5 Habits We Changed to Become Debt-Free
The cold hard truth is that to become debt-free, it’s going to require life changes… There’s no way around it. Our habits and life decisions created debt and we had to change those habits in order to become debt-free. The good news is, it’s really not that hard to change, if you want it bad enough.
Stop living in the Dark
Most people know exactly how much money they make annually but, few know how much they spend!
To become debt-free we had to actually face our debt. Sit down and add up ALL of your consumer debt.
Using a debt tracking spreadsheet made our lives SO much easier. This awesome tracker will do all of the hard work for you and also show you some incredible information about your debt. Totally free!
Acknowledging the problem is really the first… and most important step towards life changes. Add it up, and don’t be embarrassed!!
We had a little over $109,000 in consumer debt!! Holy Moley… It was terrifying but, it also set a fire under us. If you have debt, you’re normal…
The vast majority of American households are in debt and you’re now making the decision to become debt-free! Good for you!
Create a budget…STICK TO IT
To achieve debt-freedom you have to have a plan, and that plan starts with a budget! This one was fun for me.
I’m a numbers nerd and I dove into budgeting head first. My poor wife… she was obviously supportive but, I was ALL IN.
We started with the Every Dollar App and slowly transitioned to an excel workbook I created. Budgeting created a sense of control over our finances.
Once we established our budget, we actually had MORE money than we ever thought!
One of the biggest benefits of budgeting is finding extra money to throw at debt!
For years this money had been slowly leaking out of our account toward silly small purchases…
Cancel Credit Cards
Canceling our credit cards was pivotal in our debt-free journey. My wife and I had 5+ credit cards open in our name… Why?!
Who needs 5 different ways to get into debt?? Apparently, we did… For years we would pay off a credit card and then run the balance back up.
We each had one big credit card. Old Navy for her and Cabela’s for me. Once we paid off the 7k+ in debt, we shut the cards down, for good!
For us, credit cards were just an easy way to rationalize a stupid purchase.
I would use mine so that I didn’t have worry about the money right now. I think I was just hiding big buys from my wife (sorry babe)…
Close the cards and use cash, and I guarantee you will spend less money!! I’ve been learning A LOT about travel hacking and once we hit our F.I number, I think we’ll explore this.
If you live alone, skip this step… If you are married or living with a partner, this step is wildly important for your debt-free journey.
This step is by far the most difficult step.
Talk to your partner. Tell them how much debt you have, tell them what you’d like to buy, talk about your mistakes, sit down and just talk about money!
Don’t let money become taboo in your life. Financial problems are a leading cause of divorce and I simply love my wife too much to become part of that statistic.
If you’re serious about becoming debt-free, you have to be open and honest with yourself and your partner.
An amazing side-effect of our debt-free journey was the improvement in our marriage!
I’m not to proud to admit it, but this was hard for me… I really needed to grow up.
Realizing that just because I wanted something, it didn’t warrant just slapping it on my Cabela’s card and “worrying about it later”.
Separating want from need wasn’t hard to do on paper but, it was hard to do in my little pea-sized brain.
Sure, my wife and I work hard and we make great money… and we rationalized every stupid purchase with that very thought. That is a childish, short-termed vision.
To become debt-free we had to look at the long term picture and postpone gratification.
As Dave Ramsey says, “Adults devise a plan and stick to it, children do what feels good”. I’m here to say, becoming debt-free feels better than any purchase I’ve ever made… It took us four years to get here, but… man oh man… it’s worth it!
What changes will you make to get out of debt? Let me know in the comments!!