Debt

Guys, you all have me so excited about this. I was already over the moon about making some changes in my house but seeing you guys have the same issues and goals is making me realize how important it is to talk about this and hopefully get us all on the right track.

Cory and I spent a lot of energy last year paying off our debts. We got well over 10k handled last year and now that I am officially not dumping a ton of money on items that aren't necessities, I know we can completely close the lid on our debts soon! Which has me absolutely giddy.

You probably have thought about wanting to pay off debts (if you're already debt-free, give yourself a pat on the back for being awesome!) but you probably don't realize how much it weighs on you. You also probably don't realize how much having clutter and stuff in your house can weigh on you. It isn't until you lighten the load that you realize how hard it was to carry. That's why I encourage you to look at your surroundings at home and start to get rid of things you don't need. It's a huge step towards seeing where your money goes and it allows you to feel the air around you actually being lighter. I know that sounds crazy, but I swear it's true.

Okay, back to debts. When it comes to focusing on paying off your debts, step one is to make a budget. Do it. You may not think you need to, but I swear you do. Write it all down. All of your bills, include money you spend on gas, groceries, haircuts, birthday gifts you will buy for people, etc. Then add up all your income.

The result will either be: A- you will see that you don't have enough to cover these or barely enough to cover it all comfortably. Or B - you will see that you *should* have enough left each month to start paying off debts.

If you are an A- Sorry, this sucks. But you are in a tough spot right now. This should be eye-opening that you really shouldn't be buying extras.  It doesn't mean you need to feel discouraged. It means you need to get started! You are likely living beyond your means right now. If you are putting things on credit...STOP. Stop it. Right now. Cut them up. If you can't afford it, don't buy it. This goes for everything. Starbucks, birthday gifts, all of it. It will suck for right now, but your goal is to payoff debt, and you need all your pennies for that.

We used to be an A. When Cory and I both got out of college, we had a ton of debt and weren't making much because we lacked experience. We had two large car payments of cars that we had bought years before, quite a few credit cards and two large student loans. We were living like we had a lot, though. We put everything we wanted on credit. We have always had very good credit scores so we always got a high credit limit and that just spells trouble if you are an A.

If you're a B - good for you! This should be easy! All you need to do now is figure out where all that extra money is going each month. If after your budget, you are supposed to have $500 a month left, and you don't...you need to take a good look at where that money ends up. You might be surprised at how much a trip to Target, a few coffees a week, and that new graphic tee added up to. That money needs to start going to your debts.

Cut the E X C E S S

Some tips about paying off debts and saving money:

• Cancel stuff. If you have a gym membership, tanning package, etc...Cancel them. You shouldn't be tanning anyway :) And if you have a gym membership you don't use, cancel it. If you use it, then keep it. But it's one or the other. Use it or lose it. If you subscribe to a service like Ipsy, let that go. I know it's only $10/month but do you really use those samples? Or are they sitting somewhere right now, unused? It's adding to your debt and your clutter! 
• Think of each purchase or membership cost as hours worked. It's not just money you're spending on things you don't need, you are literally exchanging hours of your life to make that money. You are paying for that coffee with hours of your life. 
• Cut cable. You don't need it. That time could be better spent anyway. Cable is completely unnecessary, no matter what you say to try to convince me otherwise. 
• Call companies to see what they can do to help. I called Sprint because we were paying for an "unlimited" plan but I noticed how little we were actually using. They were able to change my plan and lower my cost by $25/mo without resigning my contract. It's not much, but if you do this with a few things, it will add up! Call your internet provider, tell them you are looking at cancelling to save money, they will likely have a promotion they can add to your account to lessen the cost. 
• Be honest with yourself. It does you ZERO good to pretend like your Starbucks habit isn't part of the problem. You can live without Starbucks. And $5 for a cup of joe is crazy, in my opinion. 
• Sell stuff. I have mentioned this before. But do it. If you are de-cluttering, this is a double good idea! Clear your home and pay off debt at the same time! Sell on ebay, Craigslist, have a garage sale...and put it all towards a debt. DO NOT BUY MORE STUFF with that money!
• Stop eating out! Go to the store, buy enough fruits, veggies and meats to eat for the week. You will spend $60 for the whole week rather than $20+/day to eat fast food. You'll lose weight and be healthier. TRIPLE WIN!
• With credit cards, always pay more than the minimum monthly payment. Double it, if you can. 

Look up Dave Ramsey. You don't have to buy his books or pay for one of his classes to figure out the gist of his program. He can get a little extreme. He talks about eating rice everyday or getting a second job delivering pizzas. Some of his ideas just aren't as feasible when you have kids or other obligations. But if you can do those things to quicken the process, good for you! If you can't, then you need to really kick it into high gear with making sacrifices. I know it doesn't sound fun, but you'll love the result. 

The only thing I really disagree with Ramsey is the order to pay off debts. He says to use the "snowball" effect and I do that too, to some extent. But I think it depends on your personality, if you need to see that first debt paid off ASAP to keep motivation, then do it that way. Personally, I like to pay toward the highest interest loan first. I think of it as money in my pocket by paying a chunk to those loans first. Example : when Cory washed his iPhone, we had to buy a new one from Best Buy, which is interest free. It is our smallest debt, but I still pay bigger debts off faster that have higher interest. I could have easily paid Best Buy off by now, but my focus is the school loans, I want them GONE! But do it however you want. You can't go wrong if you are working toward these goals. 

I will have more on this soon but I have a teething baby on my hands!

Thanks for reading!