How To Get Out Of Debt And Stay That Way

Today it’s all about how to get out of debt and stay that way. Oh, wait, I can hear some people saying, “I can barely make ends meet.” I get it, I really do. I will say this, there are tricks to getting out of debt and stay that way. My first recommendation is to set a budget. A reasonable budget. You can start by writing down what your net income is (the amount you bring home in your check), then list all your debt/bills. If you have student loans, car loans, or credit cards write the interest rate next to the debt.

If you own a home, write the interest rate down on that debt as well. Make a column with your take-home pay on the top. This makes your DEBT real. You can write the balances each month as well, if that helps you. Here is an example for you:

Net income: $3000.00

House/Rent: $1000.00  4.5%

Car: $300.00     2.00% (this rate can be higher or lower depending on your credit score)

Food: $400.00

Utilities: $200.00

Student Loan: $200.00  8.00%

Cellphones: $100.00

Cable/Internet: $100.00

Savings: $300.00

Misc: $200.00

Credit Cards: $200.00  12.00%

Now, the first thing you’re going to want to do is to pay off the highest interest rate payment first. In this scenario, it is the credit cards. That would be the first one to eliminate ASAP. Please don’t ever pay just the minimum balance. It will be a 20-year loan, if not more, in some cases. Now, after the credit cards are paid I would apply the amount you were paying on the credit cards to the car payment. Get rid of that debt.

After the car is paid off, apply the amount you were paying on the credit card debt AND the car payment amount to your student loan, and get that debt paid off ASAP. Before you start this debt reduction, look at your cable bill. Can you cut it? Please look into Netflix, Hulu, or whatever movie channel(s) are available in your area. If you can cut out some or all of the cable expenses use that money towards your debt. Once you cut out all your debt, pay whatever you can on your home, if you are buying your home. DEBT FREE is awesome.

Another really good tip to think about is writing down what you spend. It’s like dieting but with dollars instead of food. If you know what you’ve eaten you will know why you haven’t lost weight. The same goes for spending, write down what you are spending your money on. It’s hard when I hear friends say, “I can’t afford to do that.”

What they are really saying sometimes is this, I want to have debt and get my nails done, a pedicure, and buy clothes every two weeks or whatever. Oh, and the kids love a soda every day. You know, we just need to get out of the house. If we use this attitude, we will always have debt. It’s a fact of life. What money comes in, can only go so far toward our monthly expenses.

We as adults set the stage for our kids, whether it be spending money like crazy on new clothes, new shoes, etc. If your children see you spending money like your purse or wallet is overflowing with money, they think that is normal. It is not. Please do not buy “stuff’ to make you happy. It’s not worth it, trust me.

Here are some things to think about:

1. Do I really need this? Am I buying this trinket or sweater to make me happy? Put it back.
2. Skip the drive-through for dinner.
3. Start your dinner in the morning in a slow cooker or whatever works for you. This will stop the impulse of picking up dinner on the way home after lessons or work.
4. Making a budget for that morning coffee or soda drink is critical (it will come out of your grocery bill-YIKES).
5. Don’t think of keeping up with the Joneses. Trust me, they may have tons of credit card debt to make the world think they are awesome. I did loans for over 20 years, I know.
6. Only buy the amount of food you will use. Wasting food is wasting $$$$.
7. Maybe a new car is not really needed, is the car you have still working with minimal repairs?
8. You have one coat, do you really need one more?
9. You have four pairs of shoes, how many more do you really need?
10. Decide what you really NEED to purchase every month. Please remember that financial security for the long term is the best life you can achieve.
11. Be prepared for the loss of income. Please save at least six months of net income, a little at a time.
12. Use coupons whenever possible. Processed food is not healthy, sometimes they have coupons for salads, watch for them. I have seen coupons for buy one salad get one free.
13. Buy food in the bulk bins if they are cheaper at grocery stores if you like what is offered. If not, pass them by since the food will end up in the garbage can.
14. Live below your means, not within your means but below. If you get a raise, put the money in your savings account.

Now, here are some ways to cut a few expenses I haven’t listed above. This is a simple but easy way to see how far your money is going each month. I have an envelope for the following items:

1. Haircuts (go to salon schools when possible)
2. Date night (decide on an amount that will fit your budget)
3. Thrift stores for clothes or accessories
4. Groceries, learn to cook from scratch
5. Food storage purchases (out of your allotted grocery amount)
6. Gas for the car

Now, once these envelopes are empty, the money is gone until the next month. Please tell me your ideas for “getting out of debt and staying that way” thoughts. I love to hear from you, let’s share our ideas with the world. This is one more way to be prepared for the unexpected. May God bless this world.

101 Ways You Can Budget

Linda’s Book: “Prepare Your Family For Survival”

Copyright pictures:
Dollars: AdobeStock_83892551 by Justasc