freedom

How to get out of debt

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by Tsh

Tsh is the founder of this blog and is currently traveling around the world with her husband and 3 kids. Her latest book is Notes From a Blue Bike, and believes a passport is one of the world's greatest textbooks.

I‘m currently working on the chapter in Organized Simplicity that explains the connection between being debt-free and living simply.  For me, it’s been a good reminder why it was so important to my husband and I to get rid of our debt back when we were doing so, and of the bondage that debt brings to a family that wants to escape the rat race and live counter-culturally.

Even small amounts of debt means paying for the past and not living in the now or preparing for the future.

Today is not about guilt trips or explanations of why debt is bad.  I could go on and on (and on) about why I think debt is such a ball and chain, but for now, I’d rather give you some helpful information on the how of getting out of debt.

If you’re like me a few years ago, you want to get out of debt, but you just don’t know how.  You look at the numbers and the APR of your credit card, and they don’t add up.  I remember doing some basic number crunching in order to discover that if I paid the minimum on our credit cards, we’d — well, never pay them off in our lifetime.  Even paying just a bit more than the minimum would take 73 years.

You can’t play by their rules. You’ve gotta outsmart them if you want to take back your money and put it towards your family’s needs and wants.

The Debt Snowball

I absolutely did not invent this concept, and neither did most financial gurus out there today.  It’s an obvious concept, and it’s been around awhile.  Dave Ramsey advocates using the “debt snowball” for getting out of debt in his Baby Step 2, and that’s what my husband and I did.  Mary Hunt also suggests this method, and I’m sure many others do, too.

But it’s really a straight-forward, common sense way to pay off your debt without going insane.  Here’s how it works.

1.  List your debts, smallest to largest.

Grab all your paperwork, and total every single thing you owe, down to the penny.  Exclude your first home mortgage for now.  Don’t look at the minimum payment due, the interest rate, or the due dates right now.  Just look at those total numbers.  Then  make a simple list of those numbers and the name of the debt, smallest and largest.

Here’s an example of the McSimple’s list:

Gap: $127.14
Home Depot: $477.92
Texaco: $532.09
Citibank: $2,481.35
Bank of America: $17,802.66
Sallie Mae: $56,248.12

These numbers are apropos for the average American family.  The McSimples owe a total of $77,669.28 in debt, not including their mortgage.

2.  Now create a record of the other details.

Using Excel, an online financial tool, or pen and paper (all are fine), list your debt’s interest rate, minimum owed, and the date of the next payment due.  Keep this separate from your main list, because you don’t want that list to get muddled with fine print.  But it’s important to have a clear idea of what you’re really looking at behind these numbers.

Here’s some of the McSimple’s minimum monthly payments and interest rates:

Gap: $15 @ 14.29 %
Home Depot: $30 @ 9.99 %
Texaco: $10 @ 6.79 %
Citibank: $113 @ 24.99 %
Bank of America: $203 @ 6.5 %
Sallie Mae: $375 @ 4.9 %

3.  Create your monthly budget.

I’ve written quite a bit about how to create a zero-based, monthly budget for your family’s finances, and now is a time when that budget will really come in handy.  If you haven’t yet done so, make a budget for this month.  It may take some time, but it’s gotta happen in order to see the real picture.

Include all your debt’s minimum owed in this monthly budget. If you’ve got a debt payment due this month, then it needs to be paid, so list it as a line item in your budget.  It’s part of the total of your household’s necessities.

Total your monthly income and expenses.  If your income is larger than your expenses, that’s good.

Without all the nitty gritty, here are the McSimple’s totals:

Income:    $3,405
Expenses:    $3,957.18

Unfortunately, the McSimples are the situation many, many families face regularly — their expenses are higher than their income.  It might sound obvious, but the only two options are to either increase the income side, or to decrease the expense side.  Jane McSimple can sell some items on eBay and Craigslist this month, and they can cut down on their grocery and eating out allotments, so thankfully, the scale is now tipped.

Now their numbers are:

Income:  $3,672
Expenses:  $3,543.09

It might be hard to see the trees from the forest, but you need to take the time to find ways to cut expenses or increase income.  It’s not easy, I know.  But it’s gotta happen.  Your budget won’t work otherwise, and you’ll continue in the debt spiral.

4.  Create your debt snowball plan.

Take any extra money, and throw it at your debt.  It’s that simple.  It’s not easy, but it’s simple.

Don’t add any more to your savings (and Ramsey would tell you to take all but $1,000 of your savings and add it to the amount you can use in the snowball), and don’t beef up your eating out line item.  Give you and your husband a little bit of free spending money so you don’t lose your mind, but we’re talking $20 per person per month, not $400.

Here are more of the details behind what you should do.  Continue paying the minimum on all but the first debt listed — add all your extra money, and make a huge payment on that first debt. For the McSimple’s, they now have $128.91 extra in their budget.  They can add that to their $15 minimum payment to Gap, which means they have $143.91 available for that bill.

And great news — that amount is more than the debt’s total!  They can completely pay off Gap this month, with $16.77 remaining.  That goes to Home Depot, which will get a payment of $46.77.

Gap is gone, so Home Depot moves to the top of the list.  For simplicity, let’s pretend like the McSimples have the same amount extra in their budget the next month — $128.91.  This now is thrown at Home Depot, along with its minimum balance and what was formerly used to pay off Gap.  That was $15.  So now, they can pay $128.91 + $30 + $15, which equals $173.91.

Without adding monthly interest (just to make it simple here), the McSimples now owe $431.15 to Home Depot this month.  By making their snowball payment, the balance will be $257.24.  Not bad.  If they can use an extra $128.91 to pay Home Depot the following two months, they’ll wipe that debt out, too, plus extra now to attack Texaco.

Important: Many people prefer to pay off debt in order of interest rate, not total owed.  If the McSimple’s did this, they’d start with Citibank, then Gap, Home Depot, and so on.  Mathematically, they’ll pay less this way, so technically, this isn’t a bad idea.  But this isn’t all about the numbers, here, ironically — there’s psychology at play, too. It’s a huge rush to pay off a debt completely, and the momentum built will energize you to stick with this plan.  In fact, you’ll probably be more jazzed about finding ways to increase your debt snowball if you see that with just a hundred bucks more, you could pay something off completely.  With a total of almost $2,500 owed to Citibank, it might not feel as productive to the McSimples to throw $130 bucks to that debt as it would to Gap, which would wipe out that debt completely.  But, personal finance is just that—personal—so either way is okay.

5.  Find extra snowflakes.

Make it a game to find extra money for paying off your debt.  Have a garage sale.  Babysit your neighbor’s kids.  Clip coupons.  Do whatever you can to increase the income side of the equation and decrease the expenses side of the equation.

This site has shared lots of ways you can reduce your expenses, including sticking with thrift store shopping, batch cooking, line drying your clothes, and making your home greener.  There are many more ways, too.

And don’t toss out the idea that loose change doesn’t matter.  It does.  Even small amounts of cash really do add up, so use it to take control of your debt, instead of letting the debt company’s silly games run you over.

If they will let you make as many payments per month as you want, then do it.  It was borderline fun to make a $5 payment here, a $17 payment there on my school loan.  I could watch the balance drop daily — and therefore, the total amount of interest owed.  It was great.


Photo by Aussie Gall

The takeaway

Yes, it might take a long time.  It won’t be easy, and it takes sacrifice. I understand the relief of going out to eat instead of cooking, or having a date at the movie theater with your hubby.

But this lifestyle change isn’t permanent—the sooner you pay off your debt, the sooner you can enjoy restaurants again. Channel your anger at the debt, not at yourself. Be encouraged that becoming debt-free can be done.

You might find that those things you used to spent money on, instead of paying off debt, just aren’t that tantalizing anymore. You’re okay without your $4 daiy latte.  The semi-annual sale at the mall doesn’t seem as important as it once did.

You know what? This is part of simple living. Living according to your priorities, on terms that matter to you.  Not letting the world tell you how to live.  Being a grown-up, and letting money do its job—to be a tool for your family.

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Comments

  1. I love to read your on how to get of out debt. People who are suffering from bad liability need to read your post I thought. Thanks for sharing the insight. Toddler Crafts Susan
    .-= Toddler Crafts Susan´s last blog ..Kids Recycling Craft =-.

  2. avatar
    Liz Duffy says:

    This is so so useful-thank you for posting this.It has come to me at exactly the right time.As these things tend to :-) It makes me feel there is light at the end of the tunnel. Much appreciated.

    • I agree this was a great blog. There are a lot of basic questions that we have answered on our site that you may also find useful. I think people get debt management and debt settlement confused as well as understanding the difference between secured (ie home, car) and unsecured (credit cards) debts.

  3. thanks for this, it is helpful to read. I’m in the middle of fixing a budget for my family. We don’t have a whole lot of debt, but the main thing we’re having problems with is working in two currencies. We’re military and stationed in Europe, so the husband gets paid in dollars but some of our outgoings and debt are in Euros. I am not good with money or math and am finding it frustrating.
    .-= Satakieli´s last blog ..Existential Crisis =-.

    • We have two currencies, too, because we work for a US-based company overseas. So I feel your pain. Oftentimes I make two budgets, using the current exchange rate. It can be a real pain, especially when certain things are spent in cash locally, and other things are deducted from our account in the States.

  4. Prayer can help, too, of course! We were able to pay off $35,000 (which included our credit cards, student loans, and car) in ONE year because we were given a place to live rent free (in exchange for a little extra work). This was in the expensive DC area, so that extra money went straight onto our debts.

    It was amazing when we made that final payment!

    Jamie
    .-= steadymom´s last blog ..Inspiration for Your Weekend =-.

  5. Tsh, I couldn’t agree more – to get out of debt people need first and foremost – strategy. Then there is perseverance and living by principle of delayed gratification. Both pay off BIG time. Great post, as always!
    .-= Emma @ Baby-log.com´s last blog ..Ski vacation – 4 mistakes I will never make again =-.

  6. This was great Tsh. We LOVE living debt free, much simpler, and will never go back to that bondage (truly I believe it is).

  7. Great, Great, Great advice!!. I’m trying so hard to get our debt snowball down and was so close, until our vehicle & computer needed to be replaced at the same time. I’m not giving up though; it felt good to be so close before & I’ll get there again!
    .-= Mrs. Smith´s last blog ..Laziness keeps me in debt. =-.

  8. This post comes at the perfect time for me & my family! My husband and I are starting Dave Ramsey’s Total Money Makeover on Friday (our next paycheck)

    This week for me will be working towards baby step 1 of having $1000 to put away…so I jsut paid the $5 to put an ad in our local paper for a yard sale…if we havent used it in the past 6 months, love it, & it’s not an heirloom…it is OUT OF HERE!

    WE are so excited to be taking this step together to get out of debt & glorify God with our finances.
    .-= Heather W´s last blog ..Linen Bird Patchwork Pillow 2 =-.

  9. avatar
    Southern Gal says:

    My husband and I have been married almost 29 years. We married right out of high school. I am so thankful the Lord instilled in my husband the wisdom to avoid credit cards. We’ve never had credit card debt that amounted to anything we couldn’t pay off in one month. BUT we did have vehicles that we paid for for many, many years. Now after 28 years of new/used cars that were financed, we have four vehicles all paid for. (His, mine and two of our children) Yes, there are repairs that have to be made along the way, but we’ve found that the Lord provides the funds even before we know we need it! (Perspective – A better way to look at it than we almost never get to save any of that extra money!)

    Since we don’t have credit card debt and the last vehicle was paid off in November of last year, we are using that money to build up our savings. We’ve also paid off braces and that extra goes to savings. The debt snowball is a great tool to use to get out of debt. We’ve tried to instill in our children the wisdom of having no debt. We look back at all the vehicles we’ve had over the years and wish we had the money in our pockets and a clunker in the driveway!

    Love your site. Thanks for the practical advice on how to live simply.

  10. Great post! You outline everything so well. I used this approach to finally kick my credit card habit last year. I knocked out over $8,000 in debt and paid for our wedding. It does take a little sacrifice, but the reward is so worth it! As you budget, you also learn what is really important to you and what you can easily live without!
    .-= Amy Reads Good Books´s last blog ..Cost =-.

  11. Great post! The main focus of our blog is how we live debt free. Getting rid of your debt is truly freeing and you will never want to go back into debt no matter how nice that shiny car looks in the dealers lot.
    .-= Mrs. Not the Jet Set´s last blog .."Fresh" the Movie Review =-.

  12. My husband and I worked our way out of debt through Dave Ramsey’s plan too. We have had the opportunity to hear him speak in a few different conferences and he is very entertaining. He has a way of convicting us of our consumerism mindset and challenging us to break out of the mold.

    It is a painful process to get out of large amounts of debt because it is a major lifestyle change. It’s important to pay off the debt, but it’s equally important to stay out. Ouch. The biggest help for our family has been to use cash instead of debit /credit cards.
    .-= Stacie @ newmommyhelp.net´s last blog ..What Not To Do When Potty Training =-.

  13. We started the debt snowball last August, after years of struggling to pay down debts using the minimum payment method. So far we’ve paid off $24,000! We don’t have gazelle intensity yet because my husband isn’t willing to give up certain things, but he has also taken on a second job to help pay down the debt. One of the things I also do for snowflaking is to sell my old CDs, DVDs, and books on half.com. It helps me declutter and earn a few extra bucks at the same time.
    .-= Megan´s last blog ..Menu Plan Monday: August 10-16 =-.

  14. Man, that snowball. Sounds so easy on paper, but so difficult when you’re scraping by paycheck to paycheck. It helps to know all of that, but it’s tough when it feels like there’s not an extra penny to throw at the debt. Definitely printing this out for future reference though.
    .-= Heather @ Alis Grave Nil´s last blog ..O Camelbak, my Camelbak =-.

  15. avatar
    Beth@Not a Bow in Sight says:

    If you have several large debts ($10,000+ each) and are making minimum payments on each AND you’ve cut out all of the extras (cell phones, cable TV, snack foods) AND you can’t add anything to your snowball without not paying your light bill or another necessity- THEN how do you get out of debt?

    The debt snowball only works if you have small credit cards (like those under $1,000) and then are able to get a snowball started once those are paid off. It seems like a good idea (and it is) if you have smaller debts. If all your debts are large then the debt snowball might not work for you.
    .-= Beth@Not a Bow in Sight´s last blog ..Enjoying the Moment =-.

    • It works with all sizes of debts. If you listen to the Dave Ramsey Show, you’ll hear people that have millions of dollars in debt, and have used the snowball to pay it all off.

      It works for all sizes, it just takes longer depending on how much you have.

      Be encouraged. :)

      • avatar
        Beth@Not a Bow in Sight says:

        Let’s say your smallest debt is $10,000 for example. And let’s say the minumum payment each month is only $50 more than the finance charge for that month.

        If you cut all items out of your budget and are able to put $100 additionally towards that debt, that means that only $150 is going towards your principle balance each month.

        At that rate you will only be able to get your snowball rolling (first debt paid off) after 5 years! Yikes!

        Then there are “unexpected” items to consider that might occur in those 5 years- like medical expenses. And if you don’t put them on the credit card, you will have to use either your emergency fund or dip into your $100 per month extra that you’re putting towards your debt. This can be a never-ending cycle.

        Taking on second jobs and/or a mom deciding to leave her SAHM position can really tear apart your family relationships so consider it carefully. I’ve seen it happen…

  16. I did the debt snowball from 2001-2004 & paid off $36,000. It was awesome, and I have told lots of other people about it, too. I was debt free except my mortgage – wonderful. Then I bought a car & paid it off in 2 years, too. It really is the best system out there, and such a rush when something is paid off that you have worked for. I did start making more money during that time, too, so I related to that part of your post – thanks!

  17. Love, love, love this post! This is a great, simple guide to getting out of debt. This is exactly what my husband and I are doing right now, and it is working! We are living simple, eliminating debts slowly but surely, and reaping the rewards of finally living responsibly. Oh, if we’d only had this information around 10 years ago!

    Thanks, S.M.!!!
    .-= Sarah´s last blog ..Free to be me =-.

  18. We’re snowballin’ these days and it has actually been fun! We started by attending a seminar in January where part of our “baseline” assignment was to calculate our net worth, and then recalculate it six months later. This weekend, we recalculated and found our net worth had increased by $30K! Bring on the snowflakes!

  19. This is a great post, even though currently its not applicable to me and my family. You see, aside from a student loan and the mortgage, we have no debt.

    However, we are adding an addition to our family in January, so we are currently making ‘payments’ toward that. Between the amount we pay ahead, and the ‘extra check’ we get one month (3 pay days instead of 2 like most months), we should walk away from the hospital owning our child free and clear.

    Sometimes people should remember to ‘snowball’ anticipated debt as well. (Though, in our case we are just decreasing the extra mortgage payments for the next few months.)
    .-= Rebecca´s last blog ..My Life, and how it should be =-.

    • Just think how much more you’d have once those school loans are paid off, though. I truly feel like many people hang on to college loans because the interest rates are low and because it’s easy to put them on forbearance. I know that’s what we did. :)

      Totally understand the need to save up for your family’s addition! We did that with our second, and it was so great not to owe a dime in medical bills. Way to go.

  20. I appreciate your list too but what tips do you have for us that are dealing with accurring medical debt. My medical treatments amount to around $3000 last month and my out of pocket prescriptions are over $600 a month. And yes, I have insurance.
    .-= Rona´s last blog ..Menu Plan Monday – August 10, 2009 =-.

    • I’d encourage you to listen to the Dave Ramsey Show, as he talks to people all the time in your situation. You could even call him and ask him yourself. Since I’ve never been in your shoes, I’d hate to give you “advice,” and make it sound like I know what I’m talking about. :) I’m honestly not sure what I’d do in your shoes (plus, I’m sure I’d need more of your background info and story to get the whole picture).

      HSAs are supposed to be a great way to save for medical expenses — maybe do some research on those.

      Either way, I hope you find some encouraging solutions!

  21. Great post! We are currently doing the Total Money Makeover and are almost debt -free. It is so exciting to see us putting so much effort into alleviating our monthly debt.
    I can’t wait to move to step 3.
    .-= Lisa´s last blog ..Staycation Weekend =-.

  22. We’re big Dave Ramsey fans over here. Following his philosophies helped pull us through my hubby’s 6 month layoff without going into debt. Of course, we’ve moved back a baby step or two, but it still feels attainable. We need to get gazelle intensive over here right abt now. I am so thankful for the simplicity of it all.
    .-= PS~Erin´s last blog ..Monday Meal Planning =-.

  23. This sounds awesome for those with mutiple debts. We’ve been lucky to not need to carry balances on credit cards, but constantly struggle with which of the “major” debts we should put any extra money (i.e. tax refund) toward. It would be so easy to write down and post a single list – duh. It’s the simple things we never think of!

    I’d like to add that a big part of this is then NOT PUTTING NEW PURCHASES on those paid off cards unless they purchase is part of your monthly budget and can be immediately paid off. Just cut them up. It’s seems like a good idea to sign up for that retail store credit card to “save 20%,” but just say no. It won’t be worth the $4 savings if you end up carrying a new debt! =)
    .-= Alissa´s last blog ..My Spidey and Me =-.

    • What are your major debts? Just curious.

      Also, I’ve heard Ramsey advocate not withholding so much as to receive a tax refund. It’s like loaning money, interest free, to the government. If you plan ahead, you could save that money each month that you’d normally send to the government. Just my $.02.

  24. We have been doing the debt snowball for almost a year and it feels like slower than snail speed. We won’t pay off our next debt for another year. We have sold everything I have permission to sell, some of hubby’s stuff is off limits, had a garage sale and the like. Now it feels hopeless again, it will take us 4 more years from now. I don’t know how people do it so quick. We have always lived by a budget, paid off our credit cards the first six months we were married, and never used them again. Our debt is a car, student loans, and the house is there, but I am not counting it. It can be so discouraging. I will say, we are adding little ones to feed, my husband is going back to school and we are paying as we go, no student loans, and I am able to only work weekends now so I can be home during the week and homeschool our children. My husband sometimes doesn’t see the point because it seems so unattainable and some days I feel the same way. We don’t have any touchable friends that live this way or live simply. And they seem pretty comfortable with life while we struggle to live the way we feel called to. Any encouragement?

    • Oh, be encouraged, Adriana! There are so many people in your shoes, living the life you’re choosing. It’s a bummer that they’re not touchable, I know, but know that you’re not alone.

      I’ll say that one of the reasons ours was “quick” was because we didn’t have much debt to begin with. It was extremely slow at first, but that’s because we weren’t really doing it right (this was before I had heard of Dave Ramsey). We weren’t gazelle intense, so we were kinda acting like we were waiting for magic to happen and for our numbers to magically get lower on their own.

      I’d also say that those people around you that seem to be comfortable — they might be, or they might not. If they’ve got debt to pay for their lifestyle, they’ve really got heavy chains around them, whether or not they’re conscious of them. And it may feel like your snowball is taking forever, but just think…. When you’re done, you’ll have no debt. None. You’ll be ahead of most Americans, since almost every one of us carries debt. You’ll be able to save money like crazy. I’m still shocked at how much we’re able to save now that we don’t have payments.

      And finally… Just remember that being responsible and a mature adult isn’t easy. It takes work and sacrifice. And sometimes it’s no fun. But it’s worth it. You can sleep at night with a clear conscience, and in the end, you’ll be freer than you imagined.

      Hang in there! :)

  25. we are looking to move to a country that will minimise our living costs to be able to save up and get out of debt. Its a bit of risk with a 9mnth old, but if we stay where we are staying now, we will always live on the verge of a crisis. I don’t think our lives at this stage bring much glory to God as all our effort goes into covering basic living expenses.

  26. My hubby and I stated the Dave Ramsey plan about 2 years ago and it has changed our lives! We were on a roll and paid off $25,000, but are now at a standstill since our income has decreased quite a bit due to the economy.
    This post has hit home again! It’s so tough, but I know we have to find a way to increase our income since we are already on a pretty tight budget.
    Gearing up for round 2, I know it will be worth it!
    .-= Tashia´s last blog ..Back to School Shopping Shouldn’t Leave You Broke =-.

  27. We bought the Dave Ramsey book after I read posts on your site about paying down debt. Even on one income and two kids it is encouraging that we can still see our debts decrease with some organizing and planning. Thanks for the post!
    .-= Ruthie´s last blog ..Homemade Dessert Party Menu =-.

  28. Great post, we all need a little reminder now and again. Debt can be so unforgiving!
    .-= Marilyn´s last blog ..Do You Need Extra Cash? =-.

  29. One thing that hasn’t been mentioned is going back to work (even if you are a SAHM) to pay down debt. I know that childcare is a concern, but if you truly are in a desperate situation, try finding a part-time job! Maybe you could take an evening part-time job, while your husband is at home with the kids. We utilized this strategy, and it was completely worth it. It was grueling, hard work, but now we are debt free. Be willing to think outside the box to bring in additional income.

  30. This post is simply great! This year, my husband and I canceled our credit cards and now buy either cash or use the charge card which we then pay in full at the end of the month. That helps us stay within the budget and also, put aside money in the savings account.
    .-= prerna´s last blog ..Being a Mom: Choosing Toys for Toddlers =-.

  31. Thank you for posting this! This is wonderful! I know some people this this could really help!
    .-= OllipopGoose´s last blog ..TAI (Think about it/Talk about it): You are so fake! =-.

  32. I wish I could say I didn’t have much experience with this…but I have found myself in debt several times and have really learned to notice how it makes me feel (not good…and really not worth whatever it is I am purchasing)
    I am diligent about calling the credit card companies to renegotiate my APR. Often if I explain (with kindness) that I would like to have the APR lowered, they will change it a bit. I’ve been surprised – having a 20% APR lowered to 8%!
    I know it’s cheesy – but when I email them – I include a picture of me and my son – and I write a short paragraph about how I am working hard as a single parent to be money wise and make my limited dollars go as far as I can. This helps remind them I am a real person – and I have had better luck with this and speaking from the heart. Last winter we had a nasty flu and I was late with some payments, crazy fees popped up like mushrooms and I was able to get them reversed explaining what had really happened, and telling a couple funny stories about watching too much Thomas and neighbors leaving ginger ale on the front porch b/c we couldn’t leave the house – and they reversed the fees.

  33. In your example Citibank card interest rate was much higher than The Gap card rate. Would you not apply all of the snowball to knock that debt out first?

  34. Sorry, I just saw your addendum at the end of your post. Yes, there are two ways to do it, but I think the best psychological boost of paying off your debt more quickly surpasses the method of paying lowest to highest debt and not addressing the interest rates.

  35. One thing Dave Ramsey said that I will never ever forget is “Today, you don’t deserve it.” Talking about going out to eat, going on that mini shopping day, and taking that last minute vacation. Basically, anything that appeals to our instantly gratifying desires. Saving money and paying debt is NOT instantly gratifying. That shocked me because I believe I can spend an extra few dollars here and there and it won’t matter, right? Wrong. Everything adds up and the numbers don’t lie. yikes. Thanks for sharing your thoughts and encouraging me to keep pressing on.

  36. We had attempted to do FPU (Financial Peace University) on our own, without the actual videos about a year ago, and I loved the envelope system, it helped us to see what we were spending money on, it was very eye opening. We have since fallen off the wagon and are now realizing how badly we want to do this 100%. I’ve also since found Pearbudget.com and fallen in love, it will make budgeting so much easier. Thanks for the very timely post, it was encouraging and gave me the nudge to discuss it again with my hubby!
    .-= Donna S´s last blog ..Party Planning – Big Top Circus! =-.

  37. good, simple advice…thanks for sharing!

  38. What a great post! I am forwarding it to my daughter. My darling hubby and I have been married 29 years and in the early 90’s I used the Mary Hunt version of “snowballing” to eliminate our debt. We have remained mostly debt-free except for our mortgage and a car payment. I have MS and it is progressing. Because we live below our income level, I was able to stop working and concentrate on getting through this difficult period. There IS freedom in living within your means :-)
    .-= Melodye Olsavsky´s last blog ..Happy (Almost) Birthday to Me =-.

  39. This is great. We took the DR course but my husband had a challenge with implementing since he is in sales and a constantly fluctuating income. So we are having to really work at our communication as the income changes. whew!! love your thesis site and will be reading more, and referring. thanks so much! I also love the snowflakes links!! thanks!
    .-= Sophia´s last blog ..Bear and Cougar =-.

  40. We listened to Dave Ramsey on an Audio Book and it was great. I love his voice, especially when he says, “Gazelle Intense!”
    .-= Marie {Make and Takes}´s last blog ..DIY Reusable Lunch Set for School =-.

  41. Thanks for these great tips! We are on this debt-free plan too…we basically decided we were done with buying STUFF we wanted to have $ for experiences (eg. travel). So far this year (by increasing revenue and decreasing expenses) we’ve paid off over $16,000 in school loan debt & one car loan. One car loan to go and then to tackle the mortgage! I love reading your financial posts, keep ‘em coming! Thanks Tsh!
    .-= LobotoME´s last blog ..{ summer fun } =-.

  42. Thank you for sharing. I liked the line “Channel your anger at the debt, not yourself”. We’re still working away, day by day. It’s always encouraging to read about those who have made it to the other side :)
    .-= Jenn @ Beautiful Calling´s last blog ..TUT: 10% Less of Me! =-.

  43. Thank you for this post. The things I could say about our debt journey! Whoa! But I’l leave it at thank you.
    .-= Christy B.´s last blog ..Children’s Prayer Club: Guinea-Bissau =-.

  44. avatar
    Nicole Siswick says:

    This is brilliant. I only wish I had come to it sooner. After successfully paying off a large portion of our debt a few years ago, we made some major life-changes that landed us back in the red. Very much looking forward to being in the black again!

    • I can definitely relate to this. We were riding high till the recession hit pretty much *right* after we decided to splurge for the first time in a while. Unfortunately, we are still working our way out of the hole; but making steady progress nonetheless!

  45. Thank you for this article! I feel inspired whenever I read your articles and this is an area where I often feel hopeless.

  46. Hi Tsh,
    I am a teacher and have 3 young children. Sending all 3 to daycare would be over 700 bucks a week. I’ve been tossing around the idea of working from home as a daycare provider after I read your positive views on working from home in your book, Organized Simplicity. But, my husband and I have school and car loans and a mortgage. Do you suggest making a career move amidst this debt? Could I reduce debt and also make this “simple living” move to working at home?

  47. This is a great post! I paid off all of my credit card & dental bills & my car a few years ago. It felt great! Last on my list was my student loan. I ended up taking a part time job that I LOVED (timing races) & threw ALL of the money I earned at that job at my student loan. I paid it off in a year! Just 3 months ago I made the last payment. I still have the part time job because I love it so much. I’ve started using that “extra” income that I never really had access to before, to start my handbound journal business! (www.reneweduponadream.etsy.com) I’m so excited about being able to invest this money in myself, without even missing it!

  48. assuming you cancel all credit cards once paid off?

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