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As Dave Ramsey says, “unless you control your money, making more won’t help.” How true are those words? I often find myself impulsively shoving knick knacks from the $1 section at Target into my cart. It’s as though they strategically placed them there knowing that I needed them! How nice is that?! Of course, I just HAD to have those new Easter decorations. Or what about those pretty little notepads to write all my “to-do” lists on. Ya feel me?!
“Never spend your money before you have it,” Thomas Jefferson
One of our big family goals this year is to pay off all of our consumer debt. HOLD UP! Did I just say it? How weird did it sound? Yes. That is correct. We are going to pay off ALL our debt.
Now, full disclosure, we have a hefty amount of consumer debt we’ve accumulated over the past few years. Between me staying home full-time, Brent restarting his business as a real estate agent while simultaneously investing in a real estate rehab project & being in the middle of another one, we had very little money left at the end of our month. When you have an income that is reliant upon commission only, sometimes the necessities aren’t so necessary anymore when you have a million different things going on.
Needless to say, credit cards became our fall back. And once you start charging those suckers, everything ends up on there. The McDonald’s drive-through, groceries that you don’t use because you went through the drive-through, mini-vacations we couldn’t afford, bachelor parties, bachelorette parties, gifts, rehab expenses, a roof, you name it, we charged it. Thankfully, both projects have been completed and sold. However, the profits have been rolled over into new investments. So where does that leave us now?
Paying down debt
Now that we’ve made it over the initial hump of completing the projects, Brent really getting his real estate business going and my side income, we’ve been able to start tackling the big debt that is staring us in the face. Of course, in order to do this we needed a plan. There’s that saying “a goal without a plan is just a wish.” Or it’s something like that…
We know we need to change something in order to get rid of the lingering dark cloud that has been hanging over us. Brent and I have a lot of goals and bucket lists to check off. In order to do so, we’ve realized we need the freedom to tell our money what to do, rather than the other way around.
5 Ways to Tackle Debt:
- Write down your debts – smallest to largest. This is #1. How do you know where to start unless you have all the big numbers in front of you? Every year the big three credit bureaus allow you to check your credit report for free. I recommend getting one of these reports so you don’t have to worry about missing any debts. Once you figured out how much you owe & to who you owe it, right them down smallest to largest. I recommend following the Dave Ramsey debt snowball approach. It helps you accomplish those small victories and stay motivated along the way.
- Cut up the credit cards. I know, this is very hard to do. What happens if you have an emergency? Well, the purpose is to get out of debt, right? So why keep charging that thing and allowing yourself to get further behind? If you hold onto even one card, the next thing you know, that morning coffee run will turn into an emergency. Cut them up!
- Save $1000 emergency fund. Fast. Once you have an emergency fund in place, you’ll be able to breath a little easier. In case you have an unexpected event, you’ll have a small safety net. Of course, this small safety net is only temporary until all the debt is paid off.
- Create a budget. Write it down. On Paper. Make a list of all your monthly income & expenses and start telling your money what to do.
- Cash-Only. That’s right. Everything besides your necessary monthly expenditures is paid for with cash. I use old envelopes from the bills I still receive in the mail but pay online. I don’t need them and was recycling them. Now, they have a purpose. I’ll write down the spending category with the amount on the envelope. Once the cash is gone, that’s it until next month.
Brent and I have just started implementing these new habits. I have to admit, it’s been hard. I’ve struggled. I love shopping and buying new clothes. I love sharing about all my new outfits. Playing dress up is fun. Buying things is fun. Consumerism is a favorite American past time. But my goals are bigger than that. My ultimate goal is to have a 100% paid for house and be completely debt free. In order to accomplish this, I need to have a solid plan. So far, this seems to be working. Hey, it worked for Dave Ramsey! What’re some ways you’re tackling debt?