It was a crazy thought — paying off and cutting up every single one of my credit cards. It was an even crazier thought that one day we may not owe anyone a single dime.
I kept thinking to myself, "It'll never happen" and "I'm a stay-at-home mom with another baby on the way and my husband is a contractor, we can't make this work." But little by little, we did.
We killed off over $55,000 of debt in just two years all while living on one income and growing our family of five. It was anything but easy, but it was the best decision we ever made — to become debt-free.
Our family members looked at us like we had lost our minds when we told them we no longer had a credit card for "emergencies" and when we got rid of our fully loaded Mac Daddy Tahoe for a well-loved, paid-for Sequoia with leather interior being the only bells and whistles it has.
My friends thought I was insane when I started walking dogs for extra money to pay off our debt even faster. "Uh, you're hugely pregnant and you're walking dogs in this heat?! Y'all must really need the money."
And the truth is, we did need the money. We needed every penny because we had a crazy plan of paying off all our debt. And this year, we are going to finish that plan and pay off our house.
By now, our friends and family don't think we're crazy anymore because they've seen firsthand the blessing that becoming free from the hold of debt has been to our family. My husband was able to quit a job that he no longer loved in favor of starting his own business again and being home more with our three children. We've been able to give like never before without fear that we won't have enough money left to pay the bills. We've been able to send our two oldest children to a private preschool, and we've been able to go on several vacations. All without using credit cards and all while paying off debt.
It hasn't been easy, but then again, nothing worthwhile ever is. If you want to join my family in the crazy and pay off debt, here's how you get started:
1. Stop Using It
In order to completely become debt-free, you have to make a commitment to stop using debt — of any kind. That means no more credit cards, no more taking out loans of any kind, and no more borrowing money from a relative.
It'll be scary at first, like real scary. You'll feel a little panic like you won't know what to do if this or that happens, which is why you must do step two . . .
2. Start Saving
Trust me when I tell you this — once you make the declaration to become debt-free, all of a sudden all these worries and panic will hit you. You'll start worrying how you'll pay to fix the car when it breaks down or how you'll pay your insurance deductible if an emergency happens. This is why you must absolutely start building up an emergency fund.
Start with your starting point — talk to your spouse about how much you want to save first. It could be as little as $500 and as high as $5,000. The point with the starting point is to pick a number that works well for your family but is not overwhelming.
A great emergency fund will end up having six months of your living expenses saved in it. Which for most folks, if you tallied up how much money it takes you to live every month, then multiply that number by six, it's probably at least $20,000 if not more.
The truth is that if you tried to make $20,000 your starting point instead of, say, $1,000, you'd end up overwhelmed and feeling defeated when you struggled to save up that amount. Don't do that to yourself. Pick a starting point that you can realistically save in the next month to three months.
Then once you've reached your starting point, pick another point and work your way up to your six-month emergency fund goal.
3. Pick Your Method
There are a lot of arguments in the personal finance community of which debt payoff method is better — the debt avalanche method or the debt snowball method. For me personally, I love the debt snowball method (and it's the one we used) because it helps you build up momentum and keeps you from feeling frustrated by little visible progress.
But obviously, you should pick the method that best works for you and your family. In case you're not familiar with these methods, here's how they work:
- Debt Snowball Method: In this method, you pay off the lowest balance debt first and then "snowball" up from there to the next lowest balance debt.
- Debt Avalanche Method: In this method, you pay off the debt with the highest interest rate and then "avalanche" from there down to the next highest interest rate debt.
4. Which Debt to Start With?
Once you've decided on the method you're going to use, you'll then pick which debt you're going to start paying off. In order to pay off this debt, you're going to have to throw every extra penny that you have at it.
5. Stick to It
This is the hard part of killing off the debt monster. You have to stay committed and focused to paying off your debt. Even when there are setbacks (and there will be setbacks!), you must keep going. The debts aren't going to pay off themselves.
Always remember to give yourself grace when you hit a stumbling block, but don't be afraid to get back up and back to work. Write down what your life will look like once you're debt-free, and keep that as inspiration for those tough days to help keep you motivated.