The Budget That Paid Off $200K in Debt


This is what a budget to get out of $200,000 in debt looks like.

In my last article, “One Pharmacist’s Journey Out of $200K in Debt,” you read how it took a lot of sacrifice, planning, and perseverance to be debt-free. Now, the question I keep getting asked is “How did you do it?”

Well, here is what a budget to get out of $200,000 in debt looks like.

Before I begin, though, it is important to address my financial situation during this plan to become debt-free:

Financial Situation

1. I am employed by a public university with a forced retirement contribution, due to not contributing to Social Security. However, it is important to note that approximately 20% of my income is going to retirement savings between my contributions and my employer’s match.

2. My wife and I were partners in getting out of debt. This budget went through several reiterations as our circumstances changed: take-home pay varied, kids were added to the family, and our intensity and motivation to get out of debt increased.

3. We are a one-income family. My wife stays home with our 3 boys: 4-year-old Samuel, 2-year-old Everett, and 8-month-old Levi. If we can be debt-free on a single income, you can, too!

So, what was the breakdown of monthly expenses during the time we focused the most intensity on getting out of debt?

Budget Breakdown

30% to non-mortgage debt.

This was predominately our student loans, but it also included a couple cars and a kitchen remodel.

15% to our mortgage.

One of the keys to getting out of debt and winning long-term financially is to avoid having too much of your monthly income tied up in your housing expenses.

10% to the local church.

I’ll be honest that we didn’t start our journey of getting out of debt this way, but we later became convinced of the importance of giving to our local church.

10% to groceries and household items.

This was by far the hardest budget item for us to predict and keep consistent from one month to the next.

5% for auto fuel, insurance, tolls, etc.

We live approximately 3 hours from both of our parents, so we are on the road a lot!

5% to utilities

We couldn’t keep a house without gas, electricity, sewer, trash, and water.

25% very specific miscellaneous categories

We found that being as specific as possible allowed us to track the expenses, which gave us the best chance of winning with our plan. Having too many broad categories would leave too much room to spend without enough accountability. These specific categories included our TV solution (Netflix and Sling TV), hair cuts, date nights, family entertainment, saving for vacation, clothing, personal spending, and gifts for family and each other, to name a few. It’s important to note that you can strip your budget further to free up more money to throw at debt; however, we felt it was important to have some reasonable level of fun.

The Hardest Part

One of the hardest parts about being on a budget was having the discipline to stick to it, even if we didn’t have to. After all, it was “extra” money that was going to non-mortgage debt, so if we overspent in one category, it would be OK, right?

Wrong. We quickly realized that it was a slippery slope, and while we had our missteps here and there, we mostly held to it.

For example, if we didn’t have family entertainment money, we didn’t go out. It’s humbling to have that kind of discipline in spending just $20 to $30 when you have a 6-figure salary, but what kept us grounded was knowing that as long we had a large amount of debt, we had no right to have a sense of entitlement to spend.

Realistically Making It Work

After establishing the aforementioned categories, it took a few months to calibrate them. Your first attempt will not be perfect, so plan for readjustments.

We still adjust a couple areas from time to time, and guess what? That is OK!

Don’t beat yourself up if the first couple months are a struggle. Fight the good fight and it will pay off.

We also had to track our expenses. One online tool that helped us and can help you is, which takes Dave Ramsey’s famous envelope system and implements it electronically. There are several online tools out there, and you can use what works best for you and your family.

Last, but certainly not least, we celebrated our wins and forgave ourselves when we hit some bumps along the way.

So, what now? Put it on paper, get after it, share your progress, and find someone to keep you accountable. I can’t wait to hear about your journey.

Follow me on Twitter @FinancialRPh and submit your financial questions at

Your Financial Pharmacist,


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