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OUR DEBT FREE STORY
As promised, we’re telling a “brief” story on how we got #debtfree and answering some of your questions. I thought this would be a quick 10 minute video, but grab a snack and get comfy because we got pretty carried away on the details. 😅
If you need a really simple, no-frills answer on how to start getting yourself out of debt, check out my blog post on the 5 simple steps to starting a debt free lifestyle.
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5 SIMPLE STEPS TO STARTING A DEBT FREE LIFESTYLE
We’ve all heard about the Dave Ramsey podcast and how important it is to be debt free. I have yet to meet anyone who truly thinks “I love keeping myself in debt”, but the reality is that the idea of getting out of debt is just as overwhelming as drowning in it. We know that crippling debt is all we hear on the news nowadays. We know that the debt-mentality is being heavily promoted to our generation: get student loans, go travel, work part-time, you only live once, and my personal favorite, treat yo’ self. But do you really want to treat yo’ self to high interest rates and debt that will follow you into retirement? Nah, me either. If you’re wondering how to begin getting out of debt, there is no easy answer to such a complicated question, mostly because everyone's timeline and budgets are different. However, the template for everyone who is debt free is about the same. If you’ve been thinking about where to start, you’re tired of being stressed and owing debt collectors a piece of your life, it’s time to start acting on it. Here’s 5 simply stated steps on how you can start the debt free journey.
1: Start a budget
In order to know how to get out of debt, you need to know where all your money is going. Is it car payments? Is it groceries or eating out? You need to identify that. At the end of this month, sit down with yourself (or you and a spouse) and identify how much you’re spending in each category: rent/mortgage, electric bills, cable, groceries, gas, tolls, miscellaneous, etc. Find out where every single dollar is going. If your full-time job’s salary does not significantly exceed your bare bones of living, you’ll need to reevaluate. Consider a change in career/companies, or find a way to monetize your hobbies and talents (more on this later).
2: Identify Needs vs. Wants
You made your budget, and now it’s time to make cuts. I bet you'll find some things that you can do without, like that beauty box you signed up for, the gym membership you don’t use but keep it just in case, or maybe one of the other streaming services you don’t watch as often. Figure out what you are willing to live without. $10 a month on unneeded expenditures will result in $120 a year. That may not seem like much to you now, but if you put that towards your debt, that's $120 that’s not growing interest. Remember: wants v.s. needs. Stop financing things you don’t have the cash for. Stop letting people borrow money from you. Stop being extra on your spending habits so you can look good for your friends. Be intentional. Build a plan for paying off your debt and stick to it. Keep in mind, nothing good comes without a little sacrifice. It won’t be easy, but if you cut out these unnecessary expenses for just a few months, one year, or a few years depending on your goals to tackle your debt, it will be 100% worth it.
3: Credit Monitoring System
Take full control of your debt by creating an account with a credit monitoring company. This could be done through your own bank or through the very popular app, Credit Karma. This allows you to identify every dollar of debt that you have, along with any strikes against your credit and any debt that has fallen into collections. Knowledge is key in these situations, as you can’t begin to tackle your debt if you don't know or understand what you are up against. Begin to tackle your debt by either size or interest rate. Tackling a debt by size will allow you to pick off each credit account one by one and diminish the amount of accounts in which your debt is spread across, whereas tackling a debt in order from highest to lowest interest rate allows you to save the most money on interest overall.
4: Sell what’s collecting dust
If you haven’t used an item for three months consistently, sell it to deduct from your debt. For us, it meant selling some guitars David no longer cared for, taking some of my clothing to Plato’s Closet, and even selling some old decorative vases and knick-knacks. You won’t miss any of the stuff you sell, no matter how much you think you will. You’ll also learn to appreciate things you purchase more, which will make you more intentional with your spending. Train yo’self.
5: Monetize your hobbies.
Being on the debt free journey doesn’t mean you need to stop having fun. Do you have a hobby you can monetize? Every dollar counts. Remember that this step can be as permanent or as temporary as you'd like it to be, and will help you to diminish debt at a faster rate. For us, David loved photography so he created a photography and videography business to bring in extra income. I loved painting and started my own Etsy shop. There are ways to have a side-hustle that you will actually enjoy.
When I bring this point up to friends who are inquiring about how to start getting out of debt, it is not uncommon to hear "but Krysti, I don't have any hobbies or talents". That's okay. Learn to cook and eliminate eating out. Wash your own car and save money on the car wash. Cut out the trips to the salon and invest in a cheap gel polish machine and youtube your way to painting your own nails. You can learn skills that, even if you don't monetize, will work with you to help save money and upkeep your lifestyle. Learning to cook was something I decided to spend more time on, and it was a fun way to challenge myself to cook new things that I wasn’t normally used to cooking. It stopped me from eating out as much, and I also learned how to cook an awesome Orange Chicken (take that P.F. Changs!) As a bonus, it was something my husband and I could do together. One of our favorite things to do is browse through Pinterest recipes and recreate one that catches our eye (this is what introduced David to his favorite cookie of all time).
The debt-free journey can sound overwhelming, and sometimes it is, but it doesn’t have to be. It doesn’t mean you need to live in an empty apartment on your floor eating only ramen. Be realistic. Approach your goals as you would start the gym: don’t go extreme with the heavy lifting or you won’t be able to maintain it. Start small. Make changes you know you can upkeep. Challenge yourself to cut an expense that maybe you think you can’t live without and commit to that for a month. You’ll be surprised at what you’ll learn about yourself. You’ll begin to find joy in the way something makes you feel, rather than stuff. Consistency is what will keep you successful. If you need to write a sticky note and put it on your wall, have a photo of your family at your work desk as you're dragging yourself through your 9 - 5, pop in those headphones and listen to an encouraging podcast - whatever it is that motivates you, do it. Commit to it. No one’s ever said they regret being debt free.