How I did it: My guy and I decided 2012 was going to be the year we get serious about paying off our credit card debt ($11500) and student loans. Using our tax refund and living frugally by our budget, we paid those cards off in less than 4 months. Now we're targeting the student loans. 

BEST. DECISION. EVER.

I can't even put into words how good it feels to no longer have credit card payments. More importantly, it feels incredible to know where our money is going these days. For years, it seemed like finances were beyond our control. Everyone in America is in debt, or at least that's what I tried to tell myself to quell that nagging little voice in my head.

We intend to continue budgeting for life.

Lessons & tips:

• Set up a budget montly. Don't just make one static budget and expect to be able to adhere to it. Things will pop up from time to time. When that happens, often the amount is small enough that you can 'borrow' from another category in the budget. But sometimes the amount will be larger (i.e. automotive repair or inspection) and you'll simply have to add it into the budget for that month.
• Enjoy living frugally. No, seriously! It's not bad at all. I don't really mind not having stuff. I've never really measured myself by the amount of things I own. But now, after having experienced the pleasure of not having credit card debt, I'm more determined than ever to avoid accumulating stuff if it means going into debt again.
• Be persistent and determined. Dave Ramsey speaks about "gazelle-like intensity," and it's a concept that makes sense. Approach this debt with everything you've got. All that stuff you've got lying around that you don't use? Sell it. Sell your car and get a cheaper model (We did this.).
• Remain flexible. We've allocated a small amount in our budget each month for "fun money." Mine supports my knitting/crocheting hobby. Hubby uses his for tattoos or drawing supplies.
• Tweak for the first few months to get an idea of what is sustainable for you. Our budget is tight, but we learned in the first few months to give ourselves a small amount of wiggle room. We just kept working at it until it clicked.
• At the end of every month, we sit down together and discuss our spending for that month, if we want to make any modifications, and so forth.
• Use the envelope system. I don't like everything Ramsey advocates, but this one works fabulously. Every paycheck, pull out some cash and put it in your respective envelopes. That's the money you spend for the week. When the grocery money starts running low, you know you need to cut back.
• Communication. This really does take a lot of work and effort. Both partners need to know where the other stands, and both need to be in agreement as to how they will spend their money. It took my dude a few weeks to come around, but now (once he started seeing what this can really do) he's just as "gazelle-intense" as I am.

Resources:

• Mint.com
• Dave Ramsey and other self-professed financial gurus
• Determination and willpower to stick to your plan

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May 28, 2012, 03:45AM PDT | 3 comments | 15 cheers