How We Paid Off $30,000 of Debt in Just 6 Months

How we paid off $30,000 of debt in just 6 months

Welcome to part 4 of my financial freedom series — this is the story of how we got real about our finances and finally learned to live debt-free FOREVER.

If you’ve been here before, you know that during this journey, we were living in Israel — a country with a high cost of living and relatively low salaries. Just about everyone in Israel lives in “minus” — aka debt.

Our minus, including checking account overdraft, credit card debts, and a personal loan to my parents, had grown to the staggering sum of $30,000.

We finally got real about our financial irresponsibility in January, and by March, we had reeled in our spending, increased our income and managed to put aside $1,000 into a baby emergency fund. Now it was time to really roll up our sleeves and knock out that $30K in debt.

To do this, we had been following the Dave Ramsey plan. Now, you need to know that we are an Orthodox Jewish family, and Dave is an evangelical Christian. He sees his teaching about personal finance as part of his “ministry”, so it probably goes without saying that not everything Dave teaches fits into our family’s belief system. His common sense approach to financial freedom, however, made so much sense to us, that we decided to give it a try.

According to Dave Ramsey’s Total Money Make-Over, once you are current on all your bills and you have a $1,000 baby emergency fund (Baby Step 1), you move on to Baby Step 2: Paying off all your debt except for your mortgage. You are supposed to do this by using his “debt snowball system”, which works like this:

You list all of your debts on a piece of paper — or an Excel chart, if you’re geeky like me — from the smallest to the largest balance due, without regard to interest rate. Then you pay only the minimums on all the debts except for the smallest one, while you attack that little one with everything you have. As soon as that debt is paid off, you cross it off the list (this is amazingly gratifying) and apply the amount you had been paying on it to the next smallest one. You keep working your way down the list, building up momentum as you go — hence the term ‘snowball’.

In case you are wondering, the reason Dave tells you to pay your smallest debt first is because he wants you to get that taste of success as quickly as possible. Yes, mathematically, it may save you a few pennies to pay off the debts with the highest interest rate first. But as Dave always says (and I’m paraphrasing here), ‘This isn’t about your math skills. This is about your behavior. If it was solely about math, you wouldn’t be in this position in the first place!’

Just like Dave told us to do, we listed out our debts and started attacking that littlest one with a vengeance. After just one month of “working” our snowball, we had paid off the first debt (a few hundred shekel on a credit card) and were half way done with the second one (a few thousand shekel on another credit card). We were pumped.up! Yes, the austerity of the budget was difficult, but we were so thrilled with our traction, that we keep moving forward.

Around this same time, I discovered that I had a CD (certificate of deposit) from my first job in Israel, which was coming due. Called a “keren hishtalmut”, this account had funds that I had contributed, along with a match from my employer. After nearly seven years of earning interest, the fund was now worth almost $5,000! The fact that I was totally unaware that I even had this account speaks volumes to our total financial disorganization pre-DR.

As for what to do with this account, we turned to Dave Ramsey. He recommends that you to cash in any savings accounts and/or non-retirement mutual funds in order to pay down debt … as long as you are totally committed to NEVER EVER EVER going into debt again. We knew we were committed, but we didn’t want to “take the easy way out”. We wanted — needed, even! — to sweat a little bit more on this journey.

So we decided to keep working the debt snowball by cutting out expenses and increasing our income, while I made arrangements to have those funds released in a few months — enough time to let us really work up a good paying-off-debt sweat!

To further complicate our lives, we had decided to move back to the U.S. and were planning to leave in July. So, while we were working furiously to get out of debt, we were also trying to figure out all the logistics of an intercontinental move — which, by the way, we had committed to cash flowing since incurring new debt was no longer an option for us.

The weeks cruised along and so did our debt snowball. I loved calling the credit card companies to make extra payments, which I did as soon as the money hit our bank account. 500 NIS (~$125) here, 1000 NIS there. The people on the other end of the line were always so incredulous, “But you just paid us last week? You know, you don’t have to make another payment until next month, right?”

Over the first three months of our debt snowball, we paid off approximately $5000. We were averaging well over $1,300 a month in debt repayment — definitely enough sweat equity for us to feel comfortably cashing in that CD.

Once the $5,000 hit our checking account at the end of May, we wiped out two more debts on the same day. Now all that remained in our debt snowball was our checking account overdraft (roughly $3,000) and the $16,500 we owed my parents for our van. (See how that loan had foolishly come to be in part 1 of our financial saga.)

With our move-to-America date rapidly approaching, we started selling off electronics and big furniture items we didn’t want to move. The cost of transcontinental shipping was so high, that it didn’t pay to ship anything that would be cheaper to replace States-side, unless it had sentimental value. As we sold televisions and microwaves, futons and rocking chairs, I used some of the money to pay down our remaining debt and squirreled away the rest so we could pay cash to our movers.

By July 1st, 2008, we had paid off all our debt, except for our van, which was up for sale; and we had set aside a couple thousand dollars to cash-flow the cost of our move.

Two days before we left Israel, we finally found a buyer for our Kia and he agreed to our ‘absolute lowest we can go’ price of $16,000. We could finally clear that loan to my parents!

If you had told me six months earlier that this would be possible — that we would be totally debt free (other than our mortgage), I would have whipped out a calculator to prove you wrong. To this day, I’m still not even sure how we did it – because the numbers just don’t seem to make sense. We were making so little and paying off so much.

Yes, the biggest chunk of that came from selling our van and cashing in a savings account, but we had worked really, really hard to cover the rest of our debt and cash flow our several thousand dollar transcontinental move. I was — and still am — so proud of what we accomplished!

…But I also knew we were only just beginning our journey. Dave Ramsey’s plan has 7 steps to financial freedom, and we’d only worked the first two.

Stay tuned next week when I tell you about Baby Step 3 — fully funding an emergency fund with three to six months of expenses. Here’s a little teaser for you: It took us twice as long and a couple of major life changes along the way to finish Step 3 as it did Step 2.


This series is now completed. You can read all of it here:

Part 1: An Honest Discussion about Debt

Part 2: How We Owned Our Problem with Debt

Part 3: How Saving $1000 Changed My Life

Part 4: How We Paid off $30,000 of Debt in Just 6 Months

Part 5: The Rocky Road to an Emergency Fund

Part 6: Finishing Our Emergency Fund – We Did It!

Part 7: So, We’re Out of Debt and Have an Emergency Fund. Now What??!!




  1. your story is nothing short of inspiring and (unfortunately?) resonates. thank you for sharing it as well as the tips. you just never know you you might be helping!

    • Thank you for your kind words. And I’m sorry that it resonates, b/c I definitely know how totally consuming and stressful it is to be in debt like we were. <3

  2. I totally agree with MM! You make it sound so doable. Thanks for sharing. I know it can’t be easy to put all this information out there for the world to read, but I am enjoying reading your story.

    • Thank you, Tali! I’m so glad you are finding it helpful — that makes the airing-our-dirty-laundry part of this feel like it’s definitely worth it.

  3. Way to go, Mara – this story is inspiring! I’m staying tuned for Part 5!

  4. I heard about you from our friends at I love your website… I just started a simple one over the summer with a friend whose hubby is Jewish. We’re trying to get it all together, but the chagim threw us for a loop. I love your inspirational stories. Buying sale items is not enough. My hubby and I need to tighten down and attack our credit cards like you did. Thanks for sharing Dave Ramsey’s steps. My mom has been telling me about him for a while, but it’s hard to listen to her while I’ve got one child on the knee and the other in my line of vision. B’h, there’s bedtime! Anyhow, I love your blog!

  5. Great story and I am at the edge of my seat. I’m wondering if you can post about how you manage to remain frugal the U.S with school tuitions and health insurance bills, which you didn’t have in Israel. I’d also like to know why you left Israel, just out of curiosity.

    • Thanks so much for reading and commenting, Abbi. You are right that the expenses sort of “switch” here… Israel has BL and just higher cost of living in living. Here we’ve got health insurance and day school (in the Midwest, our COL is particularly low – especially housing – in comparison to Israel). Ultimately we have found that our basic budget is slightly lower here, but it’s not overwhelmingly so. One of the best ways we affect our budget is by keeping food and household expenses under $600 a month — and usually closer to $500.

      BTW, I just finished up this “honest discussion” series on Sunday… I think there were three more parts after this one that you just commented on.

  6. Hi, I just found your website via another site. I am doing this plan to paying off debt as well. I am curious to know (if you don’t mind sharing) how you were able to do this? Did you cut back on groceries or anything else? Or did you just refocus on where to spend your money? We only have X amount of dollars left after bills. Unfortunately, we can’t get $20,000 extra every 6 months. :(

  7. its too bad things didnt work out for u guys in israel :(

  8. One thing to keep in mind regarding living in Israel is that there is very little incentive to save — almost all health care is free, if you are sabra then you are likely a veteran and have free/cheap access to Eged bus line, and lots of access to jobs that olim do not.

    Many of the reasons Americans save is to buy a house, prepare for disaster/health problem, etc. Home ownership in Israel is not uncommon, but people there do not move as much as Americans — a typical sabra will be born and live in the same house and may even move their parents into a home and take the house many years later — mortgages are too expensive there.

    Israelis live minus because there is little incentive to do anything else.

  9. I’m not Jewish, wanted to learn about becoming Jewish and felt like I was not wanted. But ,I absolutly love your story. This is going to help me immensly. Thank you sooo much. Sylvia

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