As I mentioned in an earlier post, 6 years ago I was in credit card debt up to my eyeballs. At my rock bottom, I made a vow to restore my financial well-being as well as to insure my family’s security. This vow was unwavering, which it had to be if I was going to be successful. Here are some techniques my wife and I used to get out of debt and actually start saving money. Hopefully some of my techniques can help somebody else.
Stop using credit cards altogether. When I first started my journey to be debt free, I would only pay for things with cash. It is amazing how easy it is to slide the plastic, it does not feel like real money. This is a big reason why teenagers and college aged kids get into so much financial trouble. When you pay with cash, you see the cash go bye-bye and it makes a big impact psychologically. I kept a credit card in my wallet with a small limit for emergencies only.
Stop living for today only. I fell into the trap of consumerism where I felt I had to have it all and failed to consider my long term financial peace of mind. I had to have the newest DVD player and the newest clothes. Finally, I made a vow to enjoy what I had and forget about the rest. This mind set was one of my keys for success. None of that other stuff will bring me happiness in the long run. Any happiness that accumulating things gave me was very short lived and quickly faded away into the sunset of 18% interest rates.
Find some extra income. I picked up a 2nd job at The Home Depot and worked there 24 hours a week, mainly weekends. The extra income always went toward paying off the credit cards. Plus, there was a nice side effect of this job; I was always so tired I never had the energy to go and waste money on stuff. Other options are starting an ebay business or picking up some moonlighting work. If you are going to be successful in getting out of debt every dollar counts.
Create a budget of needs. Needs are shelter, food, heating, you get the idea. Once you figure out what your needs are then get rid of all the other crap. I just wrote a post called 7 Ways To Reduce Monthly Costs Right NOW, it is amazing how much stuff I was wasting money on every month. Whether it be stops at Starbucks all the time or memberships that we seldom use, you can reduce a lot of costs by cutting these out of your monthly budget. Use the extra savings to pay off your debt. I can say from personal experience that this really does work.
Stay the course. I can remember having many set-backs on my journey to be debt free. Car needed new tires or the washing machine broke, but it was important for me to realize that getting out of debt was a marathon not a sprint. I knew that if I stayed focused on the prize nothing was going to stop me. As anyone who has come out of debt can tell you, the peace of mind and serenity that living a debt free live brings you is well worth the ride.
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15 responses so far ↓
Great post! It’s so simple, but it’s so hard to follow through. It’s inspiring to see that you’ve actually done this!
Thanks Lynnae, I was afraid the post might make it sound too easy. It is very hard to do but like they say “the harder it is, the bigger the reward.” Or something like that….
Great tips, Kyle!
Thanks Tish and glad you stopped by my blog.
Wow
Congrats!
I love the list.
My only debt is education debt though
I’ve never had consumer debt (thank goodness!)
But for me, it’s impossible to be credit card free because of my job - constant company expenses that I get reimbursed for later, so not only do I need a LOT of cash on hand to be able to be CC-free, I also need to have a record of where, when, how much and what I spent it on (what category).
But when I spend my own income (I try and keep the two separate via a matrix of 6 Excel spreadsheets LOL), I spend it on credit card so I have the line item as my record, then I go back home, and immediately pay it off in full - that exact amount.
I used to do this when I first got my credit card at 19, but I had slipped over the years, and now I’m back to doing it again instead of throwing a flat $500 amount into it because I hazarded a guess that it was how much I spent..
not very exact or good.
Fabulously Broke, yeah if you can pay it off every month then a credit card is a good and very convenient thing. When I was younger and well, kinda stupid, I was more of the mindset of buy what I want now and worry about it later. (or even, don’t worry about it later) That got me in a lot of trouble.
Thanks for the comment.
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A very good article, much like an article I published today.
If a debtors credit rating isn’t tarnished, I recommend getting a low or zero percent interest rate credit card and moving balances over first. Then, tackle the debt aggressively while not worrying about racking up big interest payments.
Some credit card companies will agree to reduce their APRs while others will not. Still, it is a consumer’s market for people with good credit.
Excellent advice, I agree with you that it hurst when paying cash instead of using the plastic. We feel it more and therefore spend less.
maria
I know this is an old post, but I found it via a series of links and had to comment. In 1999, I was told by my accountant that I had absolutely no choice but to declare bankruptcy after my small business failed, but I refused to do that since honestly my debt was from my own foolishness and had been in fact within my control since most of it was accumulated either before my business failed. Instead, doing pretty much just what you described, I spent 8 years working my way out, and now have no credit card debt - the only debt we have is our mortgage, a small second to consolidate my student loan bills from my Master’s degree (which, in my field led me to a significant raise so it was more than worth the cost), and another year on a car loan at 4% interest.
I’m always shaking my head at folks who think that there is a quick and easy way out - or who think that they’re so far in that there’s no benefit to getting themselves out. I’m glad to “meet” someone who was in my same position and understands what it really takes to get out of that level of debt.