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Debt free? Time for a massive change.
2016 was an eye opening year for me. I have been married since 2006, a mom since 2008 and just now am realizing so many things I could have done differently, especially with money. By May 2016, I had accumulated around $50,000 worth of debt, including the car loan. I decided that I was going to join all the success stories I’d heard of becoming “debt free”.
Well, first of all, the will to be debt free is great but you do need an actual plan. I didn’t have that until the following July. I started out on the wrong foot and because of that, my progress has been slower than I had hoped.
Luckily for you, I’m here to share with you what not to do if you’re like me and are wanting to get out of a pile of debt.
Things I did wrong:
- Did not have $1,000 in savings.
- Started trying to save too much each paycheck to reach a target goal, which led to feelings of failure.
- Starting without savings makes it impossible to avoid putting MORE debt on credit cards.
- Didn’t do much research on proven strategies, thought I could just dive right in with willpower. Didn’t know about the “debt snowball” method.
I have found Dave Ramsey’s snowball debt payoff plan to be the one that fits my situation the best, so I’m on the 7 Baby Step program. It has been hard to juggle since I started off wrong, I am trying to make it work though and feel confident I’ll get there. I’ve had a few things derail me since the start but now that I have a clear program to follow, I’m definitely on the right track.
Somehow when I started this debt free journey, I missed the first baby step of that $1,000 savings. I’d read some about the snowball method but didn’t find my way to Dave Ramsey’s site until later. And of course that turned into me putting more debt on my credit card just to buy groceries or gas. How can you pay down debt if you keep racking it up? You can’t.
So now that I’m on the program, I’m really looking forward to sharing this journey with you and hope I can inspire you to reach your debt free goals. I did manage to pay off one credit card before I got a little “stuck”, so all is not lost!
If you’re looking for a big change with your money habits, Dave Ramsey has a lot of great tips and I love his story.
Why and how did I accumulate all this debt?
The why part is an easy but laughable reason. I simply thought that carrying credit card debt and always having a car payment, etc. were normal and everyone did that. Because I had a great credit score and found getting loans a breeze, I pretty much had peace of mind that I could get money for anything I needed.
That turned into a “Just put it on the card, I’ll never pay it off anyway” kind of thinking. I still remember getting my first credit card offer and seeing the $10,000 limit. I was a newlywed and very young (although responsible) and I will never forget thinking, “Woah, I’ll never use that much credit!”
Yeah, right. Fast forward 10 years and that huge limit is part of why I’m here sharing this story with you.
I will say that I never used a card frivolously. I’m not a big impulse buyer or splurge on myself kind of girl. This happened because I was not ready to juggle debt and my income never increased enough to allow it by the time I had racked up quite a bit. If you make $600,000 a year, yeah you can probably hope to pay off a measly $10,000. Me? I don’t have that kind of income, so add that card in with lots of other things that pile up on you over the years and you’ve got one serious problem.
How did this happen?
I think it boils down to a lot of choices I made that probably weren’t the best. Never getting on a real savings plan, using a card to buy things quickly instead of waiting to save up the cash, always using a card instead of a closed ended loan, just to name a few.
I remember when I got my first new dining set, I put it on the same credit card I have now instead of financing it through the furniture store. It would have been paid off (probably interest free) in I think 24 months. This option works better to me than credit cards. They are such a temptation that I don’t really want in my life. I still want loans to be a last resort though, ideally saving for what you need/want should be tried before running to the bank.
Another factor in all this is we are and have been for a while, a one income family. My husband works himself ragged to support us and unfortunately it took a massive pay cut for me to really get serious about losing this debt. If I had known this a long time ago, I could have used so much more of that money to pay down the debt and save.
That’s why I find this to be critical now, it’s not okay to just “carry” around debt. It suffocates you and limits what you can accomplish for the future. I wasted so much of that bigger paycheck and I’m here to tell you, you will never regret becoming debt free no matter how large your bank account is. Imagine being able to pay cash for anything and being able to give away more money, more frequently.
What changed inside me to break the cycle?
It was a combination of living on very little for about a year and being tired of never making ends meet after I had become used to just buying whatever I needed, no questions asked. Another reason was that my husband and I had a real talk about our future. Starting a business and getting out of his current job became the big motivator for me.
I invite you to join me on this journey to financial freedom and maybe one day I can show you a debt report that shows zero.
Okay, not maybe, definitely.
I have also started monthly debt reports to keep up with my progress.