If you’re ready to start, I would start with…
Reading or listening to The Total Money Makeover by Dave Ramsey. It can be intimidating or some of what he says may seem outlandish, but there’s a reason your way of finances hasn’t worked for you…so listen with an open mind…I promise it works!
When we first started, I some “Dave research” and started listening to his show on SiriusXM, the Podcast app on my iPhone, and I watch some of his “Best Of” shows on Youtube. He’s a very charismatic guy and he puts things in terms that I can understand.
I’m still not a whiz at all this stuff, but at least it makes sense to me now.
I was so excited about this new way of budgeting, paying off debt, and building wealth that I almost forgot to include my husband! I was so ready to change that I hadn’t even considered to make sure he knew what we were about to do!
Luckily he was on the same page as I was and was ready to make some changes with me.
I can look back now and laugh at it but at the time it would’ve caused some major issues if he wasn’t quite ready to make some changes.
When you’re ready, you’re ready.
Add up your debt…
This step should be relatively easy. Add up all of your debt (you can include your mortgage but you don’t have to in this step).
Personally, we had two car loans, two small credit cards, and student loans from my husband’s undergrad. We also have a mortgage but didn’t include it in this list – for now, you only want to focus on consumer debt.
Add up your debt (not including your mortgage) to get a picture of what size of mountain you are about to climb!
Debt is DUMB because it takes your most valuable wealth-building tool (your income) away. Debt is DUMB because it takes away from your future and from your children’s future. Debt is DUMB because you can’t live the live you want if you’re constantly making payments to creditors, cars, and other finances items.
Still ready to start?
Get on a budget!
If you do not already have a budget, I highly recommend making one. If you are married, sit down with your spouse and make one. Write everything that goes out. All the necessities. You may think, “we don’t have the time to do a budget.” You have the time, I promise…you can’t afford NOT to do one!
There are so many budgeting apps that help you set up a budget. And Dave Ramsey recommends using the EveryDollar App (you are giving ever dollar a name and a designation). However, my husband and I prefer to use a Google Sheet spreadsheet that we both have on our phone and it updates in real-time. Whatever format you’ll use is what’s best for you.
Important note: it honestly takes a couple of months of making and sticking to budgeting to get the hang of it. Things come up, you forget to budget for something, or you completely fly off the budget…this happens so give yourself about two or three months of a grace period to really give budgeting an honest try!
Once you read through Dave Ramsey’s book or any resources, you’ll come across the Baby Steps. This is a tried and true method for paying off debt and building wealth.
Start with step 1 and progress through step 7 – we already had Baby Step 1 complete so we were ready to move on to Baby Step 2.
My husband and I are currently in Baby Step 2 – we are using our snowball to pay off debt! We pay minimum payments on all debt except the smallest debt – then we attack that smallest debt will all freed up income!
It’s not uncommon to have a huge snowball working for you to pay off debt – that’s the whole idea of getting a snowball going!
Since we started in November of 2018, we are almost to our half-way mark on your debt payoff journey!
Getting started wasn’t easy… we started with:
- Adding up subscription plans
- Adding up debit card purchases for places like Target, Walmart, and restaurants
- Finding areas in our budget to cut so that we could get our snowball bigger
That’s what got our snowball rolling! We made cuts anywhere and everywhere that we could!