I have never been so excited to write a blog post in my life, because I know that it's going to help so many of you that are reading today. It's no secret that debt can be crippling and is for a large majority of us, but in writing this post, it's my hope that I can help equip you with some resources and tips that are actually useful. My husband, Chris, and I are being very aggressive about getting rid of our debt, because we've realized that it's holding us back from things that we really want in life--our own home, financial freedom, children, money for retirement, and extra money to simply enjoy life.
Over the next year, more than ever before, we're focused on preparing for our future. We've been listening to Dave Ramsey podcasts and following his steps, but are also adapting a few of our own "steps" in. One thing that Chris and I quote to each other when we feel like it's not going to be worth it is a quote by Dave Ramsey: "Live like no one else now, so later you can live like no one else."
It's definitely not going to be an easy journey, but it's going to be so worthwhile and rewarding in the end. It's going to take a lot of sacrificing, diligence, and determination. You just have to be mad enough at your debt to do something about it. We have a spreadsheet to make sure we are on track, and believe me, when you see your finances plugged into a spreadsheet, the numbers become more real. They're laid all out in front of you--from every penny of debt to every penny of your spending, and every penny of income, there's no denying where your money is going to and coming from.
We will be paying off over $50K of debt (mostly student loans and some credit card debt from our wedding) in just one year, and yes, I know that sounds insane, but you guys, it can be done. I love the reasons that Allstate gives for paying off your student loans now. The financial freedom that you will have when it's gone will lift so much financial pressure off of you.
Now, obviously we are married and have two incomes, so if you are single reading this, $50K will most likely be a little crazy, but of course for everyone, the debt amount and how much you can pay per year, and the length will change. This is just how we are planning to pay off our debt in hopes to spark inspiration for you to control your finances and not allow your debt to control you any longer.
I also want to make a disclaimer and tell you I am no financial advisor or expert what-so-ever. I do have a degree in Business, which of course has fueled my love for numbers, spreadsheets, and all that is making this journey possible, but even though I'm not an expert, these steps and strategies have worked for us, and I just know that they can work for you, too.
I also gave those of you following along with me on Instagram a chance to ask some questions about this financial journey, and I'll be answering your questions within this post. I've also teamed up with Allstate to give you some additional resources that they have on their website. If you're ready to take hold of your finances and work hard towards financial freedom, then let's get started!
Use a spreadsheet of your debt, income, and expenses
This can be and will be a daunting task, but my friends, it's so worth taking the time to do. It's the most eye opening thing you can do for yourself, because there's no lying about where your money is going to. You'll have different categories for different expenses. Some of you will have less and some will have more.
The categories will also depend on how aggressively you want to pay off your debt. If you'd like, you can still feel free to have a "fun money" category. We have about $100 between the both of us each month set aside if we want to go out to eat or need a new clothing item for work.
No matter what your spreadsheet looks like, the important thing is that you update it as often as possible. Dedicate a time one day a week to update it or even every night if you really want to. It's important to stay consistent with updating it to assure you are on track and right where you need to be.
Be honest with yourself and input each and every expense and debt. It's the only way for you to fully see what you need to tackle first. I've actually created a spreadsheet for you FREE! You can download it by subscribing below.
Put $1,000 in your savings account
Before you start aggressively paying off debt, have $1,000 in your savings as an emergency fund. You never know when your car will need a repair, you unexpectedly get sick and have a medical bill, or your refrigerator decides to break on you. This $1,000 will be for emergencies only, and you're not to touch it unless you don't have the money in your checking account.
STOP using ALL credit cards
If you don't have the money to pay for it with cash or your debit card, you can't get it. It's a tough reality to face, but if it's not on your debit card, it's not your money. Stop taking on new debts and using your credit card as a crutch, because you think you'll pay it off at the end of the month. Chances are, you won't, and you'll be left with an interest charge and the ball keeps rolling, and your debt gets larger and larger.
I put all of my credit cards in my bedside table, and I haven't had the desire to touch them since I switched to this mentality. From my bank credit card to my store credit cards, they're no longer in use and will be paid off so soon and I can't wait.
If you think about it, the rewards and the 5% discount that some stores offer are not worth the interest payment. I'll be the first to admit that I got sucked into the mentality that I could get something, because it was an additional 5% off or that I was so close to getting another reward, so it only made sense to spend that extra $50 to get a $10 reward. WAIT. WHAT?! WHY did I ever think that was okay?! But it's something that a lot of us think and have been conditioned to think, because it's all we're ever told by these major retailers.
Put your credit cards away--cut them up if you have to and stop using them.
Pay your smallest debts off first
This is part of Dave Ramsey's snowball debt payment, and let me tell you, it's so motivating and exciting when that first card or payment is complete. It all started for us when Chris paid off his car. He only had a few months of payments left, but he paid it off completely and truly owns his car. For me, I ended up paying off two store cards in one month. I think I had $50 or something silly on one and about $750 on another. We happened to get our security deposit back from our old apartment right before I paid these off, and I used all of the money to pay those off and then some on my bank credit card.
I was so excited the night that I paid them off online, I immediately told Chris, and we updated our spreadsheet together. Once your smallest debts have been paid, move on to the next and keep tackling them from there until it's gone.
Have a no spend month
If you really want to test your self-control, have a no spend month. A few months back, I wrote a post on why I chose to have a no spend month, and honestly, it's what fueled us to pay off our debt in a year. Dedicate one month to not spending a single penny on anything other than necessary expenses like groceries, gas, rent/mortgage, loan payments, etc. That really allows you to physically see how much money is left in your bank account, and helps you realize how much money you are spending unnecessarily each month.
Get a second job or a side hustle
Many of you know that I used to be a full-time blogger, but when Chris and I got serious about our finances, I knew that I needed to go out and get a full-time job again in management. It wasn't an easy choice to drop my dream of being a full-time blogger, but I realized that getting a second job didn't make me any less of a #girlboss, but more of one.
Whether you get a side hustle job as a waiter or bartender on the weekends, a nanny gig a few times a week after work, or work at a retail store on the weekends, get off your booty and do it. The extra paycheck will make a world of difference. Sure, you won't have as much free-time, but isn't it worth sacrificing a year of time to set your life up for financial freedom? I think, yes.
I work 40 hours at my retail management job and then another 20+ hours on my days off working on my blog and crafting sponsored content. The great thing is that I love both of my jobs, so it brings me happiness knowing that by doing what I love, I am able to provide extra income. I essentially more than doubled our income...almost tripled it when I went back into management. When you see the numbers add up, it's an amazing feeling.
Downsize your home or apartment
Downsizing is such a great way to cut expenses. Do you have a half empty room that you don't really need? We used to have a two-bedroom apartment and we hardly used our second bedroom. It was technically my office and the guest bedroom, but let's be honest, I worked mostly from the dining table or the couch. We were essentially paying for a room we didn't need.
Once our lease was up, we knew we had to move out. We actually took up a friend's (they're family really) offer to move into their home for a year or so while we focus on paying our debt and saving for a home. If you ever have this opportunity with a relative or close friend, do it. It is saving us over $1,000 each month and we are able to put that towards our debt.
Even if you don't have this opportunity, downsize as much as humanly possible. Heck move into a studio apartment. Having an actual bedroom isn't a necessity, it's a luxury. Plus, you can make a studio apartment so cute. Just pretend you're living in a studio in NYC. haha!
If you're still lucky enough to be living at home with your parents, enjoy it and be grateful. Take this time to pay off any debt you may have and save everything after that. Don't blow through your money. Your future self will thank you.
Stop going on vacations and taking trips
I feel like my post is full of a lot of necessary harsh realities. Chris and I didn't take a honeymoon after our wedding, because we simply didn't have the money to. The same goes for anyone taking vacations. Just because society says you get to go on vacation, doesn't mean you can. If you have debt, you literally can't afford to go on vacation, because you have zero dollars.
The minute your debt is completely paid off, go ahead and save money to pay cash for your next vacation. But until you're there, stop traveling, and stop going on vacations. Every time I see people on social media rave about all of their vacations, but outwardly say they're struggling to pay off their student loans, all I see is credit card debt increasing, and financial freedom farther and farther away for them.
Shop at discount grocery stores & use coupons
If you're lucky enough to live near an ALDI, go to ALDI. It will become your best friend when you're shopping for groceries. If you don't have a discount grocery store near you, use all the coupons you can find! Giant Food has a coupon app and you can save so much money on the things you buy regularly. You can also go on store websites and print coupons to bring for additional savings.
Something else that has helped to save money at the grocery store in general is go in with a list and only buy what is on your list. Impulse buys (like in the snack aisle--guilty) can really add up and tack on unnecessary spending. Meal planning is another great way to cut spending. If you know what you're going to eat that week, you won't have food sitting in your fridge or pantry uneaten.
Another tip is buy as you need it. All too often we would have food go bad, because we couldn't eat it fast enough. I pass the grocery store on my way home, so it's super easy for me to grab something that we'd need for dinner or lunches the next day.
Pin Me For Later!
Eat at home & pack your lunch
The days of going out with your friends each weekend and grabbing a beer or drink after work on a Friday are long gone. Sure, you can put in the budget an outing every once in a while, but the spur of the moment meet ups can't happen.
The mark up alone of food when you go out is insane! You're better off eating at home--not only for your wallet, but for your health. Be in control of what you're putting in your body and keep that money in your wallet.
Packing a lunch is also huge. As much fun as it would be to grab a hoagie from Wawa or a mid-day coffee, it's not in the budget right now. Pack your lunch every day, and you'll find that the amount of money you're saving is a credit card payment--sometimes more!
Be sure to download my FREE Debt Killer Spreadsheet by subscribing and using the sign up form in my post! It's been a huge game changer for us, and I know it will be for you, too! Good luck on your journey to financial freedom. I'm cheering you on!
This post was written as part of the Allstate Influencer Program and sponsored by Allstate. As always, thoughts and opinions are my own. As the nation's largest publicly held personal lines insurer, Allstate is dedicated not only to protecting what matters most, but to guiding people to live the Good Life, every day. Thank you for supporting ACF!
Kristen, it's wonderful to see a couple your age being sooooo sensible. As you say, your future self will thank you! Pinning.
ReplyDelete