The Budget Couple

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Epsiode 45: Large Debt and Looking to Pay it Down

Nate and Danielle answer a listener’s question about debt and how they would approach paying it off. They also talk about smalls ways to save money to help pay off debt faster.

Show Notes

Two-part question:

I was one of those guys who always had money to spend but played with credit cards and dug myself in a number of deep holes. I’m now 30 and my girlfriend and I are on a very strict budget due to my debt. I make about $60000 CAD and my girlfriend makes about $70000 CAD but I have $28000 student loan debt, $16000 stupidity loan debt and we both have new vehicles which is another $60000 for both. That’s over $100000 between the two of us not including our mortgage. 


Current Incomes: $130,000 CAD

Current Debts: $104,000 CAD

  • $28K student loan
  • $16K stupid
  • $60K cars

So you have a lot of debt, but the good news is that you have a solid income to help you out of it. There’s nothing you can do about the stupid or student loan debts except pay them down. On the car loans, we would suggest getting rid of one or both cars and getting something more affordable. Two $10K is better than two $30K cars. Moving down in cars would lower your debt significantly. You could eliminate 20-30% of your debt just by changing cars.

Before I did anything else, I would explore selling the cars and what it takes to do so. Chances are that you may owe more on the cars than what they are worth. In this case, you could try to get a loan from a bank for the difference of the value and the loan amount, plus the cost of a replacement car. While you will most likely “lose” money in this, your overall debt picture changes.

You will owe less overall, and your car payments will be lower which will allow you to throw more money at the debt.

With your credit cards see which ones have the highest interest rates and/or the lowest amounts left on them. Either put extra on the one with the highest interest rate or pay off the one with the lowest amount due as quickly as possible. 

Also, good call holding off on investments and paying as much as you can on the debt to dig yourself out of the hole. We both like your plan and the commitment that you have made to get out of debt. It’s hard but worth it.

Part 2 of the question:

You mentioned in 2 or 3 podcasts that you use amazon for some recurring purchases. Would you be able to give some onsite on what type of products you find worth ordering through amazon I dont mean the gadgets just household products. I understand prices are different in US vs CAN but given how much debt I have accrued I’m looking at every Avenue to save. Thanks guys!

For saving on Amazon on household items you really need to research what your local stores offer vs what Amazon has. We use Amazon subscribe and save which gives you 5% off for anything less than 5 items per month and 15% off when you subscribe to at least 5 items a month. Diapers are 20%.

Our subscribe and save items vary almost every month as Danielle hunts through Amazon to see what the best deals are. In general, we get the following items:

  • Paper towels
  • Toilet paper
  • Toothpaste
  • Dog food
  • Coffee
  • Personal care (shampoo, face wash)
  • Vitamins are significantly less expensive

As a rule of thumb, the more an item weights, the less likely that Amazon will be a better deal (since they have to roll in shipping costs differently than a grocery store would). Mouthwash is cheaper at the store for us than what it is on Amazon for us.

Also, price things out per item. Bulk quantities of items can cause deals to look better than what they actually are.

Also always make sure you are comparing prices on store-brand items to get a better idea of costs.

One final cost-cutting measure that can really add up is to check out your monthly subscriptions and find what you don’t use and get rid of it. Check with your service providers to make sure you are getting the best deal that you can. As we have talked about before we have switched credit cards and banks to make more money as well. All of these things don’t move the needle much, but they are ways to save a bit.

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