The first step to being freed from debt is to get a handle on your spending by creating a budget or at least by keeping a record of where your money is going. Track every penny in the beginning so you can truly see how you are spending your money.
The “You Need a Budget” app (YNAB) is very helpful with this. Once you get a handle on where your money is going you can develop a plan to handle your money better and work to get out of debt and stay out of debt.
The second step is to start working to pay off debt. According to Dave Ramsey, the best method of getting out of debt is to use a snowball effect. Start with the smallest debt and put as much money as possible towards paying off that debt while paying the minimum on the other debts. Once that smallest one is paid off, start paying the amount you were paying on the smallest debt to the next smallest debt in addition to what you were already paying on it. Do that until it is paid off. Then take the amount you were paying from those 2 debts and pay that amount on the next debt and keep doing this until it is all paid off.
For example if you have a credit card with $500 balance, a doctor bill with $2000 balance and a car note with $10,000 balance you would work on the Credit Card first by applying say $100/mo on it until it is paid off. Then take that $100/mo + the minimum(say it was $30) you were paying on the doctor bill and pay that $130 on that bill until it is paid off. Then take the $130 you were paying on the doctor bill and put it along with the minimum you were paying on the car note (say it was $400) and pay that amount ($530) on the car note until it is paid off. In the meantime don’t create any more debt. Get rid of Credit Cards keeping only one for emergencies (and pray you don’t have any emergencies).
Once everything is paid off except for maybe the house, save money BEFORE you buy anything and pay for it upfront instead of putting it on a credit card or getting a loan to pay for it. This way you are saving all that money on interest. This takes patience and discipline, but it is worth it. Believe me, I know. This is what my husband and I started doing several years ago and it is so freeing. We don’t even go on vacation unless we have saved the money to pay for it upfront.
Once you are out of debt or maybe after you have paid off some of the smaller debts, start putting money from each check into an emergency fund. This fund will be there to keep you from going back into debt when the car breaks down or the dishwasher goes out. You will have the money in your emergency fund to pay for it instead of putting it on a card and paying tons of interest.
After your debt is paid off, start putting money in savings for different expenses such as saving up for a car so you won’t need a loan, for a vacation, for a new roof on your house, etc.
Every year your homeschool registration fees are due by August 1st. I highly recommend you start putting money back from each check months before it is time to register so the money is there to pay in full when you register. This will keep you from having to come up with a big chunk of money at one time. For example, if you want to enroll on June 1 (which gives you plenty of time before the August 1 deadline in case something comes up) and your fees will be $160, then start putting back $20/mo (or $10/bi-weekly or $5/week) from September – April. You will easily have the $160 to pay in June. This works well for your curriculum also. You can put this cash in an envelope and label it for registration fees and not touch it, or you can put it in a savings account and mark it for registration fees in YNAB or whatever budgeting tool you decide to use.
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