photo by Shyald
The kids gave my debt a pet name: “Snowball.”
It was a fond reference to our new family vehicle: a pure white Subaru Forester.
The year was 2007 – Mr. Right and I had been married about a year.
For our annual camping trip to the Land of Do As You Please, we decided we needed a new car.
So in our typical, spend, spend, spend style, we bought a brand new car.
Four months later, the focus was back on my new car, but in a different way. What had we done? We were racking up debt faster than we could find ways to scratch Snowball. During a girls weekend with my family, I heard from other women that were struggling with debt – just like me – and I did the unthinkable… I cut up all my credit cards.
It was painful. It was scary. It was empowering beyond belief.
After the trip, I went home to Mr. Right and said, “Lets get out of debt.”
It was February 2008. We read and researched the Dave Ramsey snowball method for debt and did another scary thing: created an excel spreadsheet with all of our big, bad, ugly debts.
Here’s what that spreadsheet looked like:
Furniture: $1,800
Credit card: $1,877
Wedding ring: $2,200
Parents: $2,800
Credit card: $3,900
Credit card: $5,590
Snowball (the car): $24,000
TOTAL: $42,167
Now I know depending on who you are, this won’t seem like that much debt … or you could be blown away by our stupidity. Looking at those numbers was depressing. We loved to spend and hated pay it back.
It was time to change and we were serious. We established an overly-strict budget and proceeded to spend hours each month entering every receipt, making every penny count. Now our method is much simpler, but the big news is this:
As of October 2009, we only have $9,500 left to pay off. That means we paid off over $32,000 of debt in less than two years.
Realizing that today felt incredible. We had changed more than our spending habits – we had changed our entire life.
By now you may be thinking, “Good for you, princess. Here’s a star.”
The reason I’m sharing this (very) personal information is to prove: anyone can do this. YOU can do this. I am an idiot with numbers (I can barely add and subtract) but I just paid off $32,000 of debt. That’s a salary. That’s a nice down payment on a home. That’s what we did.
Here’s what worked for us:
First, save $1,000 in your checking account. Then, don’t touch it. Ever. This prevents those expensive overdraft banking fees and is really good peace of mind. And anytime you have $1,000 laying around, well, that’s just pure awesome.
We used the snowball method. You can read about it here and learn tons of tricks on Baker’s awesome finance blog: www.manvsdebt.com.
We enforced a strict weekly spending allowance. Mr. Right and I only get $30 per week (each) to spend on our whims: a candybar, latte, lunch, new dress. This may sound like a lot, but trust me, its not. And telling yourself, “Sometimes, you have to live a little,” is cheating. Don’t.
We trimmed the fat. We got rid of cable. We started making our own bread. We stopped drinking soda completely. Little things add up – how many can you find?
We started tracking our expenses. Finding out you spent $800 on groceries last month puts a hasty stopper in the grocery budget drain. For the first few months, this will be very eye-opening, but its key to staying on track. When you see a money drain, stop it up, fast. Do this together and get ready to be very annoyed with the other person’s excuses. You will argue. And that’s ok.
Stop going to Target. This seems simple, but for a spender, its very hard. I’ve learned that by not going to a store, I don’t buy stuff. Genius, right? If you’re a compulsive shopper like I was, put yourself in rehab. Don’t go shopping for a month… the withdrawals are intense, but you can kick that nasty Target habit, I promise.
How about you? Are you wishing you could get out of debt? Are you already on the (rockin’) path to financial freedom? Tell me more!
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Very inspiring!
I want to start my own business, but I need to get out of personal debt first, and save money to start that business. After meeting with my financial advisor, I realized that it can be a long, not fun, process, but it pays off (heh, pays off, get it?) in the end. Great article!
Love the article! There are some great ideas in there that I need to follow.
Here’s one tip I know for keeping a low grocery bill – only buy meat when it is on sale. And when it is on sale, stock up when you can. Don’t plan your dinner around the idea that “I want potroast tonight.” Plan the meal around what was on sale that week. And if you don’t know what is on sale, where, or what is a good price, ask your mother or grandmother if they live in the same town – you know they know where the bargains are.
Great post – I’ve been on self-imposed spending hiatus this year so we could focus on paying off our non-mortgage debt (which was mostly my school loans)…. We’ve paid off over $24K so far!
Good luck knocking out the rest of it ~
What about the car? Did you sell it? It seems that Snowball was the biggest problem on itself.
No, we didn’t sell it. But we’ve almost paid for it! The thought did cross our mind.
Was browsing your about page and landed here. Oy. I *so* needed to read this — VERY inspiring! And my new mantra re: debt? “I. Can. Do. It.” Sheesh, if I’d stop being a professional student, I may not have as much.
Thanks for sharing this part of your story. It is really valuable to me.
@ Cali – Yes, you can do it! This is coming from the person that used to say people don’t need savings accounts – that’s what credit cards are for. We are SO close to having our debt paid off. It is an amazing feeling to take control of your money, instead of the other way around … Good luck! If you have any questions, shoot me an email.