5 Tips For Getting Out Of Debt

Dated: 01/30/2014

Views: 2061

by Ellen Mallernee Barnes  

We are happy to bring back the occasional guest post from blogger Ellen Mallernee Barnes. Today’s looks at how she and her husband managed to pay off over $10K in debt in 2013! 

Last spring my husband and I had another excruciating visit with the taxman at H&R Block. Because I work from home as a freelancer, it’s up to me to separate the tax money out of each paycheck, save it up, and pay my taxes quarterly. That’s a lesson that’s taken me a long time to learn. In any case, we were faced with another whopper of a tax bill—one that made us physically ill. Financially, we hit rock bottom. We had basically no money in our checking account and none at all in savings, and we had piles of bills—including this new tax bill, bigger than all the rest. We felt hopeless and trapped and stressed beyond measure. We thought we might even want a divorce but realized we couldn’t afford to get divorced. That is until we turned to Dave Ramsey’s Financial Peace University program.  

Walking into that first class has got to be a bit like when an alcoholic goes to his first AA meeting—very humbling. My husband and I attended classes weekly at a local church that provided childcare for our girls, and there we were given the opportunity to start from square one with learning how to pay off debt, save money, and budget. By the end of December we were surprised to find that in eight months’ time, we managed to pay off $10,857. We still have about $10K left to pay off (this includes our car but not our home), and we are committed to doing that this year. Paying off ten grand has been extremely hard. We have been humiliated and encouraged both. We have fought tooth and nail to stay out of the red, applying every extra dollar we could to debt. I often liken budgeting to dieting, in that you are bound to fail. The trick is to start right over after a failure. Just like a dieter will occasionally overeat, we occasionally overspend. That’s not reason enough to throw in the towel on our monthly budget. Here are just a few more of the lessons we’ve learned about money this last year.  

The key to saving money is … not spending it. This sounds painfully obvious, but it’s been a revelation for us to realize that the way to achieve our financial goals isn’t to make more money (although that can certainly be helpful) but rather to stop spending the money we already make. Otherwise, we'll just keep finding new ways to spend our money. That's what we were doing before, and it wasn't working. 
2.Celebrate all the small successes. When we realized that we had $20,000 to pay off, the task ahead felt insurmountable. But Ramsey recommends breaking your debt down into parts, using his Debt Snowball plan, which has you organize all your debts smallest to largest and pay off the smallest first, going down the line until they’re all paid off. In this way, we’ve gotten to celebrate lots of small victories as we’ve paid off medical bills, credit card bills, and car repair bills. Meanwhile, we are still looking at that tax bill from 2012, although it’s noticeably smaller thanks to our monthly payments. And instead of throwing bits of money at all of our bills, we’ve been able to see real, measurable results by choosing which bills to pay off in full.    
3. Keep your eye on the prize. When I get down about not being able to go shopping like the rest of my girlfriends, I remind myself to think of the future, and it’s helpful. For one, I imagine that once we’ve paid off the last $10K, we will be able to quickly and easily save for a week-long family vacation to Key West, which is my heaven on earth. Not only do I so look forward to this vacation, but I look forward to how much simpler my life will be without a desk drawer full of bills. I look forward to less strain on my marriage—once those bills are out of the way. I look forward to the security of a fully stocked savings account.  
4. Restrain yourself. When I’m bummed or lonely or bored, I like to go shopping. It sometimes feels like I have to physically restrain myself from getting in my car, going out, and spending money. I’ve had to find more things to do around the house, and I’ve had to make myself stay away from places where I know I’ll feel compelled to spend money. For instance, the Green Hills Mall, which used to my playground.  
5. 'Fess up to friends. Most people live paycheck to paycheck, but hardly anyone talks about it. But there is something so healing, freeing, and healthy about admitting to your friends that you can’t go out to eat this time or that you’ve made some stupid choices and are now working toward getting out of debt. I’ve noticed that this has freed up my friends to vent about their finances, too, which has helped me realize that we’re not alone, even when I think we’re the only ones who are struggling. It’s also helped me to see that there’s no shame in working to get out of debt. It’s a far bigger shame to stay in it and keep it a secret. 
Speaking of Dave Ramsey, read his 8 Tips for How to Sell Your House
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TJ Anderson

TJ Anderson is a Nashville Realtor with Benchmark Realty who's helped countless clients both buy a home and sell a home in Nashville, Tennessee. He blogs about Nashville regularly, from Nashville-area....

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