving into their new house, Cody and Georgi became debt-free.
And in October 2016, their first daughter Eloise was born.
Since Cody and Georgi paid off their debt, they haven’t slowed down.
They’ve continued to get raises and pursue freelance work, and their income is now up to $90,000. They’re using the extra cash to try to reach financial independence — or the ability to live off passive income from investments and businesses — in the next five years to spend more time with Eloise and their future kids.
Their journey started with paying off their car loan and grew into a new way to look at life and spending. One that values free time over more stuff.
Earlier this year, they co-wrote the book “Clocking Out Early” to teach others to cut expenses, invest well and retire early — no matter what their income or the cost of living of their city.
Now when it comes to spending money, Cody asks himself this question: “What can we do to reduce this expense, and ultimately, maybe increase our happiness?”
Jen Smith is a staff writer at The Penny Hoarder. She and her husband paid off $78,000 of debt in less than two years on two less-than-average salaries. She gives money saving and debt payoff tips on Instagram at @modernfrugality.