Have you ever wondered how to cope with mounting debt? Have you felt overwhelmed and wondered how you are going to pay the basic bills? I have. When the recession hit it hit us hard. Bryan took a 75% pay cut while still working the same number of hours. It didn’t help that our daughter was experiencing heart problems and we spent all our spare time in a doctor or specialist’s office, thus incurring tons of medical bills. We’d been fairly frugal before but it didn’t take long to burn through our savings when you’re spending thousands in medical bills. After Bryan finally found a new job we assessed the damage and tried to cope with the aftermath. Here’s the tips that helped us the most:
1. Take Stock of your debt.
How much do you owe? Write down every bill on a piece of paper. It may not be pretty but it will help you know what you need to do to recover. Use a debt calculator like this one at Consolidated Credit to see how long it will take to pay off bills or credit cards
2. Don’t Spend.
I’m not talking about doing without necessities, like food, water and electricity. I’m talking about things we can do without. Keep a spending journal and see where the money is going. Do you pick up fast food because you are in a hurry? Do you pick up a coffee every day? Once you see where the money is going you can decide where to cut back.
3. Don’t forget to treat yourself occasionally.
This is like going on a diet. Total deprivation makes you want it more. We would save up and go out to eat a family friendly restaurant (using a coupon) once a month. We still got to splurge but in moderation. We looked forward to it more than when we were able to eat out whenever we wanted too.
4. Pay off the smallest debt first.
This is a Dave Ramsey tip we tried. We sat out our bills and ordered them from lowest to highest. Using his “snowball principle” we started with the smallest amount first and then began to work our way through the bills. It’s produced a sense of accomplishment when we paid off each one.
5. Be realistic.
Paying off debt takes time—especially if you are still incurring new medical bills—but it can be done. It takes patience and determination but the end results are worth the sacrifice. If you’re wondering about how the sheep fit in with this that was my son’s reward for sacrificing with us and not complaining. He asked for these sheep for years before we were able to purchase them for him. Now he’s developed a profitable plan for raising sheep and is employing the thrifty tips he has learned over the years.
I like the paying off the little bills first! Never thought of that! What is he going to do with the sheep? The state fair? He could sell the fur for yarn? Very interesting wanting sheep!! Thanks for sharing the picture!
Awesome advice. We don’t have any debt anymore, but years ago I had over 30K in just stupid things and this is how we paid it all off in a few years… one at a time, smallest first and so on..LOVED reading your post and it really works!!! BUt like you said, be realistic… it may take some time, but you will get there…
I am so happy that we are almost out of debt! it is such an amazing feeling to live within your means and not stress about it anymore
I need to share this with my sister who was asking for tips. They all sound so reasonable and doable!
These are good tips. We cute back a lot once by cooking at home and not spending on eating out for a few months. I was amazed at how much we saved.
Awesome tips! We are working hard at becoming debt free. We have a long way to go, but eventually we will get there!
These are fantastic tips. And that pay off the smallest first is a miracle worker! Seriously. We did these and it felt like we were able to get out of debt so much faster. It FELT. So it kept us motivated to keep budgeting, not spending and getting that debt out of there. It feels amazing when you get can knock off another source of debt from your monthly expenditures.
Great tips! I’m glad to be debt free finally!
These are GREAT tips! I have been in finances/mortgages for almost 5 years, and each and every step you listed is what I tell my clients trying to get their debt down!
Great practical tips! I love the sheep, they’re cute! How cool that your son came up with a way to make them profitable!
great tips.
i 10000% agree with the don’t spend. my husbands coworker yesterday was complaining about how they have so much debt…while eating a burger and fries from takeout…for the 5th day in a row. lunch out x5 days is at LEAST $50 from where he was getting it- never mind the gas and wear/tear on car. this guy gets starbucks on the way to work each day too.