Darren Rowse at problogger.net is having a group writing project and wants submissions in list form. I was trying to think of what I can write about and then it hit me – I don’t have a post yet that lists everything that we are doing to make a dent in our debt.
So, how did we go from over $37,614 in credit card debt to $28,623 in less than 6 months on an income of $45,000/year?
1.) Number one thing – change the attitude! Things didn’t start happening for us until we started thinking positive and started believing that we could make this happen. A positive attitude leads to positive results. Whenever I start feeling blue, I try to remember to repeat that phrase to myself.
2.) We removed all credit cards out of our wallets and put them somewhere safe in our home but also a spot where they are not easy to get to. Some suggestions I’ve heard of are to freeze them inside a water-filled container or lock them in a safe.
3.) We track where our money is going. I use Quicken to track everything and we rarely use cash. Not having cash makes it easier to track things. (If you don’t have Quicken, you can do this using a pencil and paper.)
4.) We found places to agressively cut spending. One of the easier expenses for us to cut has been in household spending. I no longer purchase things to decorate or furnish the home. We are doing fine with what we have and I have learned that we do not need more. One of the hardest is groceries and dining. I’m still working on that one. Overall, we are taking drastic measures to spend as little as possible so more money can go towards debt.
5.) We are working on increasing our income. I have been furthering my education with some classes to earn more at work and my husband is working hard to get his business off the ground. We have also been making extra money in interest on one of our accounts thanks to Discover Bank’s CD rates and we’re trying to increase our worth, myself as an employee and my husband as a self-employed individual (hopefully soon ;))
6.) We use any extra money towards debt. For our tax return this year, it all went towards debt. The income that I will make from my blog will go towards debt. Basically, if it’s not from a paycheck it immediately goes towards debt. I’m also always on the lookout for ways I can make a few dollars here and there (surveys, selling things, etc.).
7.) We worked to reduce the interest rates on our credit cards. This one wasn’t that easy when we started out paying off our debt. Some people can call their credit cards and get their rates lowered. I wasn’t one of them until I started knocking down the balance on the credit card. Then they listened. For more on this one, visit my post here. We also used balance transfers to shift debt around at lower rates and even tried prosper.com to refinance some of our debt. You can get some information about credit cards and how to use them properly at creditcardsguidance.com.
8.) We figured out our gameplan. We listed our debts and figured out which ones were were going to pay down first. All extra money was shifted towards that debt. There are many different methods one can use (like pay the lowest balance first or even the highest interest rate balance) but remember you have to do what is right for you! We actually are paying attention to a few things with our plan: our credit ratings (trying to keep debt equal between my husband’s accounts and my accounts) and trying to not have too many balance transfers going at the same time due to the risk (like how one minor late payment can skyrocket the interest rate).
9.) We calculated a goal date. I was a little hesitant to do this one, because I didn’t want to set a date and then not make it. But I am finding that the date is keeping me motivated. May 2009 here we come!! 😉
10.) We are not gonna give up!! There will be times we slip. We sure did end up spending a lot for dining last month and of course I feel bad about it. But it sometimes slip-ups happen to the best of us. Just pick yourself back up, dust yourself off and keep on heading towards your goal.
That’s everything I can think of at the moment. But I’m still learning – there is probably more to come