I often don't feel qualified to give advice on paying off debt since we're still in the process ourselves. We are, however, over a year into our journey and have used Ramsey principles for several years. Since the beginning of our journey has long passed, I feel like I have some good and helpful information to encourage someone to begin paying off debt.
First of all, we couldn't start our journey well without a plan. The plan we put into place was pulled from Total Money Makeover by Dave Ramsey. We were able to check out a copy of the book at our library.
After reading Total Money Makeover cover to cover, the first 'baby step' was to get $1000 into an emergency savings fund. This amount obviously won't pay for a drastic emergency, but it's enough to tap into if you're actively paying off debt and something out of the ordinary comes along.
If you do have to pull anything out of your emergency savings fund while paying off debt, it's important to stop baby step 2 and get your fund back up to $1000.
After having the emergency fund in place (which can be achieved more quickly by selling items on Market place, Poshmark, working an odd job, or really tightening up the budget) we read Live Your Life Not Theirs by Rachel Cruze. We were also able to check this out from our library.
While Total Money Makeover provides the game plan for debt payoff, Rachel Cruze's book Live Your Life Not Theirs talks about the heart behind your spending and comparing your life and lifestyle to those you see around you and on social media. This book was so important in our journey to help us stay focused.
When baby step 2 begins, the process says to list out all debts smallest to largest, not according to interest rate.
The purpose of listing debts in this manner is to achieve success early on & in turn, stay motivated and press on in the journey.
I made a separate post about how to make a zero based budget and begin using the envelope system, and I'll link that HERE.
These methods of handling money helped us tremendously and we learned we were able to really cut down on what we spent in certain areas, while completely doing away with other categories.
I was able to have success in the beginning with Poshmark and Marketplace. Both were areas I told myself I would never do, because dealing with post office lines, shipping boxes and messages from people I didn't know who might stand us up or be weird (this definitely happened) was NOT an interest to me.
I'm grateful I decided to try them out and put a chunk of income toward our first couple of debts.
I also shopped around insurance and phone providers and ultimately switched our providers. We use Progressive for Vehicle and Renters insurance and switched to PureTalk wireless for a phone provider. I believe if you use the code 'Ramsey' when signing up with Puretalk you will get a deal and some freebies.
Part of us paying off debt was also getting our 'ducks in a row' so to speak. We wanted to be completely independent financially so we left a family phone plan (we of course made sure the timing was correct and it didn't hinder family before doing this) and we left the insurance provider we had always used due to family using it (this was because we found a cheaper option). In the long run we wanted the cheapest rates, but also feel like being completely separate financially from family is a form of honoring them and honoring the Lord.
Something else we did was add identity theft insurance. We already have term life insurance through Zander. If you have any questions about life insurance PLEASE reach out. I cannot press this enough that you NEED life insurance if you have a spouse/family. I will happily send you info!
We felt like if we were going to actively pursue debt payoff we needed to set ourselves up with proper insurance and security for our finances and lives.
Another area we focused on was seeing what we could do without, but also being realistic. Our envelopes are areas we know we will need cash for. We choose not to stream any entertainment right now and are able to find many free resources. You get really good at finding freebies when you're on baby step 2!
We also had/have many dream meetings and budget meetings. It's up to you how often, but it's important to dream together and remember your 'why' as a couple. You can start your conversation by stating 'We want to be debt free SO THAT..." The 'so that' is SO important. Also, holding budget meetings is effective and keeps you accountable. They might be tense the first few meetings as you get used to them and also manage differing personalities but they are incredibly important.
I know there is more info I can list but I'll leave it here. If you are beginning your journey, no matter how old you are or what your financial standing is, you CAN do it!
With heart from our home,
Jordan
Comments
Post a Comment