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Living on Less ~ Dump the Debt

by Toni Herrbach

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There is only one way that we could have the goal to live on half of my husband’s salary, and that is to be debt free. I know this is a frequent topic on the site, but I cannot stress how important debt free living is to reaching your financial goals.

note: When I write about debt I am not talking about a mortgage, although I think it is awesome if you can pay cash for your home, and I personally know people who have, I realize this is not a realistic goal for everyone.

How to Dump the Debt

Hate Debt – If you view debt as a tool, or something that can be useful it will be very hard to rid it from your life. If you hate it, you will be less tempted to find reason to acquire debt. Example; for years I thought credit card debt was bad, but car loans and student loans were tools. This mentality caused us to purchase cars that were above our means and take out way to many student loans. Now that I hate debt, but need a bigger vehicle my incentive to save is huge. We need a different vehicle in two months, so I better get serious about saving or someone will be riding on the roof. Debt is only a tool for the lender, a tool to get rich off of you.

Put it on Paper- Why do so many people refuse to open credit card bills or tally up their debt total? It is overwhelming, but ignoring it is not the answer. Debt will not magically disappear if you refuse to answer the phone or open your mail. Make a list of all your debt. My recommendation is to use Dave Ramsey’s debt snowball plan of writing it down from smallest to largest, do it however you want as long as you do it.

Figure out your Income- For some people (like those of us in the military) this is simple. For others with variable incomes add up your income from the past year and divide by twelve. That should give you an average of what you make each month.

Write a Budget- I highly recommend downloading some sort of budget form for this. You can make one yourself, but with so many free downloads on the web why bother. When writing out your budget make sure all the necessities are covered first; food, shelter, utilities, transportation, and clothing (essentials only). Figure out what you have left over and create a plan to apply it to your debt.

The Tricky Part– This is where the rubber meets the road, for some of you there might not be money left over, or at least not enough to cover all your debt. You have an income problem. In order to solve this problem you must create more income or lower the cost of your necessities. A house is an necessity, a 3000 square foot house is not. Transportation is a necessity, 2 brand new cars with huge payments are not. Food is a necessity, but if you spend any amount of time on the internet you know there are people who feed their family of 10 for $300 a month. Okay, I am exaggerating slightly, but food is an easy category to trim. Clothing, definite necessity, new clothes from the mall, not so much.

If your necessities are already trimmed to the max it is probably time to consider getting a second job. I know the economy stinks, but many places are still hiring part time workers. Remember delivering pizzas isn’t glamorous but neither is filing for bankruptcy. This is a temporary situation until you are able to get on top of the mountain of debt.

At this point you should have some extra money to attack your debt. If you are serious about hating debt you will have no problem putting every nickel and dime towards debt reduction. The more you desire to change your situation, the easier it will be to make lifestyle changes that can help you reach those goals.

Remember cutting cable, eating beans and rice, owning one car might be temporary until you are able to make a dent in your debt. If you choose to keep your current lifestyle (usually the one that got you in the situation in the first place) it will take you a long time to become debt free.

For our family drastic short term changes were enough to rid ourselves of debt. The funny thing is that once we had no debt, we had no desire to spend either. It wasn’t as if the day we sent out last payment to Sallie Mae we went out and celebrated with a steak dinner.

Thrifty living was a short term goal that, for us, ended up as a lifestyle change.

 

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Comments

  1. Amy Ellen says

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    okay… i’ve officially become a happyhousewife junkie. but i really appreciate all the good thoughts your sharing… and the entertainment of your story : )

  2. Paisley says

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    I love reading your site and especially the posts like this one that talk of debt free living. I would love to follow Dave Ramsey’s Total Money Makeover but have been able to convince my hubby. I think its the fact he would have to give up some things that is holding him back. I want to be debt free so I can retire and spend more time with my granddaughter. I have been following you on Twitter for a while and would like it if you would follow me too, my name is Paisley aka k9roo.

  3. Joelle says

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    Thanks for the reminder. We are trying to get out of credit card debt ASAP, and then we’ll tackle my student loan (which isn’t very big.)

  4. momstheword says

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    I know, frugality and debt is a frequest topic on my blog too. The thing is, it really does need to become a lifestyle change. Once we got out of debt, we needed to stay out of debt (and we did). I think some people view debt as just a natural thing and to be expected.

  5. mandy says

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    Great post! I hate debt too! I have another tip to help you stick to that paper budget…go cash only. People spend an average of 15% less when they are buying with cash compared to using a card.

  6. kaycee says

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    Thanks for this, it’s always inspiring to read articles like this.

  7. Hi, it's me Jen says

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    We want to be debt free!! We are currently paying for 2 mortgages and have been for a year and a half. Ugh. As funny as it sounds, it has been a blessing. We have really had to take a cold hard look at our spending habits, and bring them into line with our goals. A little borrowing here, a little debt there to carry us through this real estate crunch is NOT acceptable to us anymore.

    We have pledged to each other to follow Dave Ramsey’s approach and knock out our debt. And, God willing, our old home will sell! Prayers appreciated.

  8. Jennifer says

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    Great post! I couldn’t agree more. We are also trying to save for a new car. Our van is not very reliable and frequently needs repairs. We need to replace it within the next couple of years, but we would like to replace it before the end of this year. So we are saving like mad too. We paid cash for dh’s car last summer, so I know we can do it. You can too!

  9. Joe Aldeguer says

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    very informative and helpful post.. thanks for sharing it..

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