How We Got Out Of Debt (And How You Can Too!)

Debt. It's a nasty word. Even typing it, it seems menacing. Debt isn't scary to all of us though. Most of us grew up in a world where debt was considered normal. Debt, in some cases, is even celebrated. Celebrated in the form of a shiny new car, an elaborate home, and that vacation of a lifetime. Behind the scenes of these celebrated financial disasters, are people who are stuck constantly working just to pay the loans on items they rarely get to enjoy. Nobody enjoys a vacation they put on a credit card. Not really, anyway. Once the tan fades, the bill shows up in the mail.

It's time to stop keeping up with the Joneses. Or more fitting in today's society, the Kardashians. Unless you can afford that ridiculous lifestyle. Then, by all means, follow your dream. It's time to be honest about your financial fitness. Yes, that's a thing. You can be financially out of shape or you can be financially fit. The choice is yours. If you're someone who wants to choose the latter, here are a few tips to get you on the track to debt-free living:

1.) Get A Budget- And Follow It!

This one seems all too obvious, but most people don't have any sort of plan for what to do with their money. Fail to plan, plan to fail. Sit down and figure out what you make each month. I know it can change, so estimate on the lower side. Then figure out what you're spending or what you should be spending on your necessities. I don't consider a $75 per month cable TV bill a necessity. Here's an random example:

Monthly income = $3,500

Rent: $800/ mo.
Utlities: $150/ mo.
Groceries: $400/ mo.
Car Insurance: $150/ mo.
Gas: $200/mo.
Phone Bill: $100/mo.
Health Insurance: $50/ mo.
Car Payment: $200/mo.
Student Loan Payment: $150/mo.

Total= $2,200/ mo. monthly payments

A budget always needs some wiggle room, so make sure you incorporate a few non-necessities (choose them wisely) to your list. It was important that my husband and I had some "fun" money to use to go bowling, to a movie, or use the extra on gas to head out to Red Lodge for a day of hiking. Your "fun" money could go to Netflix, an occasional dinner at your favorite restaurant, or you can save it up and make a well thought out purchase with it.

This is where expenses get cut. When you create a budget, sometimes you realize you're spending $4/day on a cup of coffee (at 5 times per week that adds up to about $80 a month), getting your nails done every two weeks ($50-$80 a month), and paying for an expensive cable package at $60/month... that adds up to a lot of cash. You need to learn what you can live without. The more you give up, the better you'll be off in the future. Sacrifice now to reap the benefits later. I promise it is worth it.

2.) Tackle Debt

Dave Ramsey recommends something called the "Debt Snowball" and I'm all for it. What you do is tackle your smallest debts first, moving to the larger ones as you pay off the lesser ones. It pumps you up to get a few debts out of the way, and I guarantee it will keep you going toward the bigger, more daunting ones.

Example:

Your Debt Sum

Medical Bill: $125
Credit Card: $500
Car Loan: $6,000
Student Loans: $11,000

Let's assume you're the person above and make $3,200 a month in your household, spending $2,200 on your necessities. We'll give you $200 a month to put away in case of emergency and $100 a month for non-necessity fun. That leaves you with $700 every month to demolish debt. In your first month, you could have your first two debts paid off just by being more mindful about your money.

3.) Go Harder

I understand that we all make very different amounts of money and some of us have a lot more debt than others. Maybe after you pay your necessities, you only have $300 left over. You may need to get creative and a maybe even extreme with your debt-free journey. Even if you have $2,000 leftover to pay debt, going the extra mile is very rewarding. Here are a few ideas:

Downsize Your Home.  So many people live in homes so much bigger than they need. If there's two of you living in a five bedroom house-- find.something.smaller!! A smaller home means less money toward a rent or mortgage, freeing you up to put more toward your debt. Another bonus is that less house means less time spent cleaning! With a smaller home you also can't fit as much into it, therefore lessening the temptation to fill it with unnecessary crap. (which also saves money!)

Get A Side Hustle. Find something you can do on top of your regular job to make some extra cash. Russ took care of the yard for our landlord to get some money knocked off our rent. I got a job a couple days a week at a physical therapy office on the side of my own business. I went through all of our things and started selling items we didn't need. 

Find Free and Cheap Fun. We spent a lot of our evenings going for walks with our dog. It was free, relaxing, and healthy for us all. We also enjoyed fires in our backyard, fishing, and game nights with our friends. Instead of going to the movie theatre, we'd rent a movie and make our popcorn at home. Date nights and evenings with friends don't have to cost a thing. It's really the company that matters.

Frequently Reevaluate Your Needs. Maybe after a month or two of doing your debt free journey, you realize you can manage to have $50 a month of fun money instead of $100. More money to put towards your debts.

Do A No-Spend Month. This is a month where you only spend money on your basic bills and use up all your food in your pantry. You just go to the grocery store for perishables. Meals are definitely simple during a month like this. But guess what? You'll surely survive.

4.) Make As Many Purchases As You Can With Cash

Then, make the rest with a debit card (which is essentially cash) It's easy to watch cash disappear which makes it harder to get rid of. Swiping a card is just too easy. Cancel your credit cards-- you don't need one! Put money away every month for emergencies so you are never tempted to use a credit card.

5.) Buy Used

Everything. Well, not everything. I don't recommend used underwear. We paid for our Toyota Highlander with cash simply because we bought used and we shopped around. It can be done, people. The entertainment center in our living room is one of my favorite pieces of furniture. It retailed for $600 unfinished. I found it on Craigslist, refinished for $100. Whether you're shopping for a car, furniture, dishes, or pet supplies you can likely find it used and in great shape. Just have patience. Check out Craigslist and spend a Saturday going to garage sales. It doubles as good bonding time with a friend or significant other!

6.) Let Your Friends And Family Know Your Plan

Telling the people in your life that you're getting out of debt is an important step. First, it holds you accountable. If you tells others your plan, you're more likely to stick to it. Secondly, it lets them know why you'll be skipping on some dinners out and possibly that summer road trip. This part can be hard, however. You'll find some people will think you're stupid and have a bad reaction. I find that these people are usually up to their eyeballs in debt. Don't worry about them, just do your thing-- maybe you'll inspire them to get up and try too.

7.) Incorporate Daily Personal Development

It's important (in all aspects of our lives) that we never stop learning. This is true to your debt-free journey. Go to your library (free!) and pick up some books on finances and frugality. Download Dave Ramsey's podcast or an inspiring audiobook. These tools will help you stay focused on your end result.

You have to make your money work for you or you'll always be a slave to it. Break the mold of the "American Dream" and crush your debt-free goals.