Put yourselves on a tight budget. Figure out exactly how little you can live on, and budget for absolutely everything, a set amount, each month. Then, anything left over goes towards your debt. We have a lot of debt. Although we have 0 credit card debt, we've racked up a pretty substantial amount of school debt. Luckily, almost every bit of Joel's was paid for, but I went to private college for 2 years and then went a fifth year at ISU so that added up quickly.
The key to this system is to pay everything in cash. No credit cards, no nothing. Since you've budgeted exactly how much you are allowing yourself per month, you take that amount out in cash. Put it in envelopes, and when the money for that category is gone, you don't spend anymore that month. Anything left over at the end of the month in the envelopes gets added to the pot you pay on your debt. There's a specific order things go in:
Baby Step 1: Save $1,000 that you only use in the case of an emergency.
Baby Step 2: Everything extra goes towards your debt. Pay off the smallest amounts first. Once you've paid off one thing, use that money towards the next. Of course, you've got to keep paying the minimum on your other debts, but you add all the extra to one of them until it's gone, and so on and so forth. This is called the debt snowball. Within a couple months or many months, depending on the amount of debt, you will be debt free.
We're on Baby Step 2 right now. Today in the mail came 2 bills that I was very excited to get. I know, I know, it's ridiculous that I would be excited for a bill to come. But, I was excited to pay off our car and one of our measly student loan payments. Actually, I was ecstatic. I can't wait to write 2 checks and be rid of 2 of our monthly debt payments. Then, next month, we will have an extra 300, plus whatever is left over from our envelopes to put towards the next debt. See how fun that is? Ok, fun is open to interpretation, but c'mon.... we see that in the next 2-3 years, we'll be rid of a ton of debt, instead of spending the next 15-20 years paying off college.
And, because posts with no pictures are boring, here's a shot of the munchkin flashing a smile. That's right, we've got a smiler. And she's such a happy baby that I get to see this all the time!
We started doing this at the beginning of the year. It's such a great program. We were had almost everything paid off in no time! Then I got really busy with the baby and wedding and all and it kind of went on the back burner. After the new year, I really need to start doing this! I would use coupons like crazy at the store! I hope it works for you guys!
ReplyDelete