If you’re like roughly 80% of the U.S. population, you more than likely have some form of debt, whether that’s credit cards, student loans, car payments or mortgages. It has become almost a right of passage as an adult. You go to college and rack up thousands in students loans. You graduate and “gift” yourself a brand new car payment (gee thanks!). You get married (or don’t- you do you) , and you make the biggest investment to date, buying a house. And if kids are in your future, prepare yourself for thousands of dollars in medical bills because insurance doesn’t cover everything and even healthy people can end up in the hospital.
Basically what I’m saying is, I’m right there with you. I grew up with parents who set a great example for financial independence but I also grew up in a world that encouraged me to take out thousands of dollars in loans to finance an education with the understanding that I would then work for decades to pay them off. If you ask me, that’s a crap deal. So a little over a year ago, my husband and I decided no more. We weren’t going to do the debt thing any longer and we got really serious about paying it all off. Mind you, we bought a house, had a baby, took vacations and have lived our lives all at the same time. We are not debt free but we are well on our way and the biggest take away has been our understanding of what debt really is and why we as a family are making some big changes.
There are TONS of resources out there that can help you pay off debt quickly and encourage a “beans and rice diet” to get you to those financial goals. If that’s your thing, then this post likely won’t be helpful. But if you’re just trying to get your finances on track, pay off debt, and still enjoy your stage of life, this is going to speak to you. Below are some of the ways we have really focused our intentions are made a huge impact on our financial future.
Stop Using Credit Cards
Ya’ll this one is HUGE. I don’t care if you are a responsible adult that only uses credit cards for this or that, blah blah blah. If you have debt, then credit cards are not your friend. Hopefully you have some semblance of a savings account. If you do not, you need to stop what your doing and save $1000 ASAP. Once you have a safety net, then you can focus on your debt. Growing up, my parents made me save half of my paycheck which felt like a punishment but as an adult I’m so grateful that saving money was ingrained in me early on. A savings account is your emergency fund, NOT credit cards. It is far too likely that if you use a credit card, even if you intentions are to pay it off within a month, you won’t. That means you pay interest on that balance which is money you could be using for other things. If you don’t have the money for something right now, then you can’t afford it so do yourself a favor, cut up the cards or put them in a safe place OUT of your wallet so the temptation to use them is gone.
Prioritize Your Debt
This will be different for everyone. High interest rates can be a scary thing but small victories can also be super motivating. It’s up to you to decide what your goals are with your debt payoff. For us, we starting attacking small balances first. That helped us cut down on the number of accounts we had to keep track of very quickly and the money that we were using for those smaller payments could then be applied to the next account on our list. Some people prefer to take down bigger debts with higher interests rates first. My only critique with this approach is that it can tend to feel like using a squirt gun to fight a house fire. Your efforts are far more subtle and can take longer which can lead to you loosing steam. Whatever you choose, make sure it’s something you can stick to and see it through.
Consider a “No Spend” Month
This is pretty much what is sounds like- a month where you don’t spend any money outside of your bills, groceries, and transportation costs. This was something we did to really get an understanding of where our money was going. We wrote out our budget for the month, including anything that we knew we were going to have to purchase. Birthday gifts, dinner out with friends, it was all included but once the budget was set, there were no impromptu dinners out, amazon purchases or target runs. If we absolutely needed something, then that money needed to be taken from another designated fund, so less money for gas, or groceries, etc. We were amazed at how much money we had left over at the end of the month and that became our first big payment towards our closing costs, money we thought we’d have to take out of our savings. This takes a lot of cooperation and dedication but it really does help you understand how you feel about money and some of the ways that you can really tighten up your budget.
Your Tax Return is Not a Bonus
This one is a two part-er. With tax season coming to a close, many of us are waiting on that sweet sweet refund check or freaking out that we are paying in this year. Let me be very clear. Your tax refund is money that you LEANT to the government for a year, and now they are paying you back. It is not a bonus. So let’s all agree to use that money for good and not evil. Using that money to pay off a balance will put you in a much better financial position than using it to eat out, get your hair done, or buying 45 unnecessary things from Target… you get me?
Piggy backing off of that, you should be able to pay your bills with your regular income. So anything extra that you bring in each month, should be money you can put towards your debt. If you can’t cover your regular expenses, nothing extra, with your regular paychecks then you need to look at what you can cut back on. Spotify, Netflix, Hulu, and other subscriptions might feel like necessities but they can add up quickly. By eliminating extra expenses that you don’t actually need, you can free up more money in your budget to help get you in the black.
Remember You Aren’t Perfect
Some months, you will be the debt payoff GODDESS you were meant to be. Others, you will have expenses pop up, unexpected bills or spend more on groceries and eating out than you expected. As long as you aren’t going into debt further, you are still on track. Coming from an all or nothing type of person, this is really hard! Just remember that you are doing your best and as long as you are continuing to push forward towards your financial goals, you will get there.