Paying off Debt

Debt can ruin lives and families. Once you let it get out of control, you feel like it’s hopeless and there’s no chance of digging yourself out of the hole.

I want to tell you though that no matter how deep you feel in that hole, you can dig yourself out. I was able to get out and so can you.

Get everyone involved

The first thing you need to do is sit down with your spouse and children. Have a serious conversation about how you got into this mess without laying blame on anyone. Everyone needs to be on board with getting out of debt, otherwise it’ll seem pointless and you’ll lose interest as well.

Create a budget

Creating a budget doesn’t have to be scary. This is an opportunity to see where the holes in the ship are and get them plugged up.

With your significant other, list your bring-home incomes: the number on your check that is actually deposited into your bank account after taxes.

Next, you will need to list all of your expenses. Every single monthly expense that you pay (mortgage or rent, cars, utilities, cell phones, groceries, credit cards and loans, etc)

Subtract your expenses from your income. If you have a negative number, it is time to trim the fat and figure out how you can remove some of those expenses. Cut cable. Negotiate a cheaper cell plan. Find cheaper rent. Shop somewhere else for groceries. There are many options.

If you have money left over, GREAT! This is extra money that can be applied to paying off your debt faster.

Start paying everything off

We chose to use Dave Ramsey’s snowball method for paying off our debt because it was simple to follow.

A simple definition: Organize your debts from smallest to largest. You are going to pay the minimum payment on all of your debts so that you can focus and apply the largest payment possible each month to the smallest debt until it is paid off. When that first bill is gone, you move up the list to the next one and so forth.

It can be overwhelming to look at those large debts at the end of the road but it is very rewarding to get the smaller ones out of the way.

Find extra money

A great way to pay extra on these debts and move faster through the system is to create additional income sources and applying that extra money to the payoff.

We went through our house and began selling all of the things that dug us into this hole. We either sold them on eBay or craigslist and applied that money to paying off our credit cards.

Some people get second or third jobs. Other’s create a side business. Either way, you will move faster through the system if you create additional income quickly.

Stay focused

You’re going to fall off the wagon and make mistakes. Just get back on and refocus and you will find yourself debt-free.

As Dave Ramsey says: Live like no one else, so later you can live like no one else.

We did it and so can you!

We focused on paying off our debt by trimming our expenses and finding extra money by selling things. Our debt mountain looked impossible to us but we successfully paid off $16k in credit cards in less than 9 months.

No matter how big your mountain looks, you can conquer it!

Now, get to work!


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