My husband and I were always good with money until a surprise surgery left us with $10,000 of credit card debt. Here’s how we paid it off in 8 months.

Katie Oelker with her husband

Katie Oelker with her husband

  • My husband and I were always good with money — we lived within our means and didn’t carry credit card debt, so we didn’t watch our day-to-day spending too closely.
  • However, when we both changed our jobs and were surprised by medical bills for an unexpected surgery, we just couldn’t keep up with the expenses.
  • Soon enough, we had $10,000 of credit card debt. Once I started scrutinizing our spending, though, we were able to pay it off in less than a year.
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When my husband and I met, neither of us carried credit card debt. We lived within our means, spending the money we made to travel and dine out at new or interesting restaurants within the Minneapolis/St. Paul area.

After dating for a year and a half we rented a small 1-bedroom apartment together in a suburb of Minneapolis. When our lease was up for renewal and we wanted more space, we realized we could buy a home for roughly the same monthly payment as a 2-bedroom rental apartment nearby.

So that’s what we did. We started our home search and ended up buying a modest 3-bedroom, 2-bathroom home on the other side of town. I was still teaching at the time, and my husband was transitioning from entrepreneur to corporate employee, so we wanted to make sure we could afford a home on one salary in the event we needed to.

What happened next was completely unexpected. My husband needed to have surgery on his shoulder, and insurance barely covered any of it. Although we had been great at living within our means, we didn’t have a lot of extra savings and when the medical bills started rolling in, we couldn’t keep up. That, coupled with me leaving my stable teaching job to pursue entrepreneurship, really took a toll on our finances.

We never worried about what we’d been spending — but now we had to

After we bought our home, but before the surgery, I had changed jobs. Then, post-surgery, I switched jobs again, taking a full five months off when our daughter was born. I did receive six weeks of short-term disability pay, but otherwise that time was unpaid. Then, four months after returning to work, I left to stay home with our daughter full-time and pursue my own financial coaching business. It was the right decision for our family, but still a financially straining one.

At one point my husband and I had close to $10,000 of credit card debt racked up between medical bills and not adjusting our lifestyle with the loss of my income. We had been so “good” with money up until this point in our lives, and I had a lot of shame around the fact that we had recurring credit card debt. I decided it was time to take back control of our finances.

I was no stranger to using a tracking/budgeting software, but had been neglecting to watch where our money was going over the years. We never felt we needed to worry about what we were spending, but looking back now I realize that it would have helped us prevent the mound of credit card debt we had gotten ourselves into.

Seeing where our money actually went was a real eye-opener

The first thing I did was type out all of our fixed expenses, including all memberships, subscriptions, and bills. This right away made me realize what we signed up for that we didn’t actually need, or worse, weren’t using at all.

I then subtracted all these fixed expenses from the amount of income we had coming in each month to determine what was left over. That leftover amount was what we got to spend on variable expenses such as groceries, entertainment, and dining out.

The next thing I did was link all of our accounts to Mint in order to categorize and track all of these discretionary expenditures. I set up spending targets so I knew when we were getting close to the amount I had allocated to that category. This was a huge eye-opener and made us realize how we were spending our money, especially on food!

By checking in with our accounts on a daily basis, I was able to help our family stay on track and free up cash to send to our debt. We were able to pay off that debt within eight months, and have been able to keep it off since. Now I usually only check in with our accounts on a weekly basis, but I still use the same cash flow template and the spending targets to keep our family on track to reach our bigger financial goals (like paying off our mortgage early).

Fast forward a few years and we have a healthy emergency fund and will be paying off the rest of my student loans and my hubby’s car loan within the next month. I can honestly say we wouldn’t have been able to make strides this fast if it wasn’t for my commitment to getting a handle on where our money was going each month. It seems elementary, but I tell all my clients that the first thing they need to do is figure out where their money is going.

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Katie Oelker is a financial coach, personal finance writer, and podcaster.

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