Debt is something that we have been living with for many years. Over this past year, I finally started getting aggressive with our debt. I am so tired of worrying about money month to month. It is exhausting.
Let me share a few things that have made a big difference in giving me my peace and sanity back about money.
You Need A Budget (affiliate link) is budgeting software that has changed the way I look at money. Not kidding!
I have been using YNAB for about a year now and that is the first big difference. I have never stuck to any budgeting software for that long (and I’ve tried many!).
With YNAB, I am able to plan for future expenses, big and small. I am able to set aside money for small things like birthday presents or car repairs. I also can save for big things (in small increments) such as vacations and Christmastime.
Lastly, I love that transactions are automatically uploaded into my online checkbook and then I can immediately take them out of the appropriate budget section.
The most drastic thing we did recently to get out of debt is to do a home loan refinance.
I DO NOT recommend this for everyone! We had some extenuating circumstances that made this the way to go for our family.
- We did a VA refinance, which means you can refinance 100% of your home’s value.
- We had a large amount of equity in our home because of the house fire and the insurance money we used to make the 2nd house bigger than the 1st.
- We were able to put all of our debt except a vehicle and student loan in to the house.
- By refinancing to a 15 year mortgage, we took off 10 years from our mortgage loan. That’s huge!
- Obviously, we didn’t pay off debt, we just moved it. But we were able to close all of our credit cards so that we will never use them again!
Wants vs. Needs
Learning the difference between wants and needs has been another thing that has helped in budgeting and getting out of debt.
In our consumeristic culture, the line between wants and needs has become very blurred. So how do you determine what is a want and what is a need?
- Is it pivotal to your survival? Of course food is important to survival, but you can survive on a homemade sandwich just as well as a steak dinner from a high end restaurant.
- Think it over-If you are thinking about making a purchase, don’t buy it right then. Think it over for a few days and decide if you really need it. Impulse purchases can become deep regrets later if we don’t take the time to make sure it is what we really need.
- Can you get it cheaper somewhere else? Clothing is a necessity to a happy life, but what kind of clothing? Does a shirt from the thrift store or clearance rack cover your body just as well as a designer shirt? I think you know the answer to that.
- Is your want for expensive things taking over your need to be out of debt? Pick your priorities and shop accordingly.
Make a List
We have a running list of things we want to buy. Some of the things are in the “would be nice to have” category and some are in the “we will need in the future, but it can wait” category. If we see something that would fit in one of these categories, it goes on the list. Then, as suggested above, we wait and see how things work out. We don’t impulse buy. If we happen into some money (gift or overtime) or we put some money aside in the budget for it, then we review the list. It feels good to buy things that we have been wanting for a long time. But it feels even better if we aren’t going into debt for it.
Planning and Patience
Getting out of debt is a long term commitment. It won’t happen overnight (unless you win the lottery!). It takes consistent planning and lots of patience. We are looking at a 5 year plan to get out of debt, which seems like FOREVER! I’m not usually a patient person, so this is hard for me. I want things done now! But that isn’t how this works. So I have to be happy with the little victories and keep going.Let me share a few things that have made a difference in giving me my peace back about money.Click To Tweet
We aren’t debt free yet, but we are getting there. One day and one decision at a time, we are getting closer to our goal. I want to encourage you to do the same. Make a goal and write out the steps to achieve it. Make getting out of debt a priority. It isn’t always fun to do without things you might want, but just think of all of that disposable income you will have when you are out of debt. It’s like getting a raise! And it’s all yours!
What tricks and tools are you using to get out of debt? Please let us know in the comments below. Thanks!