Just a few years ago, our lives looked totally different than they do today. My husband, Garrett, and I lived in a 1,500-square-foot house; I worked part-time at a nonprofit, and Garrett was an engineer at a manufacturing company. We had debt — a mix of student loans, credit card debt and our mortgage — but that just seemed like a part of life.
Then, things changed.
My husband and I both had significant health scares that made us take a hard look at our lives and what we wanted for our future. We realized that if we didn’t take control of our debt, we would never have the flexibility to change our work situations or travel because we’d always need to feed the beast. So, we made some big changes and paid down over $200,000 in debt in just two years. Here’s how we did it.

We Downsized

First, we decided the big house had to go. Our mortgage alone was a huge drain on our budget, and it needed another $30,000 to $40,000 in renovations. We often put unexpected home upkeep costs on credit cards, which led to more debt. So, we started calculating how much money we could save if we downsized to a tiny home.
Garrett had been talking about moving into a tiny home for years, which I thought was crazy — especially considering how many tools he had in our garage. But the more we discussed it, the more we realized this could be a game-changer. So, we sold everything — from the tools to furniture and other household goods — over a weekend garage sale. It was tough to part with, but we knew that if it really mattered to us, we could always buy that stuff again in the future when we’re in a more stable position.
Next, we bought a small, custom-manufactured home — just 500 square feet, the very smallest that they could build — and a plot of land to put it on. Even though our new mortgage would be $100,000 cheaper, selling our old house and buying the new one didn’t go exactly as planned and we increased our debt at first by having two mortgages. It took a year for our big house to sell, and then we could really start making progress on our debt.
couple outside tiny home
The Penningtons on the porch of their tiny home. Courtesy of Claudia and Garrett Pennington

We Increased Our Income

We originally wanted to pay off all our debt within a year. Since we owed $205,000 (before the second mortgage) and made less than six figures, we realized there was a bit of a math problem there. We needed to bring more money in.
Garrett was able to earn more commissions at work, and I started a full-time job at a digital marketing agency. Then, in my spare time, I freelanced for smaller companies that couldn’t afford to hire an agency. I also developed an SEO course to teach people how to do this.
A surprising benefit of downsizing was that we had way more free time. Instead of spending our nights and weekends on home maintenance, we were able to reinvest that time back into earning more money. Our income reached the six-figure mark, which — combined with cheaper utility and tax bills — allowed us to make significant progress on our debt.
We knocked out our credit card debt in 2015, the same year we started our personal finance journey. The mortgage for our tiny house followed suit in 2016. In 2017 when we finished paying off our student loans. It felt amazing. We celebrated with a bottle of cheap Champagne, and then set our sights on how we wanted to live now that we were debt-free.

We Saved for the Future

We couldn't relax just yet. While we’d been aggressively paying down our balances, we’d been neglecting our other financial goals, like savings. We didn’t have an emergency fund (not something I would recommend).
Then, there was our lifestyle. We’d been working nonstop to pay off our debt — which we’re glad we did and would do again — but we never wanted to work that much again. So, as we built up our savings we started transitioning our careers into roles we wanted for the long-term.
I transitioned into self-employment shortly before we paid off our debt, and Garrett recently followed suit. Now, we’re both location independent, and we’re moving onto our next big phase — traveling the country with our teardrop camper. Our goal: to visit all the national parks.
After that, we’ll see where life takes us. If you had told me four years ago that we'd be here, I'd have thought you were crazy. You never know what can happen. We're enjoying today — something we can do now that we don’t have debt.