How I started our debt-free journey

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After being a stay-at-home mom for almost 2.5 years, I was finally ready to return to work. Up until this point, it seemed to make financial sense for me to stay home since care for an infant is so expensive and I wasn’t making as much as I would have liked to after graduating with my Masters degree. Our debt was already piled up (thanks to my $120,000 in student loans… which is a story about stupidity for another day). We were skating by on my husband’s income making the minimum payments, but we were completely crippled by this debt.

I had heard about Dave Ramsey in the past, even read his book Total Money Makeover, but just didn’t take it seriously. Now that I had planned to return to work, it saddened me to think that I would be away from home all day and all the money would just go to debt. I was finally sick and tired of being sick and tired. I started listening to Dave’ Ramsey’s podcast and listening to families go on there and shout their debt-free scream literally made me teary-eyed. I wanted to be that family up there declaring that we were debt free. Dave always tells them that they have changed their family tree and I want to do just that for my daughter. I don’t want her to grow up with the burden of our debt affecting our day to day lifestyles and eventually weighing down on her. I don’t want her to grow up thinking debt is normal and the only way to live your life. We had put it off long enough and I was ready to change.

Along with following Dave Ramsey’s baby steps, here are some things that I did personally to help get us started.

Track your spending.

To get started, I first went back and tracked all of our expenses for the previous month and categorized them to see where our money had gone. Yes a good chunk was going towards minimum payments on debts, but I was astonished by how much we had spent on groceries, dining out, entertainment, and other miscellaneous items that we didn’t need. Seeing those numbers made me sick to my stomach. How could a family of 3 (with a toddler, no less) spend $900 on groceries AND $800 on dining out in one month? THAT’S INSANE! Track your spending and see where you are throwing unnecessary amounts of cash away – or worse, using credit to fund these superfluous purchases.

Make a budget.

I love make plans, goals, and budgets — however sticking to them is a different story. After seeing where our money was going, I decided to tackle the areas that I knew we could directly affect with some work. I decided to budget $500 a month for our groceries and $100 a month for dining out (Dave would have told us that we aren’t allowed to see the inside of a restaurant while we were on our debt, but I had to be realistic for our sanity!) I also set small budgets for household items (dish soap, laundry soap, etc. that might need purchasing occasionally), a diaper and wipes budget for our daughter, and tried to anticipate any tiny expense we might need (not want) in each month.

I am a big excel fan so I created an excel document to track out expenses. My husband works off commission so it is hard to determine how much money we will have leftover each month to throw at our debt payments, but I tried to factor the minimum amount that he makes when making our initial budget. Now the hard part – STICK TO THE BUDGET.

This can be done in a few ways – the cash envelope system is popular from Dave Ramsey, which we started for groceries and clothes. We also had two checking accounts so we tried to use one for bills and debt payments and the other checking account for necessities, such as gasoline, toiletries, and household supplies.

Stop spending.

I love to spend money. There’s no way around it, it’s just how I am. I knew this was going to be tough for me, but since I made the bulk of our day to day purchases, it was up to me to stay in control. This included at the grocery store, where I enjoyed browsing and piling up whatever looked good.

I started with my grocery budget. I enjoy cooking at home and making a grocery list, so I just tasked myself with:

  1. Selecting more affordable meals to make.
  2. Try to use as many ingredients at home to create meals – I was terrible about have a surplus in our pantry and freezer!
  3. Make my grocery list and do not purchase anything that isn’t on the list.
  4. Shop the ads and visit multiple stores to save money. I have a habit of buying certain things from different stores depending on price. I like shopping at Sprouts on Wednesdays because you get the deals from both weeks’ ads and Trader Joe’s is great for affordable staples.

Next up was unnecessary purchases that included clothes, items for the house, books, and any other random things imaginable. Right before we dived into our debt free journey, I decided to take a break from social media. I tracked my screen time through my phone and hated how much time I was wasting online. I deleted my Facebook and Instagram apps and now looking back on it, I think it helped curb some of my unnecessary spending and need to keep up with the Joneses.

Some other habits I cultivated included, no more strolling stores like Target aimlessly — that included skipping the Dollar Aisle all together (it’s a trap!) I simply would go in and get only what was on my list. I also tried to shop online if possible and didn’t incur extra costs such as shipping.

Follow a plan.

Once you are sick of your debt, decide on a plan that’s right for you! I won’t go into details about the plan, but we decided to follow Dave Ramsey’s baby steps as I mentioned earlier. To stay motivated, I started listening to his podcast daily, I check out books from the library (including books by his daughter Rachel Cruze. and other great debt advisers like David Bach and Ken Coleman). For me, always seeking information, listening to success stories, and keeping a watchful eye daily on our spending helped keep me motivated.

Dream of your future.

When we typed up all of our debts and started calculating how long it would take to pay us off (spoiler alert: YEARS, like many many years..) it was a little disheartening. To keep us motivated we dreamed of what life would be like when we are debt free. So I went back to my monthly budget and took out all of the payments that were going to debt and looked at what our total payments would be just to cover our living expenses and utility bills. It was amazing and I can’t wait to be in the place. We could literally afford to take a trip to Maui (our favorite destination) every single year and it wouldn’t even put a dent in our budget. We would still be left with plenty to put into retirement, investments, and savings for our daughter.

Spend some time daydreaming about what you want to do as a family once you are debt free. Write these dreams down and make them as real as possible because these possibilities are what will keep you going during the tough months (or years) ahead.

Well that’s all I have for now! I will update as we progress in our journey.

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