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

This is part four in my financial freedom series of posts. To read what brought us to this point, check out posts 1, 2 and 3 in our saga.


So, if you’ve been here before, you know that we were living in Israel — a high cost of living country with relatively low salaries, where just about everybody lives in “minus”. 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 of 2008, and by March of that year, we had reeled in our spending and put aside $1,000 into a baby emergency fund. Now it was time to really roll up our sleeves and see about knocking out that $30K in debt.

To do this, we had been following the plan of a guy named Dave Ramsey. Again, if you’ve been here before, you know that we chose this path despite the fact that we had pretty big differences with him religiously — he is an Evangelical Christian and considers his financial teachings a “ministry” of his faith. And yet, those teachings seemed so incredibly common sense and level headed, that we figured we didn’t have anything to lose. Plus, let’s face it, what we’d been doing clearly wasn’t working for us!

According to the Dave Ramsey system, 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 the traction we were getting, that we were determined to keep going.

Also around this time, I discovered that I had a work-based savings account (keren hishtalmut) from my first job in Israel, which was coming due. As an aside, the fact that I was totally unaware that I had this account — or that there was almost $5,000 in it!!!! — speaks to our total financial disorganization pre-DR.

In his book, The Total Money Makeover, Dave tells you to cash in any savings accounts and/or non-retirement mutual funds you may have 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”. 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 cards to make extra payments, which I did as soon as we had freed up the money. 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?”

By the end of May, we had 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 savings account! Once the $5,000 hit our checking account, we wiped out two more debts the same day. Now all that remained on our debt snowball was our checking account overdraft and then 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 we didn’t want 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 pay for our move. Two days before we left, 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!

As we boarded our plane to leave Israel, our hearts were definitely heavy. But there was one thing lightening our load. We were DEBT FREE, baby. We had paid off $30,000 of debt in just six months. 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 $3,500 transcontinental move. I was so proud of what we had accomplished!

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