Last week I posted a story on Facebook about how my husband and I paid off $29,180 in 8 months. I got a lot of respones and messages asking what we did so here it is.
Step One: As quickly as you can, save $1,000 as a mini emergency fund. Do this first so that if any emergencies pop up while you’re working on paying off your debt, you won’t be tempted to swipe your credit card to cover it and get into more debt. We had two emergencies pop up in the 8 months we were paying down debt so this fund was a lifesaver.
How do you find a quick $1,000?
If you don’t already have $1,000 lying around to set aside as your emergency fund, you can surprisingly raise it pretty quickly. Scrounge up any money at all that you can find (any little bit you may have in savings, car change, purse money, money people owe you, that quarter you found on the sidewalk — literally ANYTHING) and just put it away. Then take a free afternoon and walk around your house and make a pile of everything you don’t NEED and start selling stuff. This was the hardest first step for me, frankly, because I really liked my things (no wonder we were in debt huh?). But once I began selling and saw the money roll in, it got a lot easier. Below is a list of things we sold to give you an idea:
· Kitchen table and chairs
· Couch
· House Décor (pictures frames/mirrors, etc.)
· Standing Mixer
· Pillows
· Lamps
· Dog Carrier
· Extra TV
· Electronics
· Drapes
· Second Car
There was a point where my husband thought he was about to be sold next — so you get the point literally anything you don’t NEED, sell it. (And if you already have $1,000 to use for an Emergency Fund, use the money you get from sales towards the first bill you pay off.)
Tip: I sold most of our stuff on Facebook Marketplace, through the Offer Up app and Craigslist.
Step Two: Get a second job. If you have a skill set that can make you a decent amount of extra cash without having to go out and work a night or weekend job, that’s awesome- do it. I did not. At least not a skill that would make me extra money FAST. The goal here is start strong and quick and keep up the momentum. So I got a second job at Chipotle. Why Chipotle? Well…
1. It was within walking distance from our apartment. Since we were down to one car, I needed something close enough that I could walk to work if I had to.
2. Decent pay. Chipotle pays almost $10/hour entry level which is better than most.
3. Flexibility. The shifts Chipotle offered me were perfect for my schedule. I was truly blessed to find this job.
4. Likability. I love working around food and wanted to work at a restaurant so I wouldn’t get bored.
Tip: Remember you will possibly be spending your evenings and weekends at your part time gig, so try and work somewhere you at least kind of like. If you’re really into fashion work at a clothing store, if you’re really into health, try seeing if a GNC is hiring. Find a niche that interests you and go for it.
Step Three: Use the Dave Ramsey Snowball Method to begin paying down your debt. I was skeptical of this method when I first heard of it but it’s pretty much genius.
How it works: Pay down your smallest debt first. Once that is paid off, move on to the second largest debt and begin paying that, but add the monthly payment from your smallest debt that you no longer have to your second largest monthly payment in order to pay it down more quickly.
Super Simple Example: Olivia has 3 credit cards she’s trying to pay off: A ($200/month), B ($300/month), and C ($400/month). Olivia will pay off Credit Card A first. Then take the $200/month she was paying for Credit Card A and add it to Credit Card B’s monthly payment. So now Credit Card B’s monthly payment will be $500/month. Once Credit Card B is paid off she will then take the monthly payments from Credit Card A and B and add it to the monthly payment of Credit Card C to total $900/month. She will continue doing this until all her debt is paid off.
The really cool thing about the snowball method, is that you can quickly feel a sense of accomplishment because your smallest debt is paid off first. This keeps the momentum going. Which is crucial when you’re trying to pay down debt so quickly.
Step Four: Stay focused, Stay prayerful, DON’T GIVE UP. If I could shout this last step from the rooftops I would because it’s the most important. There are so many times I wanted to give up and just stay in debt. Here are a few for your amusement:
· That time at Chipotle when the power went out and we had to stay late until 1:00 AM and I had to wake up for work at 5: 00 AM
· That time we planned a trip with friends and had to cancel because the flights, hotel and spending money could have paid off one of our credit cards
· That time we missed 5 of our friends’ weddings
· That time I went shopping during lunch with my coworkers and really, really wanted that gold lamp from Target but didn’t buy it because it wasn’t in the budget
· All the MANY times I wanted to eat out because I didn’t feel like cooking but it was too expensive
During all of those times, I did two things — 1. Prayed for strength and 2. Recited this Dave Ramsey quote: “ If you live like no one else, later you can live like no one else.” I knew if we kept doing all these crazy things that no one else was doing we’d eventually be able to live like no one else is living.
You should also remember that it’s not forever. I eventually did treat myself to that gold lamp at Target when we could afford it. And it felt really good to buy it because I patiently waited for it and it was in budget.
Two other Tidbits
One important thing you shouldn’t overlook when doing this is to remember to use any extra cash you get to pay down your debt. This is NOT the time to ‘Treat Yo’ Self’:
· Get an IRS refund? Pay down your Debt.
· Get cash tips from side gig? Pay down your Debt.
· Get a bonus at work? Pay down your Debt.
· Find $20 in the parking lot? Pay down your Debt.
ANYTHING extra you get — down to the dime you found in the dryer — should go to paying off your debt. I kept a money jar on our dresser and any extra cash I found I put there during the week. Every Friday I deposited all the lose change and bills into the bank and paid a little more on whatever bill we were working on.
The second important thing is to remember to change your spending habits. Chances are you are in debt because you like to overspend (I did) and you don’t budget (we didn’t). It’s ok. Don’t beat yourself up. Just start fresh. Begin a budget (I reccommend the Envelope Budget System)and learn how to cut back.
Well that’s all folks. Hope this was helpful. If you ever want to chat, reach out at tristan.desinor@gmail.com. Happy 2017!
