Tips to Stay the Course and Pay off that Debt – Part 1

by Erin, The $5 Dinner Mom on January 19, 2010

I’d like to introduce you to my friend Jolyn from Budgets are the New Black!  She is wise. She is funny. She is honest. She is transparent.  And she’s got a few tips for anyone who is dealing with debt!

Over the years, my husband and I have borrowed money, paid it off, reached for the credit card, paid it off, taken out a loan, made payment after payment, paid it off… Sound familiar?

Something was always “coming up” that we never had cash for, and it was usually a move! We have been married 15 years and have moved some 11 times. We never felt like we could get ahead because we were always just trying to keep up.

Last Spring I discovered Dave Ramsey’s book, The Total Money Makeover, and it hit me: We don’t have to live like this! We can control our finances! We don’t have to reach for our credit card when those unexpected expenses come up!

The first step was to get rid of our current (non-mortgage) debt. We are eight months into paying off $19,375.72. True to (our) form, we had acquired this debt just since our last move in August 2007: We had just moved from overseas and needed a family car; we bought a house that needed new windows, new countertops… You get the idea. We are now on the home stretch to paying off that consumer debt, and here are some things I’ve learned that have helped us stay the course.

Write It Down!

I can’t emphasize this enough. I’m not going to talk here about writing out a budget — which, yes, you should do. I’m saying keep a running tally of your total debt. Show me the numbers. Write them out by hand and post them on your refrigerator. Use colorful crayons if you like. Type them out and send it to yourself in an email every day. (To your spouse, too.) If nothing else, posting these numbers in a prominent place will make a great conversation-starter the next time someone stops by. In my opinion, our society would greatly benefit if more of us shared our financial strides and struggles with each other.

Do what works for you, but find a way to remind yourself daily of your debt-free goal. It doesn’t hurt to catch a glimpse of where you started from, either.

Make it Scary

This means different things for different people. For me, putting our retirement contributions on hold while we tackled our snowball was scary: after all, we can’t get this time back! We also drew down our regular savings account to just $1000 and immediately put the rest toward our snow ball. I’m using that fear to motivate me to stay the course and to reach our goal as quickly as possible, speed bumps and all.

Now some of you are undoubtedly saying, “Savings account? $1000? I don’t even have $10!”

Then you are coming from a different place, and that is okay. For some people, it is scary to set money aside where it isn’t “doing” anything! But trust me, for others that money is playing a very important role in making us feel secure. If a true emergency comes up — if our car breaks down, say — we can dip into that savings instead of reaching for a credit card.  Once the emergency has passed we can bulk that savings up to $1000 again and resume our snowball, but at least we haven’t added anything to it in the meantime.

Keep Track of Your Spending

This is unavoidable, sorry. And a no-brainer — but undoubtedly the hardest thing to do. It’s much easier to stick your head in the sand.

The thing is, becoming and staying debt-free is more about how we spend our money than about how we save it. The only way to assess where your money is going is to, well, know where your money is going.

Many personal money management software options are out there. I personally use mint.com, a free online money management program. I also keep a separate running total of all debts, credits, and daily transactions on a tally sheet I created on a simple word pad. It’s been trial and error, and that’s the point — the only way you’ll figure out what system works for you is to get started.

The important thing is to keep up with it. The easiest way is to review and update it every (business) day. Once you have a system it literally takes less than five minutes. How much time do you spend checking your email? or on Twitter? or facebook? (Ahem) It may take up to three weeks to make this a habit, but once you do it will revolutionize your financial life.

PART 2 – Spouses, Baby Steps, Horses and more…Stay Tuned…Coming Next Week!

Jolyn recounts her family’s financial strides and struggles over at Budgets are the New Black where she chronicles their journey to live a “debt-free, credit-free, clutter-free life (one day at a time).” Currently, they’re focusing on the debt-free part.

Jolyn has one Air Force husband and three well-traveled children. They currently make their home in Ohio.

Photo Credit: Kath Walker Illustration

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