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March 21, 2018 · Leave a Comment

9 Simple Steps To Pay Off Debt

This post may contain affiliate links for your convenience.
Click here to read my disclosure policy.

Budget· Budget Tips· Debt Free· Debt Free Tips

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Does this sound familiar? You work hard at a job that you don’t particularly enjoy for a paycheck.  When that check comes, you have to dish that money back out to pay for your car, your house, your credit cards, and so on.  You feel like you’re barely making it month to month, and you just wish you had more money.

If that sounds familiar, then you’re in the right place!

9 Simple Steps to Pay Off Debt

 

Four years ago, we had our wake up call.  It came when our monthly budget was stretched to the max, and we had some orthodontic bills for Bookworm coming up.  Like I was able to pull an extra $100 a month from thin air.

I tried cutting back from our grocery budget; it was the only place we could control as most of our money went to paying off credit cards, our car loan, student loans and the rest of our monthly bills.  I can still remember the day I came home from a “stock up on the basics” grocery run, something that should have been a really low bill, and going over the new budget.  Can we talk about how defeating and frustrating it felt?

And let’s not forget stressful. I remember the sleepless nights, wondering how we were going to come up with more money, and not spend a fortune on moving to a new house, new daycare costs, new car costs, and so on, and not go further broke in the process.

I can remember having panic attacks about money too. Being so worried about money that when you can sleep, money is literally haunting your dreams.

I can tell you that more money didn’t solve our problem.  As a matter of fact, over the last four years, Hubs is making a little more, and yet we’re in a more comfortable place financially.  The sole reason is that we’ve paid off and closed some accounts, freeing up money to put towards more debts and family related things that we feel is important.

As of the writing of this post, we’ve gotten rid of $83,364.15 in debt.  In that amount is:

  • Paid off a car
  • Paid off a private student loan
  • Ended a lease on a trumpet
  • Paid off 3 credit cards

2020 Update

We have paid off over $121,550.14 in debt now!  You can grab your copy of the budget workbook I use to help us get laser-focused on our budget and pay off our debt here!

 

Here’s the steps we’ve followed so far on our journey to becoming debt free:

1 – Determine your why.

Why do you want to be debt free?  Resist the temptation to skip this… you’ll want to refer to this later on.  Your why is what will give you encouragement and motivation through the tough times, through the moments when you want to, and sometimes do, fall back on old habits.  So let me repeat… do not skip this.

For us, our why is because we want to stop the cycle of being paycheck dependent.  We want to be able to travel and not worry about how much it’s going to cost us.  I want to be able to take that vacation with my kids and not worry about how I’m pulling from money that’s going to bills to cover some things they want to do while on vacation.  We want to be able to have money in the bank for car repairs and other issues that come up.

But most importantly, we do not want to continue owing someone else money.

So what’s your why?  Write it down.

2 – Get on a budget

Even though we’re paid once a month, I still prefer to set up my budget by the week.  I personally love using the You Need A Budget* method.  It helps you get to the root of your financial priorities and commitments, and in turn, simplifies your budget.

I use my zero based budgeting worksheet and a Happy Planner Budget Planner*, and go a week at a time.  I start with our income for the week, take off what we need to put aside for savings, as well as what bills are due.  Then I use what’s remaining from the check for our grocery and fuel budget for the week.  What ever is left over I pay towards our current debt that’s in our snowball.

YNAB’s online budgeting software* makes it super easy to start your budget, and even start fresh if you need to!  It does come at a cost of $84 per year, but in my opinion, it’s well worth it!  If you’d like to try their method, you can get a free month of YNAB by signing up here*.

For more on how I set up our budget, you can check out my YouTube Channel where I post monthly budget setups and weekly budget with me’s.

3 – Get current

We didn’t have this issue, but I know it exists. I know some people who proclaim themselves as the king of balancing what bill could be paid that month and what bill could wait for another month or so.  It’s not for me.  I’ve always preferred all the bills be paid in full for the month.

If you don’t have enough money to get current, start looking at places you can cut expenses. Some ideas include:

  • reducing, or pausing retirement contributions
  • reducing grocery spending
  • cutting out unnecessary expenses like date nights, sunday brunch, alcohol, gym memberships, monthly subscriptions, etc.
  • cutting out cable or satellite TV

4 – Build up a small emergency fund.

If you make less than $20,000 per year, a $500 emergency fund should do it.  If you make more than $20,000 per year, a $1000 emergency fund.  The basis of this is that if you have an emergency arise, such as your water heater busted and needs repairs or replaced, or you got into a car accident and need to cover the deductible, you have the money in your emergency fund.

An emergency fund helps to make sure that you do NOT have to put the cost of repairs and replacements on a credit card, adding to your debt. The point here is to get out of debt, not remain in it.

5 – Control your spending

I was almost going to leave this out, but I think it needs reiterated because we’re only human.  It’s easy to get caught up in what is the latest and greatest, and what you want now.  But I’m asking you to not.  From experience, it’s very easy to revert back to old spending habits, which will result in taking longer to get out of debt.

There is also the possibility that you may not get out of debt at all.

When you slip back into old spending habits, don’t be too hard on yourself.  Remember… we’re all human.  Just revert back to your why, and start back where you left off.

6 – Write out all your debts.

This is where it can get a little scary, but remember your why.

I want you to write down everything.  Yes, everything.  Get all the ugly out.  Write the company you owe, how much you owe them, and what for.

I suggest doing a dive into your credit report as well. With the security breaches that have been happening lately, it’s never a bad thing to see if everything on your report is for you. If something on your report seems out of place, you can always contact that company and look into it further.

7 – Determine how you want to pay your debts off

Most people go with the debt snowball method of paying, while others choose to do the avalanche method.  You can read my post about the differences between the two methods.  Us personally, we’re using a mix of the two.

Whichever way you decide to pay off your debt, you need a plan and order of attack.  It will help keep you motivated.

8 – Start putting all the money you can at your first debt

It doesn’t matter the amount, whether it’s $2 or $200, put it towards that debt to get it paid off and out of the way.  Any more money that you can spare towards your debt is perfectly fine.

At the beginning of our journey, we were splitting a $500 minimum payment between three different credit cards.  It was all we could afford at the time.

9 – Continue paying your debts off in your determined order

Once you get your first debt paid off, take the money you were paying towards that debt and add it to the minimum payment on the second debt. Continue with that payment method until all debts are paid off.

Those three cards we were paying to initially?  Once we got them paid off, that was $500 we were able to send to our next debt in line.

 

That’s it – 9 simple steps to becoming debt free!  It definitely won’t happen overnight, but the habits that you create while on your debt free journey will help you in the long run.

9 Simple Steps To Pay Off Debt

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makingcentsmatter

makingcentsmatter
Only you can determine what your financial goals a Only you can determine what your financial goals are. If that means you're adding money to your savings account, or contributing to your retirement, while you are paying off debt, then so be it!⁠
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Do what looks right for you and your personal finances.⁠
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The trick to meal planning is to make it predictab The trick to meal planning is to make it predictable. But predictable doesn't mean the same thing week to week. You could have a chicken meal, a soup meal, a pasta meal, a leftovers meal, a family favorite meal, and so on.⁠
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We always try to go with themed days, but some weeks are so hectic the theme is literally "fast". Thankfully that hasn't been the case lately.⁠
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I can only hear about my extended warranty I never I can only hear about my extended warranty I never purchased so many times. 😣⁠
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March Debt Paid numbers are in!⁠ .⁠ House: $51 March Debt Paid numbers are in!⁠
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House: $511.13⁠
Citi: $0 – this has a residual $3 in interest charges since payoff, due in April⁠
D NelNet: $100⁠
K NelNet: $100⁠
K Chase: $600⁠
Explorer: $336.27⁠
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Total Paid in 2021: $8,258.84⁠
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Extra Payment: There isn’t one this month since we were $25 away from zeroing out the budget for our February 15th monthly paycheck. That $25, and monies left from our January 15th paycheck, covered our OOP costs for Hubs’ filling. We also have some savings goals coming up that need to be met, making our debt payments a little lower for the time begin.⁠
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The battle for who can charge what tonight is abou The battle for who can charge what tonight is about to begin. 😬⁠
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My kids run off with my charger, plug it into one outlet 5 feet from where they found it like that particular outlet is the only one in this house, and then proceed to fight over who can charge their device first at night.⁠
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Then they get grumpy when it's their turn and it's not the proper input cable. #itwasmychargerfirst #dontlikeitgofindyourown⁠
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A needs his wisdom teeth taken out. I've talked a A needs his wisdom teeth taken out. I've talked a bit in our February Budget Check-In about how much of this I think we'll owe, and you can check that out on my YouTube channel if you're interested, but I wanted to say here...⁠
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To the mother with little kids struggling to get your finances in order, it will get better. I wish I could have heard those words years ago.⁠
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Nearly 10 years ago we were facing a $1,400 out-of-pocket portion for A's Phase 1 orthodontic work (I looked it up after I uploaded the video... we had a $1,400 portion).⁠
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It was a lot of money for us at the time. Our kids were 6, 2, and 3 months old. I don't think we even had $500 in savings, and I just left a part-time teaching job because it wasn't paying the part-time daycare bill, so paying our portion in full was just a dream I didn't think was achievable.⁠
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I was even stressing about the monthly $100 payments. We were so strapped. It was our breaking moment to start cutting costs and budgeting more effectively. We've learned a lot in that time period.⁠
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What we've learned is that it does no good to stress about it all the time. Life happens. All you can do is try to plan ahead, and if it's something that's unplanned, readjust. It won't always be easy, especially at first, but it will be worth it.⁠
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Nearly 10 years later, we are still paying off our debts. Student loans suck. But I see this bill as a reminder of how far we have come. Seeing a bill like this doesn't stress me out like it used to, and I know we can easily create a plan that can get it done and out of the way.⁠
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Will it delay our debt-free date more? Yes. But it's not worth stressing over. Life happens, readjust, and continue on down the path. It's called a journey for a reason.⁠
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It's almost payday! Here's how our variable budget It's almost payday! Here's how our variable budgeting categories are working out for the pay month.⁠
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Food is looking good this far into our paycheck, probably because miscellaneous - which includes eating out - took a hit with unexpected purchases. Pet is low for this time of the month, and Household is spot on.⁠
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Fuel looks like it'll be lower than last month (yay for weeks of snow days & delayed school starts), and Therapy had one more appointment than initially planned.⁠
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Garden, Dental, Medical & Propane are not included in these estimates so far because those expenses are coming from sinking funds. Once we're done with the month and review the budget, I'll move over the total amount spent from those sinking funds.⁠
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How's your paycheck budget coming along?⁠
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Automating your finances makes saving money and bu Automating your finances makes saving money and budgeting more convenient, and therefore easier on you. Out of sight, out of mind, right?⁠
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What's one thing you can automate this week to make your finances easier?⁠
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Me? I'm going to set up our sinking fund transfers to automate every payday (the 15th of every month). Our bank set up a feature on their app where we can schedule savings transfers now, and I'm going to take advantage of it!⁠
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#personalfinance #personalfinancetips #budgeting #budgettips #personalfinancemadeeasy #savingmoney #savings #sinkingfunds #cash #frugalblogger #frugalmom #frugalliving #debtfreejourney #debtfreecommunity #debtfreeprogess #financialfreedom #makingcentsmatter
Oh my word... our miscellaneous category has gone Oh my word... our miscellaneous category has gone a smidgen overboard this month!⁠
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I foresee a goal for March's paycheck to at out less than twice. That's where this category went awry. $99.16 of it went to eating out. 😑 Some of it was avoidable, but not all of it. Having to drive to multiple appointments in one day during snow squalls and rearranging our whole day was one of those unavoidable instances.⁠
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Tracking our expenses - much like a budget review - is vital to sticking to your budget!⁠
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#makingcentsmatter #debt #debtfreejourney #debtfreeprogress #debtfreecommunity #realbudget #budgetcategories #monthlyincome #savingmoney #savings #frugalliving #frugalblogging #budgeting #zerobasedbudget #financialgoals #personalfinance #personalfinancetips #financialfreedom #expensetracking #budgetfail
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