Does being debt free sound too good to be true? In todays world many people think being debt free is like chasing a rainbow. I can tell you that most get rich quick schemes are just that…..schemes. However, if you are looking to the future and thinking long term then you can be debt free. Depending on how in debt you are does determine how long it may take. But, if you are willing to put in the effort for a few years and that gets out you of debt, I would say that it is worth it.
My husband and I are much like any couple out there in America. You get married, buy a house, have a couple of kids, look up, and you are swallowed in debt. This is our story of the steps we took to start our journey. At this point we are still on this journey, but have made huge progress.
The first big mistake we made was buying into the lie that you can’t survive without credit cards. We thought we could have a few credit cards and pay them off every month. We thought we needed to build up our credit. The problem with that is that when you don’t take time to prepare for life’s emergencies, they catch up with you. Suddenly you find yourself paying for life’s emergencies by credit card. Next thing you know you are behind or late on your payments and suddenly the debt cycle has started.
CUT UP YOUR CARDS- The first step to getting out of debt is to cut up your cards. We have been without any credit cards for over four years now. People mistakenly think you can’t make it in today’s world without them. You can! A debit card works the same as a credit card and has the same security as a credit card. When you buy something with your credit card put it in as credit instead of debit and you will have the same protection. Also you can use your debit card for online purchases or anything you would use your credit card for. How about your FICO score? Well, as you get out of debt and start saving up money and using cash for everything you will realize that your FICO score is not important either.
DO YOUR BUDGET- A budget is a scary word to a lot of people. My husband and I both thought of a budget as a restrictive type thing, when it is actually the opposite. All it means is planning on purpose where your money goes. How does this translate into a bad thing? It is sad to say that for years we worked, paid our bills, and spent money as we wanted with no idea where most of it was going. We missed years of money saving opportunities because we did not write a budget. Keeping a monthly budget does not mean you have to give up everything you love. You can budget for shopping money, or blow money,or vacation money. The difference is in the planning, how you are able to track where the money is being spent, and how by planning you can avoid going into debt on those “great deals.” If you like to shop give yourself so much money every month for shopping. Use cash only so when you have used your monthly amount, it is gone. This will keep you from impulse buying, but still satisfies the desire to buy. Also, you may realize just how much you are spending on your favorite vice and be able to trim the fat some. Being debt free does means sacrifice for a while, but it will mean a whole world of freedom later.
RENT A LITTLE LONGER – If we had to do it over again I think we would have rented a little longer. Again we made a classic couple mistake, investing in a house too soon. We thought we were doing a great thing by not throwing our money away (rent) and ” investing ” in a house. Although a house is an investment, if you move too fast it can also be a bankruptcy waiting to happen. Rent something smaller, get out of debt first, save money to buy a house in the mean time, and then when the time is right you will not get yourself in a bind. We bought a house that was three times our rent, then we bought a new truck, then we started having babies, then we were up to our eyeballs in debt. If you are in a house that is sucking you dry, sell it, rent and save up for another house another day. In our case we have not sold our house because we have eliminated debt in other ways like getting rid of credit cards and paying off other debt. It has made our house reasonable in the scheme of things, but you have to be the judge. If you have no immediate ways of paying off debt and are going in the hole every month it may be time to downsize.
WORK MORE HOURS- How fast do you want to be debt free? The harder you work, the more hours you put in, or the more jobs you do can greatly speed up how quickly you are able to pay things off. Again, one big mistake we made was not using the extra money I made for savings or paying off debt. It was just more money. Now we have two kids and one due in about four weeks so I am not bringing much to the table. My husband, however, has a good paying job and he has added on more clients in the attempt to get things done faster. This means he is tired because his job is very physical, but we are already seeing the fruits of that labor. Being debt free means he works his tail off now, but in a few years we hope to be completely debt free. As for me, it is a bigger savings for me to stay home with the kids, then it would be to work. However, there are a lot of little things I can do to pinch pennies as well.
LEARN FROM SOMEONE WHO IS DEBT FREE- We found out about Dave Ramsey from our sister and brother in law. They had started doing his program and got us one of his books for Christmas. You can look at his website at www.daveramsey.com. He tells you step by step how to become debt free. One of the smartest things I have heard him say is not to listen to financial advice from someone who is in debt, unless it is someone trying to help you not do the things they did. He says it would be like getting dieting advice from a fat person. It doesn’t work. Learn from people who have already figured out how to get out of debt and stay out of debt. Check out Dave’s website for budgeting advice, forms, tips, classes. We went through his financial peace class and we also listen to him a lot on talk radio, where he has all sorts of people call in with different questions and gives them advice.
We are not debt free yet. We still have the van and our house to pay off. Our plan is on hold until our baby comes next month and then all our extra money is getting thrown at the van so we can get that paid off and start on the house. However, for the first time we have money in our savings account, we have our budget planned out, we have our goals in place, and we know where we are going. That is a huge step in the direction of financial freedom and gives us hope for the future.