Let Me Tell You How I Took the Get Out of Debt Pledge

 

There's nothing unique about my situation – graduated college in the midst of the big 90's downturn, saddled with student loan debts and a hefty credit card balance. I took the easy way out – loan deferments, making minimum payments and ignoring the rising numbers on my debt. Eventually, I settled down and started a family, adding an additional $160,000 to my debt numbers by way of a home mortgage.

Sure, it didn't look great on paper, but as long as we made those minimum payments, who cared?

The Straw That Finally Broke the Camel's Back

Then the Great Recession hit. I was one of the lucky ones that still had a job, although at reduced pay and hours. We could have survived, but our lifestyle had inflated with each raise, and we weren't emotionally equipped to scale back out spending.

Then one day, an official-looking envelope appeared from our mortgage lender. Inside was a letter using the dreaded words “acceleration” and “foreclosure”. We had to pull our heads out of the sand, quick.

Putting the Plan In Action

Our plan was simple – we would stop spending on everything but the barest of necessities. I found out about the Debt-Free Pledge online and used this as a model for our strategy. Our version went something like this:

1. Enact an immediate spending freeze on all nonessentials.
2. Gather up all our debt information, including exact amounts. Also, we gathered up all our assets.
3. Called the creditors and worked out payment plans and reduced interest rates where we were able. We even managed to get a refinance on our home, lowering our payments to better fit our reduced income.
4. Brought our kids on board with the goal. They were excited to help us come up with money-earning ideas and ideas for free fun, which really helped them adjust to our new austerity lifestyle.
5. Canceled what we could – cable was gone, we reduced our auto insurance to remove the fluff, and pizza night was now a homemade affair.

We also followed the advice of an attorney and fought the small speeding ticket that I had gotten which also helped keep our premium down.
Every spare cent went toward debt repayment, except a $1,500 buffer in the bank against emergencies. Bonuses, birthday gifts from ol' Uncle Henry, and proceeds from selling off items from our reckless years were all piled onto the debt.

How We're Winning the Battle and Staying Debt Free

Except for our mortgage, we're out of debt today. As more of our income was freed up, we continued to fight against lifestyle creep. We're still making the pizza at home, and we haven't seen a need to reinstate the cable.

The secret now is to have a goal for our money. It's much easier to walk away from an unnecessary purchase when there's something else you want more. Our first goal is to aggressively pay off the house and build up our investment income. We're also saving for some major (but frugal) travel in 2017.

When we were getting out of debt, it was satisfying to watch the numbers drop each month. Now that we're debt-free, it's absolutely exhilarating to watch them rise instead!

Have you found a way to control your debt and move it in the right direction? If not check out more great advice from the team at Sell My House Fast!