Top 5 Tips to Start Becoming Debt Free

One of the questions I get asked the most is how to get started on a debt free journey. I want to share a little more of our story, and how we got started on this crazy road that will (hopefully) have us debt free in 2018.

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Keaton and I started this journey back in 2014 when we first combine finances. He was going to grad school full time, and I was the sole income for our family. I am just going to lay out some general numbers to give you guys an idea of where we started:

  • Base pay of roughly $30,000 take home a year as an RN. This included my night shift differential, and working every other weekend. If I had worked day shift, I was looking at about $24,000 base pay.
  • 30k in current student debt (as Keaton was accruing more)
  • 13 months to plan and save for a wedding
  • No clue how those numbers were going to work out

My first step: cry a lot. That sounds dramatic, but seriously, I am very practical and I knew by looking that those numbers just wouldn’t work. I was ready to cancel the wedding and eat ramen noodles until Keaton was done. Luckily, Keaton is a little more level headed than I am in these type of situations, and my mom reassured me that I was going to have a wedding, and I needed to just chill the eff out. I had read Dave Ramsey’s books and watched a lot of his shows, so I decided to start with some of his tools. This combined with some of my own tips and tricks has gotten us to the point, 3 years later, where it has become effortless to set our budget, stick to it, then meet and exceed our financial goals on a regular basis.

  1. Get your spouse/significant other on board. I highly suggest watching the Dave Ramsey videos, or listening to his talk show. He even has an app with free videos. The dude is convincing, and obviously successful for a reason. Even if you’re not sharing accounts, it’s almost impossible to be living two different financial lives when you’re sharing a life together. His book is also wonderful if you’re a reader.*Even if you’re single, it helps to have a friend or parent or someone who can help support you or lend an ear when you’re frustrated. Since we’ve been pretty open about our journey, we have found lots of people in our sphere of friends with similar goals. Explain why you don’t want to spend the extra money, or what your long term goals are to help people understand why you’re doing what you are.
  2. Use a budgeting worksheet to get started. At age 22 with absolutely no idea what I “should” be spending on shampoo every month, I could have looked at dozens of blank worksheets and gotten nowhere. I like this particular one because it gives you percentage ranges for each category, so you know where to head with your spending. Even if you have to do some adjusting, there is at lease a baseline number to start from. Also, as your income changes you can use the worksheet to adjust accordingly.
  3. ENVELOPE. SYSTEM. This is probably the best thing we ever did. It was time consuming and tedious at first, but I was a chronic card-swiper-with-no-remorse, and this broke that habit. I took a trip to the bank every payday, asked for our cash fund to be divvied into combinations of large and small bills, and used a coupon organizer to keep it straight. It probably took an hour or so to get this done every two weeks, but I believe it was the sole reason we stayed on track. Also the coupon organizer was WAY better for us than separate envelopes. Very neat and tidy 😉
  4. Leave your debit card at home. Seriously. If I took mine with me, I wrapped it in a piece of paper that said “This is only to be used for:______” with a paper clip. That way, if I knew I only had x amount of cash to spend, I wasn’t going to just casually swipe my card to cover the rest. It’s not fun to break bad habits, and this was my worst one to break, so I had to go 5 year old style on myself. We only used our cards for gas, rent and utilities, wedding expenses and student loan payments.
  5. Creat a visual to keep track of your goals. Currently, we used a Google Sheet to track our budget, but I started with pencil and paper. We also have a white board that we update every time we add to savings, or pay on a debt. We mark each one we pay off in big bold letters, and keep a running total of what we have saved/put towards debt for the year.

Following these five steps to the letter that first year is (I think) the only reason we came out on top. We did have a nice tax return thanks to both of us still having school credits, and we were able to afford a way nicer honeymoon than we had dreamed thanks to that. We used all of these tactics the following year to pay for Keaton’s last semester of grad school in cash, and are now finally able to get aggressive with our debt pay down.

Hope this post was helpful, and I can’t wait to keep sharing more about how we tackled this big scary topic of budgets and debt step-by-step. Don’t forget, it doesn’t matter how you start, or if you have setbacks, just keep going.

With love and learning,

❤ Alex

 

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