By Katie, Contributing Writer
Perhaps you’ve seen part 1 of Learning to Live Debt Free. (If not, check it out here.) To recap, my husband and I have begun the journey to financial freedom by paying off our debt. It’s been quite a journey but so far, it’s been completely worth it. So, in this part 2, I’ll give an update as far as where we are on our Debt Snowball and I’ll also share some of the practical ways we’ve cut corners, saved/made extra money, and the importance of it all.
Update on Our Journey
First of all, thank you so much for those who showed support and encouragement because of my last article! We were so blessed by many of you and excited to see that some of your are on the same path.
As of January, which marked the beginning of our journey to financial freedom, we hadn’t made much progress. We were still saving up for our $1000 emergency fund which seemed to take a lot longer than we expected. Well, Praise God, we have our emergency fund in place! But the blessings don’t end there. We are grateful that our tax return came when it did. It allowed us to pay a good chunk toward our debt. So we are on our way! After paying more with our tax return, we’ll use the minimum payments for those loans that we pay off and put that money toward the next one on our list. And the snowball keeps rolling!
It’s been amazing to see God use even the little things to show us and teach us how to use what He’s given us to plow through this debt.
So how did we get to this place? How did we go from just barely making our payments to paying extra on our debt every month?
Here are some practical tips that we took to whittle down these loans:
1) We set up a budget
I mentioned this in my original article but I think it’s worth mentioning again. Setting up a budget is absolutely key in any financial journey whether you have debt to pay or not. Telling our money where to go gave us so much freedom! I know it might seem restrictive to follow a budget, but it really isn’t. It’s actually quite the contrary. We now have freedom and power over our money.
2) We got some information and did some research
This really should have been number one on this practical to-do list, but I still think the budget is the most important component so it gets top billing. But this is key too. As I mentioned before, we started listening to Dave Ramsey’s radio show, we read The Total Money Makeover. Then we took some of the tips Dave suggested and applied them to our own situation. For example, Dave suggests that while you’re working on paying off your debt, you should reconsider contributing money to your 401K. So we decided that would be ok for our temporary situation. (I am not saying this step is right for everyone.
Please remember these tips are meant to help others see how to make changes in their own situation but it’s up to each person to decide what is right for their family.) We decided to do so because my husband’s job contributes to his 401K even without our contribution. Also, we decided on this because we are fairly young, we can temporarily stop paying on our 401K in order to pay off our debt.
3) Get/Stay Motivated
You don’t have to do this (and no, I’m not a Dave Ramsey affiliate in any way), but it really helped us. We signed up for a membership for our own My Total Money Makeover. This site is packed with information, tools, forms, and so much more. It’s definitely a great resource to have. The best part is that it connects directly with your smart phone or mobile device so you can update or consult your budget and such while you’re out and about.
Another way we stay motivated is by encouraging others and learning from others. We are thinking of starting a small group Bible study this summer with a few other couples from church in an effort to encourage them. And you know what they say: you learn more when you teach. We also want to surround ourselves with people who have the same goals and plans. While those people are few and far between, we do have a few friends who seek to do things the debt-free way.
4) Get creative in order to stick to the budget
We’ve had to make some sacrifices but over all, our experiences have taught us to be creative as well as disciplined when it comes to staying within our budget. We’ve been planning our meals (and sticking to them!), trying not to eat out as often, paying cash for purchases, and budgeting for expenses we know we’ll need down the road like clothes for the kids or birthday gifts. But sometimes, you really need to be creative when it comes to finances. We’ve been setting aside $100 a week for groceries for our family of 5 and while that is challenging, God always provides.
We try to eat a whole foods, healthy diet so not buying as much junk food helps out immensely. We do salads, soups, one piece of large meat (like a whole chicken) a week, I make homemade broth and we buy rice to put in our soup. We also buy quite a bit in bulk. And like I said, I plan meals in advance and we value our meal times together. This is just one way we’re creative in saving money.
5) Knock it out!
Be aggressive. B-E aggressive. Seriously. The only way to knock out the debt is to be aggressive and passionate about getting it paid off. I took on some babysitting, my husband did some extra odds and ends for a little pay. We are now big proponents of yard sales. Every little bit that we can spare we try to put toward paying off our debt. We aren’t always successful and wise with our choices, but we are trying! Working hard at this one goal will ultimately bring us closer together as a couple and we will also have the opportunity to teach our children the same principles so they might not end up in the same situation down the road.
I’d love to hear about your debt free journeys! Please share with me in the comments.