One of the biggest dreams for a lot of us out there is the idea of becoming 100% debt free in life. Imagine that: no credit card bills or car payment, no worrying if you are going to make it to the next paycheck. Is such a dream even possible?
I am 100% proof that it is!
But before you start thinking that I’m going to sell you on some “get-rich-quick” scheme that is going to take care of all your money woes, let me set your mind at ease. The real question for you should be “How committed are you to getting out of debt and (most importantly) STAYING out of debt?”
Every week, it seemed like we just wanted to throw up our hands and call it quits on the plan because it was so hard to say no to things like social gatherings, vacations, eating out, and shopping sprees. But in the end, we managed to stay the course and rid ourselves of $120,000 of consumer debt.
How did we pull off this miracle paying off debt? Here’s what we did that you can do too:
1. Get clear on every cent that comes in and goes out.
That means create a detailed budget so that you know exactly how much you are spending. Don’t just check your checking account. The real culprits are how much you are racking up on credit cards for nonessential items each month.
2. Once you know just how much is coming in, you need to axe every single expenditure that is not essential.
So, what qualifies as non-essential? Cable TV, subscriptions like Netflix, Hulu, Spotify, and yes, even, those regular lattes at Starbucks.
3. Work extra.
This may sound painful, but you can’t just cut money going out. You are going to have to add money coming in. If you are working hourly, pick up as many extra hours as you can. If not, look for a second job or some other way to bring in secondary income. This doesn’t have to be a lifelong commitment; just until you get a handle on your finances and get yourself out of debt.
4. The two biggest areas you can cut out, for most people, is eating out and going on vacations.
Instead, eat for much less by cooking at home and then save your money with a nice staycation.
5. Essentially, every single penny that comes in goes to pay off the essential bills.
After you cover your essentials, any money that is left over goes towards paying off the debt.
There should be no exceptions to this.
The bottom line is that you have to learn to live below your means and resist the temptations that crop up all the time to buy things that you don’t absolutely need.
We did this, day-in-and-day-out, for three years. It sucked (big time)! But it has been so worth it because now we get to enjoy our hard-earned money instead of saying goodbye to it every payday and handing it over to the creditors before anything else. This is also a HUGE lesson that we are trying to impart to our children so that they can start off on the right foot with money management.