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In the beginning of 2016, Mrs. PF Guy and I decided that we were going to hop on the "Get Debt Free" train. We're 15 months in, and we've paid off around $43,000. We paid off our second to last loan which I talked about in a previous article and I already talked about why we decided to get out of debt. Through sharing our journey, we've gotten a lot of questions.
How do you do it??
What's the secret??
How can I get out of debt?
There's no way I/we can do that!
You wanna know the point of me doing this? Why we decided to share a little bit of our financial life?
It's because of those questions. It's because so many people don't know that it's possible to live a life that doesn't include debt. And when people do get that feeling or that itch that there might be a better way to live than in debt, many don't know where to start. So I thought I'd put together a list of tips that help you get out of debt.
Spend less than you earn
A common misconception is that in order to get out of debt, you need to earn more money. And while having a big shovel to help dig yourself out of the hole helps, it's entirely possible to get out of debt without making a six-figure income. How? You've gotta spend less than you make. You need to alter your behavior around money. And that's tough! In a culture where spending frivolously is the norm, it's incredibly hard to back down your spending. Coffee, lunch, dinner, happy hours, vacations, new cars, fancy clothes. The list is endless. But at some point, you can't continue to out-earn your spending habits. You've got to learn to say no. You've got to keep track of you money and tell it where to go. And how do you do that?
Hint: If you guessed "get on a budget", you're right.
Get on a budget!
You will not get out of debt if you aren't doing a monthly, zero-based budget. If you aren't telling your money where to go every single month, then you don't have a plan. You can't get anywhere without a plan. I can't recommend You Need a Budget enough. It's a fantastic tool.
Have a plan
If you've got a big ol' list of debts that you're looking to get rid of, then make a plan. The two most common methods of getting out of debt are the debt snowball and debt avalanche methods. It doesn't matter which plan you choose. The best plan is the one you stick with.
Set long-term goals
This is the funnest part of the whole thing. What do you want to accomplish financially? What's your point of getting out of debt? Maybe you want to retire early. Maybe you want to be able to give to charities and causes that are close to your heart. Maybe you want to quit your job and travel the world for a couple of years.
When your trapped under a mound of debt, these types of goals are much harder to accomplish.
Here's the thing. These aren't big changes. Okay, maybe for some, these are pretty big. But in the big scheme of things, these are small changes that will lead you to a life of a financial freedom. These are the things that have seriously helped us get on track.
Some people will be like us and dive head first. Others will dip their toes in to test the water. And that's okay. I'd encourage anyone to try tracking their expenses and setting a budget for 90 days. Because in three months, you'll be able to see the difference that just having a budget does to your spending. You'll see things that will make you think woa.
Give it a try. Tell me what you think.
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Cover photo by Artur Pokusin via Unsplash