In today’s guest post we’re hearing from Ashley of Budgets Made Easy. She’s going to show you how she paid of $45,000 in 17 months and give you 5 debt payoff tips that will help you become debt free too!
5 DEBT PAYOFF TIPS FROM A MOM THAT PAID OFF $45,000 IN 17 MONTHS
Most families in America are living paycheck to paycheck and could not cover a $400 emergency.
It’s hard when you are in that cycle to know how to stop living paycheck to paycheck.
But it is possible with a plan and the mindset that you can do it.
I was able to pay off $45,000 in 17 months by being intentional with my money and these tips.
My journey to financial freedom began in 2014.
My husband and I were high school sweethearts and now have 3 children.
At the time that our mindset around money changed, we had just bought and remodeled our dream home. I had just had our second child and returned to work as a detective for a local police department.
We thought we were doing well financially. We had great credit scores and not “a lot” of debt. And we always paid extra on the debt we did have and paid things off early.
Plus, we had money in savings and made it automatic so we paid ourselves first.
Then one day, I came home to find out my husband had lost his job. He was the bread winner and had been with his employer for 7 years. This was completely unexpected.
I couldn’t pay all of our bills on just my salary. We needed his income to pay the mortgage.
Thankfully, we had savings and he received a severance package while he looked for another job. So, I knew we would be okay for a few months while he looked for a job.
Then we received a letter about a 401(k) loan he had. We had 60 days to payback $20,000 that was already spend on a home renovation!
We couldn’t pay it back so it counted as a withdraw when we did our taxes in 2015.
This cost us over $10,000. We should have received a refund around $4,000 but we ended up owing over $6000!
I didn’t know how we would pay it so, I decided to put it on a zero-percent interest credit card for 18 months.
When the credit card bill came in the following month, I realized that I didn’t know how I would pay it off in 18 months before interest accrued. It was that moment that changed our lives forever.
I started searching for debt pay off plans and came across Dave Ramsey and the debt snowball. I ordered The Total Money Makeover and binge read it in 2 days.
I was hooked from the moment I read it.
I got to work on adjusting my budget to a zero-based budget and cutting expenses. It was once I did those things that I realized we had more money each month than I even realized.
We were mindlessly spending our money after all the bills were paid and had no idea where it was going.
The great thing about a zero-based budget is that it allows you to be intentional with every single dollar. This means that you are able to reach your goals so much faster.
It helps you plan for all those things that seem to pop-up out of nowhere that you were should have planned for but you forgot.
It also lets you visually see how much money you really have for your goals, like saving or paying off debt. I didn’t know how I would pay off $6000 in 18 months but once I planned every dollar, I was able to see that I could actually do it.
The faster we paid off debt, the faster we wanted to pay it off. We started selling everything we could. I literally sold my house decor and lamps. It looked like I just moved in!
We sold a trailer and 4-wheeler and cut every expense we could.
We beat our original debt-free date by a year! Not only did I get that one credit card paid off before the 18 months were up, we paid off all our debt (except the mortgage) in 17 months!
It’s amazing what you can do when you are intentional and have a plan.
Here are some debt payoff tips to help you get out of debt fast.
1. Make a Budget
This is the most important step you can do with your money. It’s also important to plan every dollar in your budget and not just have money left over to spend on whatever.
It is important to remember those little things that don’t come up every month, like birthdays, Christmas, school supplies, clothing and things like that. You still have to plan for them in your budget.
Once you plan for all those things, anything left goes toward your financial goals. Those goals could be saving your emergency fund or paying off debt.
2. Sell Everything
One of the best ways to speed up paying off debt is to start selling everything you can.
This may even include your car which could knock out a ton of debt at once.
Have a yard sale to get rid of all your clutter taking up your house.
3. Cut Expenses
Find simple ways to lower your expenses like your cable and phone bills. You can even use companies and bots to do it for you! It’s so easy to save money on your bills every month.
You can even do a no-spend challenge to help you reset your budget and save money. A no spend challenge is great to reign in impulse spending and stick to your budget.
- Read: 3 Tips to cut your Electric Bill in Half
- Read: 6 Things to cut from your budget when there’s nothing left to cut
4. Use the Debt Snowball
The debt snowball is effective because it gives you a quick win. You pay off your debts from smallest to largest. So, you should be able to pay off your smallest debt relatively fast which helps motivate you to keep going.
Once you pay off the first debt, you take your minimum payment and your extra money and put it toward your next smallest debt. You continue to roll the minimum payments and extra money into one debt at a time until you reach your largest debt.
- Read: 2 Ways to Pay off Debt: Which one is right for you?
- Read: A 3rd Debt Payoff Strategy that no one is talking about
5. Find Your Motivation
You need a big reason why you want to get out of debt or stop living paycheck to paycheck. Because the journey will not always be easy.
Especially once you get towards the largest debt. You need to have something that is going to help keep you focused and on track.
Set a strong financial goal to help you remember why you’re working so hard.
Use these Debt Payoff Tips
In order to pay off debt fast, you have to be intentional with your money and find what motivates you. Then do what you can to save money and find extra money.
It all starts with believing it’s possible then making your plan.
Then get to work making it happen.
You can do this!
Ashley Patrick is a Ramsey Solutions Master Financial Coach and owner of Budgets Made Easy.
She helps families eliminate debt using simple strategies so they can stress less and live the life they want. She has been featured on Yahoo! Finance, USA TODAY, MSN, CNBC, NerdWallet, and many more.
Related Posts about Paying Off Debt:
- 5 Tips to Pay Off Debt Fast
- 2 Ways to Pay Off Debt: Which one is right for you?
- Simple Tips to get rid of Debt Fast
- A Third Debt Strategy no one is talking about
Great article! Many people we know are selling their cars or using just one car to cut out that major expense. We have been using our bikes a lot and now thinking about building or buying a cargo bike! Love your idea for getting back on track. Thanks so much!