Couple who paid off the $ 224,000 debt equity strategy he used
- Leo and Faith Jean-Louis had $ 224,000 in debt and it was costing them $ 2,200 per month.
- At this rate, it would have taken 15 years and an additional $ 125,000 in interest to pay it off.
- Instead, the debt snowball method motivated them to pay it off in two and a half years.
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When Léo Jean-Louis, occupational therapist, and his now wife Faith Jean-Louis, pediatric nurse practitioner, got married, they not only combined their lives, but also their debt. They had $ 211,000 in debt, mostly student loans and some credit card debt. The accumulation of interest eventually pushed that number up to $ 224,000.
The couple initially thought they would allocate $ 2,200 a month for their debt until they realized it would take them 15 years and cost them an additional $ 125,000 in interest to pay it off. Leo and Faith wanted to start building generational wealth for their future children, but felt they couldn’t do it until they paid off their debt.
They decided to work together to pay him back faster. This move got them out of debt in just two and a half years and saved them thousands of dollars in interest payments.
Their journey was not easy; they tried different approaches with a lot of ups and downs along the way. Eventually, a simple strategy changed their mindset and helped them stay motivated until they achieved their goal: the debt snowball method.
They went from the debt avalanche to the debt snowball method
When Leo and Faith started to pay off their debt, they used the debt avalanche method. This is when the debt with the highest interest rate is paid off first, while paying the minimum on other debts. Leo was comfortable with this approach because he thought it was the best way to avoid pay more interest. But Faith felt differently.
Using the avalanche method meant that some of the accounts they paid first had higher balances, making it harder to see progress. Faith had just started her career and was embarking on a trip to pay off debt was not what she had imagined her first year on the job would look like.
“I knew the only way to successfully deal with this mountain of debt was to both stay the course. What good is a method if we’re not going to stick with it,” Leo told Insider. “Once she verbalized having trouble seeing progress, that’s when we switched to the debt snowball method, and that changed everything.”
The Debt Snowball Method it is when the smallest debt is paid off first, while paying the minimum on all other debts. After the first debt is paid off, you move on to the next smallest balance. As small amounts are easier to repay more quickly, Faith was able to see more immediate progress. This motivated her to continue.
They celebrated small milestone victories
Once they had a method that they were both happy with, Faith created a poster with a large thermometer on it; they called it the “meter of freedom”. Its temperature points were used to mark the target debt repayment amounts. It put a little fun in the process and helped keep them both motivated.
“Every time we paid off a debt, we crossed it out and colored it. It was part of our normal routine. And we celebrated those little wins along the way,” Leo told Insider.
In less than three years, Leo and Faith freed themselves from their debts and were able to free their monthly payments to create generational wealth. They are now using their money to invest in their 401 (k) s, their Roth IRA, a Health savings account, and one 529 account for their son’s school fees.
Laila Maidan is the Personal Finance Storyteller Researcher at Insider. She covers personal stories about people’s financial journeys. Do you have a story about a financial achievement to share? E-mail [email protected].