I am at the point of my life where I am ready to live my life. I did not realize exactly how much debt I was in until my rollercoaster of 2016 ended and I was a few month into having a steady paycheck. Nobody prepared me for the realities of what comes after your education. My parents taught me about paying bills on time and how to write checks, but nobody taught me just how easy it was to accumulate debt.
I actually used to think I was responsible when it came to credits cards. I did not receive my first credit card until I went law school. But after moving expenses and 6 months without a job, I found myself in about $10,000 dollars in credit card debt and $152, 000 in student loans.
In this post, I will share with you some debt free tips to become debt free. I was not quite sure how I was going to go about paying my debts, but I knew paying the minimum each month and guessing an amount I could afford on different bills was not enough. After reading Dave Ramsey’s The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness, I was inspired and motivated by the success stories of those who followed his method, I decided to give it a go. You can check out my review of his Total Money Makeover at this post here.
5 DEBT FREE TIPS
I. Create a Visual – This is the first of the debt free tips I will be sharing with you. Dave mentioned in his book about designating every dollar of your income. Creating a visual of my bills and debts was eye opening. It helped me understand how much money I had after paying all my monthly bills.
II. Create a Plan – Becoming debt free requires a plan. There are a ton of debt free methods out there. Personally, I choose to try Dave Ramsey’s debt free tips from this The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness. Dave’s method of tackling debt is the debt snowball method. This method requires you to focus on your smallest debt first and then roll over the amount you were paying to your next debt. (Just like a snowball)
III. Cut down on Expensive – One month I pulled up my bank statement and notices that I was spending 250-300 dollars a month on fast food and restaurant. It was after that realization that I knew something had to change. The next month I put myself on a “No Eat Out Challenge” while I figured out how to cut down my expenses. During that time I looked into other ways I could start saving money fast. Check out this post to learn how to save money instantly.
IV. Extra Income – This was the hardest for me to accept. After so many years in school and a doctoral degree later I was still barely making over $47,000 annually. The reality of picking up a second income became evident so I start putting in applications for a part-time job. Luckily, I heard back from a place within two weeks of putting in applications. [Update June 2017: I started working at my part time]
V. Create Saving Account/Emergency Fund – Dave mentioned in his book the importance of having an emergency fund. I realized that if something happened I literally would have a debt “maybe” paid off, but no money for emergencies. Check out my debt payoff report here.
So those these are my tips for becoming debt free. I will be following these tips and documenting my journey on this blog. I am excited to see where this journey takes me and what doors it opens for me.