I bet you’ve got some dreams. I bet you’ve got some ideas for your life and I bet your bank account doesn’t always line up with these ideas. Am I right?
The truth is we all have an idea of how we picture our life looking and rarely does this ever line up with our reality. Most of the time, I would say it’s because the finances are just not there.
Money can be a sore subject. It can cause a lot of fights in marriage and can be a never-ending source of grief and frustration. But I would say from my own experience, it’s usually not a lack of money that’s the issue (or the main issue), but rather a huge pile of debt that month after month never ceases to remind us that our money is not our own.
Sure, we can budget, eat ramen and sit at home watching Netflix for fun in order to save money, but if debt is in the picture, you will never be able to find the extra cash to live the life you truly want to live. That is why I feel it is so vital that you work on getting yourself out of debt and out of it FAST!
Because the sooner you’re out of debt, the sooner your money is actually yours to do with what you will (not what you have to).
Before Jeff and I got married, he used to say that he would put more money into his savings and just pay the minimum on his credit cards because he felt he had more money that way. However, he quickly realized that $10,000 in savings with credit card debt, isn’t really $10,000 in savings. That money doesn’t accurately represent what you have if you still owe money to someone else.
Unfortunately in our American culture today, it’s considered “normal” to have debt, to pay a monthly car payment and to owe interest on things because you bought them before you could afford them. If this is what you believe, then it will be the way you live. But it doesn’t have to be! And in this post, I want to share with you some tips that Jeff and I used to get out of debt as fast as humanly possibly. And I can honestly say that it was well worth the effort.
How to Get Out of Debt FAST!
1. Stop Adding Debt… and Stop it NOW!
I know this might seem obvious but too often, we feel like we need our debt. It becomes a familiar part of our life to the point where we can’t imagine ourselves not charging certain things. You can survive without your debt. And if you’re really serious about taking back control of your money, then this is the first and most vital step to starting this journey.
Maybe this means you won’t be eating out so often. Maybe this means your weekly trips to Starbucks will turn into at-home coffee pot drinks. Maybe you need to cancel some subscriptions until you’re out of this hole. There are always things we can cut out or cut back on to save money and this is the time to analyze where you spend money and adjust accordingly.
Think of it as a temporary sacrifice to live the life you truly want to live.
2. Start and Maintain a Monthly Budget
If you aren’t already doing this for you and your family, then do this ASAP! This is where you will understand how much money is coming in, versus how much is going out, and where it’s all going out to.
If you want some help setting up a budget, you can watch my video HERE where I explain how I set up our budget and what I include. I highly recommend Dave Ramsey’s Every Dollar App. I use the free version, which requires me to input every transaction myself, which I love. It keeps me constantly updated so I always know where we stand financially. Something I never felt with my money before…
This may seem tedious at first and you may not see extreme results immediately. I think it took us about 3-4 months or so before I started seeing substantial results. But within 1 year from making my first budget, we got completely out of credit card debt, paid off one car, paid cash for another, bought our first home and traveled to Disney World about 3 times… and ALL we did was start budgeting. It is possible. You just have to be faithful and consistent.
3. Create Your Debt Snowball
This is from Dave Ramsey’s Financial Peace University and it really helped Jeff and I see our debt from a more manageable perspective.
First, write down each debt sum that you owe (totals) from smallest to largest. This could include credit card debt, car payments, student loans… Every debt you owe minus your mortgage. This you would attack at a later time if you desired, when you’re more financially stable.
So for example, if you have $600 on one credit card, $1,200 on another, and $4,500 left you owe on your car, then this would be what you would write.
Taking on all your debt at once can be overwhelming and you certainly won’t feel capable of ever getting out of it. But if you make this list, then you’ll only focus on paying off one debt at a time, starting with the lowest (top) debt.
Continue to pay the minimum payment on everything else and then start to attack the smallest debt. Find money in your budget that you can spare and anything that’s extra or left over, throw it at the debt. Once it’s paid off, then you’ll cross it off and move on to the next total.
What you’ll find is that the more debt you pay off, the more money you’ll have to pay off the next debt. So that when you finally get to the largest debt you owe, you’ll also have a lot more money to throw at it each month than you do right now. That’s why it’s called a debt snowball. Your money grows along with your confidence in your ability to actually pay this off!
4. Post Your Debt Goals
Now hear me out. I know this may seem embarrassing, but I believe it’s very important. Write your debt snowball out on a small index card and post it somewhere where you’ll see it every single day. We put ours on our fridge and it became a constant reminder of where we were and where we were headed.
Because when you post it, you own it, and then you attack it. If you don’t post it up, you won’t attack it with the same determination that you would if you saw it every day when you get your coffee. It’s not about identifying with your debt, but it’s about owning up to where you are and keeping a vision before you of where you are going.
5. Have a Debt-Free Goal
Sometimes the concept of being “debt-free” isn’t enough to drive us to pay off our debt as fast as we can. Because most of us have never lived debt-free lives, we don’t fully understand what this kind of life would mean for us. So make a debt-free goal for yourself that will dive you to the finish line.
For me, it would for sure be a vacation that I had only ever dreamed about going on. What is it for you? What would be so great that it would cause you to say “no” to some things right now, so that you could say “yes” to (blank) later?
However, this goal, depending on your debt, could be pretty far off in the future and you’re going to need something to get you excited for the here and now…
6. Create Mini Goals for Each Debt Sum
Every time you pay off one of your debts in the debt snowball, give yourself a mini reward. Maybe go out eat, to a movie or buy something nice for your home. Once you pay off a bigger debt, go out to a nicer dinner, or to the symphony.
Make it work for you and work it into your budget. When you cross off that debt, you need to remind your brain that this is not only a good thing, but you are going to get rewarded for what you just did. This will cause it to become more of a habit and something you look forward to doing, versus something you have to do.
The journey ahead may take longer than it did for us, but it doesn’t mean you’re going to be miserable for the next three or so years. Paying off debt is fun! It becomes addicting to cross it off and attack it because you start taking back control of your money and realizing the kind of life you could be living.
It’s a biblical principle: when you’re faithful over the little, God will make you faithful over much. Tithing is great because it keeps our hearts trusting in God as our provider. But it’s not just 10% that belongs to Him. It all belongs to Him and we can be good stewards of our money by taking ownership, getting out of debt and actually start to create wealth to use for His glory.
If you’re struggling in your finances, please don’t get discouraged or condemned. This is something almost every single one of us deals with and the enemy wants to keep you down by beating you over the head. Don’t receive his condemnation. It’s not too late. You can do this. It is possible. All it takes is the courage to make that first step.
Let’s take back our lives and start living our full potential!