Caitlin McKelvey wasn’t initially sold on taking an aggressive approach to paying off student loans. It took some coaxing from her husband Kyle, who introduced her to financial expert Dave Ramsey’s “7 Baby Steps” to managing money effectively.
"I wasn't on board in the beginning because I felt like I'd rather just make the minimum payments on the loans and live our lives like we want to,” Caitlin said.
But the Shelby couple agreed that it would be much more advantageous in the long run to get out of debt sooner rather than later, so they decided to pay off $33,000 of debt in a year. Their determination and concerted effort proved fruitful: after 13 months of careful budgeting and saving, they became debt-free.
The McKelveys began Ramsey’s “7 Baby Steps” after getting married in April 2016. They completed step one (save $1,000 for your starter emergency fund) and moved onto step two (pay off all debt, except the house, using the “debt snowball”).
Step two, Caitlin said, is this idea of using “gazelle intensity” (picture a gazelle outrunning a cheetah) to pay off your debt as quickly as possible.
At the time, Kyle worked as the youth pastor at Shelby Alliance Church. Caitlin became CEO of the Shelby YMCA Community Center in October 2016, having previously worked as the program coordinator for the English as a Second Language program at Ashland University.
Their household income was approximately $60,000. They decided to live on half of that for a year.
They used some of their wedding money to pay off their honeymoon (which cost about $3,000) and then applied the debt snowball method to knocking out the remaining $30,000 in student loan debt.
To help achieve their goal they used the EveryDollar budget app by Dave Ramsey, which helps you create a monthly budget, track spending, save money and get out of debt fast.
They categorized their spending, starting with necessities like groceries, rent, electricity, water, gas, phone, health insurance and gifts.
“We tithe to our church and we didn't want to sacrifice that, so that was one of the first things that we budgeted,” Caitlin said.
They also created a restaurant budget and what they dubbed a “fun fund,” or “blow money,” as Ramsey calls it, which is a certain amount of money that they could choose to spend however they’d like.
“We felt like even though we were trying to be really strict that year, it was important to us to still have room for fun things so that we weren't depriving ourselves and then feeling the need to splurge,” Caitlin said.
To offer an idea of how carefully they budgeted, their monthly grocery bill was $100. Caitlin said they shopped primarily at Aldi and Save A Lot, created weekly meal plans and tried to use every single grocery item they purchased.
“We made sure that we were still eating well and we still were buying fresh fruits and vegetables, but we were really being careful to only use what we needed,” Caitlin said.
In turn, they cut back on waste and embraced more of a minimalistic lifestyle.
“We weren’t buying random material things we didn’t need,” Caitlin said.
Whatever was left over at the end of each month went toward paying off the student loans, which ranged between $2,000 and $3,000.
“The end result of all of that is that we paid off $33,000 in 13 months,” Caitlin said. By May 2017 they had reached their goal.
They had the opportunity to be on The Dave Ramsey Show in October 2017 and do their “debt-free scream” after listening to many others do their debt-free screams.
“It was really encouraging to hear those debt-free stories because it felt like, OK, if all these people are doing this, I think that we can do it, too,” Caitlin said.
Now that they’ve completed step 2, they moved onto steps 3 and 4 (save 3-6 months of expenses in a fully funded emergency fund, and invest 15 percent of household income in retirement, respectively).
Caitlin said they’ve since loosened their budgeting up a bit, allowing them more freedom to give much more generously.
“It's just a joy to be able to give generously when we feel called to instead of feeling like we don't have the capacity to do it,” she said.
They’ve been able to support friends and family who are missionaries, as well as sponsor two children through Compassion International.
“Our biggest thing now is putting money aside for a baby,” said Caitlin, who’s pregnant.
The couple is expecting their first child this September.