How I Attacked our Debt As A Middle American Working Mom
My enthusiasm for personal finance and becoming debt free came about when I started seeing Dave Ramsey reels on the internet. Now I did not follow Dave Ramsey’s plans exactly because in my opinion his methods are a little extreme and one small life event like a home repair or a new set of tires could put you right back to using that credit card.
It started with multiple student loans that were not setup optimally and a car loan. I really wanted to get those reoccurring payments out of the way to start keeping more money in my pocket. I first decided I would change my payments to biweekly, effectively making an extra payment a year. After a month or two I realized my savings had gone down and I could not figure out why. I hadn’t decreased my work hours at all. No other expenses had cropped up to explain the drop. Well… I accidentally scheduled to make a full payment twice per month. After checking how much I now owed I realized wow I could really get out of debt fast if I can keep this up but making half your monthly payment every 2 weeks is much more manageable in the long run. Debt can feel overwhelming, but with a plan and some commitment you regain control of your finances. These are my best how to get out of debt tips:
1. Assess Your Debt Situation
- Make a budget and stick to it. List all your monthly expenses and income, subtract those expenses from income to determine your available funds. Don’t forget those pesky ones that don’t reoccur every month. If there aren’t enough funds, you will have to brainstorm some ways to cut expenses or increase your income. The latter doesn’t always mean career change or side hustle. Sometimes it’s just a yard sale or consigning old clothes.
*If you need ideas on how to cut your expenses, see my How to Reduce Expenses post.
If you need help creating a budget there are lots of apps you can use. There is even an IPhone app titled Numbers that can be used. However, I like to use spreadsheets.
Why a Spreadsheet (Not an App)?
Apps are fine — until you hit a paywall, lose your data, or realize they’re tracking everything you do and the adds feel like an attack. A spreadsheet gives you full control. No subscriptions. No distractions. Just clear, customizable formats that show you the big picture at a glance.
Our Budget Spreadsheet is built in Excel, and unique in the way that it allows you to see your running total of savings. I find that helps to keep me motivated, it gives me a goal.
2. Prioritize Your Debt
- I used the Snowball method, which means targeting your smallest debt first. That was easier for me to do and kept me motivated. Once the smallest debt is closed move to your new smallest debt. Hopefully, you can get to a point where your smallest debt is a mortgage and tackle that the same as all the others.
3. Increase Your Income
- Consider ways to boost your income. Pick up a side job, an extra shift, start pet sitting, sell some of your unused stuff, take that cool thing you made for yourself and see if somebody would buy it. You can make yourself another later.
- If you are work in a field that has high demand for workers, maybe you could pick up an extra shift once per month. Commit to making that extra shift income an extra one time payment to your debt. This is how I did it! And before I knew it I had knocked out all my student loans and my car payment.
4. Negotiate with Creditors
- I did not do this at the time and I am not completely positive if this effects your credit score or not but I do know it is possible to contact your creditors and attempt to renegotiate lower interest rates and potentially negotiate a settlement. If you have experience or exposure to this, feel free to drop a comment below.
5. Stay Committed
- Debt payoff takes considerable commitment, especially if you have a lot.
- Avoid accumulating new debt (so easy, I know…). I just mean disciplined spending. Do you really need spurs for your cowgirl Halloween costume?
- Avoid opening new credit accounts, use cash or debit cards for transactions. Put your credit cards in a hard to reach location making them more difficult to utilize.
* A note about credit card rewards: Yes, credit card rewards are great and can be useful but only if you have the right mindset and only use when you know you have the funds to pay off the statement balance. It’s best to tackle your existing debt before switching to this tactic.
*This post contains affiliate links. This means that if you click on one of the links and make a purchase, I may receive a small commission at no extra cost to you. I only recommend products or services that I genuinely believe will add value to my readers.
- I found reading finance books helped to keep me motivated so here are my Top 3 books about Finance:
a. The Total Money Makeover Workbook Updated: The Essential Companion for Applying the Book’s Principles: Ramsey, Dave: 9781400350858: Amazon.com: Books
b. The Millionaire Next Door: The Surprising Secrets of America's Wealthy: Stanley Ph.D., Thomas J., Danko Ph.D, William D., Fallaw Ph.D, Sarah Stanley: 9781630762506: Amazon.com: Books
c. The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life: Collins, J L: 9798893310474: Amazon.com: Books
Getting out of debt takes, time, work and discipline. By following these steps, you can achieve financial freedom too and build a good safety net.
