Step by Step How to Calculate Your Debt Payoff Date for Baby Step 2

Paying off debt can seem overwhelming. A way to help you stay motivated and intentional is to calculate a “payoff date”.

When you are getting ready to determine just how long it will take you to pay off all of your debt, you have to write it all out.

This was my Tip #3 from my blog, Getting Started Paying Off Debt.All of your debt can include but is not limited to your car, student loan debt, personal loans, financed furniture, credit cards, etc. The best way to gain momentum in paying off your debt is by making a list of your debt from smallest to largest. As you make minimum payments on all of these debts, start targeting the smallest debt with ANY money you can free up in your budget. As Dave would say, “Go at it with a VENGEANCE!!”. Maybe you worked a side gig this past weekend, throw that money onto that debt. Perhaps you only spent 80% of your grocery budget this month. Throw that extra money onto the debt. Once the first debt in your “debt snowball” is paid off, you will take the money you would have been paying towards the smallest debt and start putting it towards the next debt. This will continue until all your focus is on your last debt and you are debt free! This step can take people several years to complete based on the size of the total debt, their income or “shovel”, and their determination to GET RID of this debt! The more you can dream about the freedom you’ll have and the more you make sacrifices to reach that debt freedom, the quicker you will get there.


I want to break it down for you! 

First, write it all out smallest to largest.

I will include my Baby Step 2 Debt Tracker here for you. I explained this in previous blog, but to sum it up…Math would tell you to pay off your debt by interest rates–paying the highest interest rate debt first. But, getting out of debt is not determined by being better at math…getting out of debt is determined by a behavior change. And a huge motivator in continuing with the process is to WIN! Once you pay off that first debt in FULL, you’ll feel a WIN. And you’ll want more of that feeling.

Second, create a debt freedom chart!

There are some really cute downloadable charts you can get to track your pay off. Some people make a paper chain and hang it in their home…for each $100 or $1000 they pay off, they take a paper chain link off. At our house we had a chart with 10 columns and 8 rows. (I made it when we had 80,000 left in student loan debt.) squared-one-uYtyhKO3ygU-unsplashEach time we paid off $1,000 in debt, we shaded in a box. Around the chart, I have doodled quotes from Dave and even some of our mentors to get us fired up! We leave this chart on our fridge so that we can be reminded of what we have accomplished and how much we have left! As of July 2nd, 2020 we have paid over $50K in debt and we have about $48K to go!

Thrid, once you have your debt laid out and have a motivational debt payoff tracker established, you are now ready to see how much you can put towards debt each month.

This step can get a little complicated. In this step, you will have to create a budget or revisit a budget you already have. I won’t tell you what you should and shouldn’t pay for each month. But, if you are serious about becoming debt free, I recommend making sacrifices in this step. We don’t have internet. We don’t have cable. We don’t eat out often. We don’t have spotify premium…we don’t have premium anything really. We try to keep our dinner cost less than $5 for every “meal for two”. We eat leftovers. We stretch meat and more costly foods with cheaper sides like….beans and rice. You’ll hear Dave Ramsey and his fans say “Beans and rice. Rice and beans.” This means, minimal. Just enough to live. The quickest way to be done with debt is to live a very minimalist lifestyle for a short period of time. You aren’t buying many or any new clothes. You are working as much as you can. You aren’t going on elaborate vacations. This can be a super difficult pill to swallow, especially if you are used to having all of these things and more. Because we were working to pay off $100K+ in student loan debt while Tyler was still in graduate school (meaning he was not working), we decided that we would have to pace ourselves a little. We did pay cash to go on a very frugal (four days for less than $900) and extremely fun vacation to Inlet Beach, FL right before I had to go back to work as a teacher. Just remember, whatever you don’t put towards debt, is just extending the amount of time you are in debt. So if you decide to have a $100 wifi/internet bill each month, then you will be spending$1200 per year on wifi that could have gone to debt. That is something you and your family decide you cannot do without, though.

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We use the hotspots on our phone. It isn’t always the easiest option, but it frees up $100 per month that we can put towards debt. Your budget can be as simple or as detailed as you want it. We used to be super detailed with our budget…making a line item for everything. But, it got complicated. It required too many envelopes. It was overwhelming. Now, we just keep it simple. We have a grocery/household item budget. If I need to buy shampoo this month, it comes out of the same line item as the ground beef I bought earlier this week. Here are our line items: giving to Church, Rent, Household/Grocery, Gas (for our home), Electricity, Trash, Gas (for our car), Auto Insurance, Renter’s Insurance, Life Insurance, Cell Phone Bill, Restaurants, Addie’s spending money, Tyler’s spending money, and Gift Giving to others. We also currently have three sinking funds: Traveling, Christmas, Flights home. The traveling sinking fund is there temporarily because we have family coming up to Alaska, and we want to be sure that we can go with them to different places in AK as they are up here. That is more important to us than paying our debt off one week early. Sometimes you can do that sorta thing, but if you don’t limit this type of spending, you’ll end up months/years behind your original payoff debt–it adds up! 

Fourth,  let’s calculate your debt payoff date!

After your budget is created and you feel as if you have everything accounted for, subtract the total predicted to spend from one month’s income. If you get paid every two weeks, take your two payments from the month before and use that to fund the next month’s expenses. As a teacher, our paycheck came at the end of most every month and it was the same each month. It didn’t fluctuate. So for example, when we got paid $2400 take home each month, we would spend about $1800 on expenses and put $600 (what we could squeeze out of the budget) towards debt.

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Some months we could get more creative and put even more towards debt. In order to calculate how many months it will take you to become debt free, take your total debt and divide it by your monthly debt contributions. Let’s keep it easy. If you have $20,000 in debt and can put $500 a month towards paying it off, you will have it paid off in 40 months or so.. (we can’t forget that interest will be acquired). As your income increases, your expenses decrease, your payoff date can scoot up. 

At this point of your financial journey, you should not be investing into your retirement, you should not be saving for a home, you should not be taking out any more debt. At this point you should have $1K for emergencies, your rent/mortgage, utilities, food, insurance, and that about covers it. There will be line items specific to your needs like clothes for kids, you may even have to cash flow a *new to you* car if yours dies. But, this step is not supposed to last very long no matter what your income to debt ratio is. You should be making sacrifices that make you feel weird, uncomfortable, etc.

This isn’t a very fun and exciting place to be financially. You owe people money. 


That doesn’t have to be your last financial chapter! Let’s move on and write more! I want to cheer you on as you pay off your debt!!

Getting Started Paying Off Debt

Paying off debt can be daunting. It is very common for people who are in debt to feel extremely overwhelmed to start the process of getting out…or to even evaluate their current process and make changes. There are several methods people use to get out of debt and build wealth. The plan I follow and encourage anyone I know to follow is Dave Ramsey’s. The reason I trust this method is because it is simple, it makes sense to me, and there are no tricks or hacks. There are just 7 steps that he calls the Baby Steps. They have worked for millions of people. If you talk to someone over the age of 80 how they handled their finances, they will probably tell you similar things that Dave would like: “live on less than you make”, “pay off your home”, “pay with cash”, etc. 

Tip #1: Decide you will never accumulate more debt! 

Though we were working to pay off our debt since 2016, we were still accumulating student loan debt up until July 2019. When Tyler began graduate school, we decided that the only way he would be able to go through school would be to get student loans. We were doing “our plan”. Once I began listening to Dave’s podcast, I began trying to figure out how we could cash flow Tyler’s last semester of graduate school on a teacher income. We were already really good at saving, and I worked a few side hustles to bring in even more money. We were able to put together around 6500 to pay for his last semester and other school costs. So, in August 2019 we were no longer going into more debt. Unfortunately, I had not yet understood that student loans were avoidable. We could have made Tyler get a part-time job that would piece together with my income to pay cash for school. So, you can be ready to become debt free whenever you decide to STOP accumulating debt.

Tip #2: Develop your WHY

You have to have a “WHY”. A “WHY” is the reason as to why you are doing something? It is what will motivate you to become debt free. 

Here are some “why” examples.

 A working mother who would rather spend more time with her children might decide that she would like to be able to get to a financial position where she could cut back her working hours in order to make that happen. Getting to stay home with her kids could become a reality for her  if she and her husband sacrifice for a few years. This can look like downsizing their home, selling a car and purchasing a cheaper one with cash, choosing to go out to eat once a month instead of multiple times a week, all in the name of upsizing their dream.

Another example could be a young couple

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would like to have a paid for home before they bring children into the world in order to feel stable and free to make choices about vacations, schooling, etc. for their children that is not put to the side due to a mortgage.

A single lady who would like to travel freely and upgrade from her apartment to a home of her own might choose to make temporary sacrifices to live on half of her income and use the other half to pay off her debt and save for a home…

 A retired couple who are seeing that they have to continue working after they retired in order to fund their lifestyle might decide to sell their large home and buy something more suitable for their current dreams.

Photo by James Hose Jr on Unsplash

Whatever situation you are in, you can develop YOUR own PERSONAL to YOU why. 

Everyone needs their own why in order to be motivated to become debt free. Once you get the ball rolling, the debt is beginning to be paid off, and you can taste freedom…your why…your dreams become more and more detailed…more and more exquisit. 

Our why started out so that we would be able to buy a home and travel without fear of having enough money. Since beginning our payoff, our “why” has developed into this: We want options! We would like to pay cash for vacations/road trips/weekend getaways, upgrade from one car to two nicer cars, and have a huge down payment on our first home…or even pay cash! We both went to private, Christian schools, and we would like to have that as an option for our future children. We would like to eventually be able to pay for our own kid’s college, and being out of debt ourselves is essential for that to happen.

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We want to purchase a camper or van and travel around the country. We want to take time off or vacation from work and not bat an eye at our bank account. We want to retire in our fifties. And retire to live a life we love! We want to potentially purchase a vacation home or run an airbnb. We want to be free from owing others anything! We want to be able to give to our children, to tip the check, to support our favorite organizations and missions, to send others into the mission field, to potentially have a business.. So, to sum it up…WE WANT OPTIONS. There aren’t many options when you have payments every month. 

Dave has a YouTube channel Live Show every weekday where people from all over call in to ask Dave’s advice, to call and give their debt free scream, share stories of giving, etc. There is a show that he did in 2017 that is titled “How to Discover Your Why”. It is almost a 3 hour show, but there are a lot of opportunities to listen to this show during your day… while you do the dishes, as you drive to work, while you plan your grocery shopping, etc. He starts talking about this topic with Ken Coleman within the first 3 minutes. Related to this topic, Ken Coleman has a short blog on the Ramsey Solutions website titled “How to Find Your Passion”. This could also help you in discovering your WHY. 

Tip #3: Lay It All Out. 

This is the part where you will feel the most pain. It won’t be pretty. I suggest popping open a coke or pouring a coffee and playing some calming music as you do this. It is just a tough, bloody scene. 

This is the part where you write out all of your debts except for your home. The leased car, the financed couch, the credit card, the student loans, etc. Write them all out and put their stats beside them…total amount due, the minimum payments, the interest rate, and due date. Here is a little graph for your to print out and use. Click here to download Debt Snowball Graph

If you are following the Dave Ramsey plan, you should list out your debts smallest to largest, not even acknowledging the interest rates. Some want to try to figure out which has the highest interest rate and then begin chipping away at those.

As Dave says “if this was a math problem, you wouldn’t still be in this mess.”

Debt is a behavior problem. And paying off  your debts off from the smallest to the largest will give you the “wins” you need to motivate you to continue to pursue debt freedom! 

Tip #4: Begin the Baby Steps!  

To begin you will need to first get Baby Step 1 completed…This means it’s time to get “savings” down (or up in some people’s case) to just a $1,000 emergency fund. This will be used as defense against Murphy…because something is bound to go wrong. Your water heater breaking, AC going out, car needing maintenance…these are all valid reasons to use your emergency fund and then rebuild it. It is there to prevent you from ever going back into debt. Remember you said, “Never again!!”. Many people have several thousands in savings, but still carry debt that has interest accumulating. You may feel like your savings is a security blanket, but the problem is that savings doesn’t get used on emergencies…it gets used on Facebook clothing sales, a daughter’s bedroom makeover, your vacation to the beach… You need to get your savings down to just the $1,000 emergency fund so that you can feel the pressure…the high need to get out of debt. Once you complete this task, you are now on Baby Step #2: Paying off all debt except for your mortgage. 

And this is the toughest part. The part where you have to just put your head down and get after it. But, I believe in you! I want to cheer you on in your journey! I want to be your debt freedom friend! If you begin the process, I want to hear about it! Email me at

COMING SOON: How to plan Baby Step 2 for the step by step to calculate how long it will take for you to pay off your debt!