Yes, that's right.... I did it!!!! If you've been following my debt snowball posts over the years you'll remember that I was chipping away at my credit card debt HARDCORE! It has finally paid off.
In September 2012, I had $20k in credit card debt. In October 2014 I had it down to $10,169 and as of April 17th, 2015 I am 100000% DEBT FREE!!!
It is an amazing feeling. But I wanted to answer the question everyone has been asking (besides how I got into debt, which I explained here)... how did I do it? I've written before about how to pay off your debt but here is how I did it.
Also - all of the links in this post go back to articles I wrote about my journey and some advice on the whole process.
1 | I started an Emergency Fund.
Using Dave Ramsey's baby steps I started an Emergency Fund of $1,000 before doing ANYTHING else. In order to get that money I did whatever I needed to including selling some of my things on ebay. I know, most people say that $1,000 is A LOT of money to come up with ASAP but if your life or a loved one's life depended on it I bet you could make it happen. No excuses! My Emergency Fund serves as just that, a fund for a dire emergency. And the point of it is so that I don't have an excuse to use my credit cards.
2 | I tracked my expenses.
I looked at every receipt and bank account statement to see exactly where my money was going. I broke everything into categories too.
3 | I made a budget.
Using the information I gathered in #2, I created a budget and figured out what categories I needed to allow for and what categories I didn't need. (You can purchase a Budget Spreadsheet below!) I also started to ponder ways I could cut back and save money.
4 | I created a budget envelope system.
For over 2 years now I've been using a budget envelope system for my spending and did everything I could to stay in line with the amounts I allowed myself for each category, even groceries! I even came up with 20 ways to cut expenses in my budget. The other thing I did was utilized my envelope system as a mini savings fund for different categories like my car and vet bills. This way, I didn't even need to tap into my general emergency fund. It's really paid off in the long run!
5 | I made extra money.
I was totally against having to get a second job, but I ended up using all of the side income from my blog to pay down my debt. If it weren't for that extra income it would have taken me much longer to get out of debt. It's the truth. At one point my expenses were almost greater than my income but even after I got a handle on that the extra income was necessary for the debt pay down.
6 | I used the debt snowball.
I have tried for years to pay down my debt. I tried all different methods including paying off the smallest or largest APR first. In the end, nothing worked because I always lost momentum. That is until I started using the debt snowball method suggested by Dave Ramsey. It meant paying off the smallest debts first so you gain momentum as you go, just like a snowball.
I would pay the minimum on all my debts except the smallest one. For the smallest debt, I used all my extra income to pay it each month until it was paid off. Then when it was paid off I would take the minimum payment for that debt and add it to the next highest debt as well as any extra income I had to pay it down. And then it just keeps going. By the end I was paying almost $1,000 a month on my largest debt. I can't believe how fast it worked. It did take patience along the way but at a certain point you will start gaining momentum. HANG IN THERE and stick with it. That is my BEST ADVICE TO YOU! Oh, and you can purchase my Debt Snowball Tracker below!
That's basically how I did it, in a nutshell. The details along the way are included in many of the posts I linked to.
Next step- all of my extra income is going in my savings!
Are you debt free? Will you be using my post to keep you motivated to become debt free?
Be sure to join my Facebook group, Fixing Your Finances, to help you with your finance journey along the way.
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