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How to get out of debt by Vera_Icon

"persistence"

How I did it: We paid off approximately $17,000 in back taxes, credit cards, car loans, and student loan debt in just under 2 years.  We got to a point where we knew we HAD to do something about the amount of debt we were in - that was a BIG motivator.  I also got inspired by reading "The Total Money Makeover" by Dave Ramsey. 

 
Just to be clear - we are not truly debt free.  I have only my student loan remaining.  My husband has a car loan (and more recently a new credit card balance - see lessons and tips section).  I am content to personally be free of the "bad debt" so I consider this goal completed.
  
What we did:
created an emergency fund
gave ourselves an entertainment allowance
set a grocery allowance
improved our cooking skills
bought things we needed when they were on sale
used coupons
got extra hours/raises at work 
sold things on e-bay
tracked all of our spending

We experienced many, many, many setbacks. Our original projection was to have our debt paid off by this time last year.  We weren't "gazelle intense" the whole time, by any means.  However, I always believed that this goal was something we could accomplish.

.  

Lessons & tips: I created a chart to track our progress.  It is SO helpful to see a visual representation of your progress.


Notes to those doing this with a spouse, partner, etc:
Most likely you will not feel the same level of commitment to this goal.  I originally wanted to pay off ALL our debt (back taxes, credit cards, car loans, student loans).  My husband was only really concerned about the back taxes and credit cards.  We ended up paying off my car loan, the small "loan" for his old car, and all of the "really bad" debt (back taxes, credit cards). 
 
However, we have also recently had a setback where my husband slipped into credit card debt again.  We made a decision to temporarily separate our finances so that he could work independently on becoming better at managing money.
  
Working towards this goal with a partner forces you to look at one of the most difficult aspects of a relationship - finances.  What you find isn't always pretty but the earlier in your lives that you examine and address these kinds of things, the better

Resources: 43 Things!

http://www.getrichslowly.org/blog/

"The Total Money Makeover" by Dave Ramsey

"Your Money or Your Life" by Joe Dominguez and Vicki Robin

"The Millionaire Next Door" by Thomas J. Stanley and William D. Danko


2 people found this helpful
 

Apr 27, 2011, 10:24PM PDT | 0 comments | 22 cheers


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