Become debt free. Get out of debt.
Phrase it however you like. But the point is it’s do-able, it really is. But you need the right strategy and tools in order to actually achieve it.
If you’re a parent, it’s important that you tackle this now and then lead your kids by example. Don’t let debt or money control your life, instead control your life and your money.
5 Brilliant Ideas to Become Debt Free
1. The Debt Snowball Strategy
Dave Ramsey (a popular budgeting guy) talks about a ‘debt snowball strategy to get rid of debt. His strategy is simple, pay off the smallest debt first to gain momentum. Instead of paying off the loan with the highest interest rate, you pay extra towards the loan you can pay off fastest, that way you gain momentum and motivation to tackle the next one.
It’s brilliant, really.
To start, make a list of all your current debts, then relist them smallest to largest.
Now that you have your goal, let’s talk about easy ways to both save money and make more money so you can pay off those debts quickly.
2. The Must-Get App
Digit has quickly become one of my favorite apps.
It helps you save money automatically without a budget.
I’ve been trying it out for the last few months and now I’m totally hooked.
Here’s how it works. You connect your bank account to Digit, Digit then watches your spending habits and transfers small chunks here and there from your regular checking account into a special savings account. I’m talking $4 here, $7 there, etc. You’ll barely notice the few dollars being transferred and pretty soon you have a nice chunk in your Digit account.
We’ve all heard the theory that if there’s money in your account, you’ll somehow spend it. So what Digit does, is help you save it before you accidentally spend it. They have a guarantee that they won’t overdraft your account – they learn your spending habits and save accordingly.
Right now I have $205.20 in my Digit account. Money that I would have otherwise spent here and there, that quietly got saved away by Digit without me noticing it gone at all.
You can sign up here, it only takes a few minutes. You’re gonna love it.
And then after a while, you can transfer the money back into your checking and pay off a nice chunk of debt.
More about Digit: It’s free, they make their money from earning interest on the money, just like banks do. All funds held within Digit are FDIC insured up to a balance of $250,000. And you can turn off transfers at anytime.
3. Create a Budget
I’m one of those nerdy people that loves budgets. I kid you not, I literally snuggle up under a blanket, grab my notebook and get a little giddy when it comes time to look over how we did last month and plan the next month’s budget.
When I had more time I used to track every single dollar to the dot. Now we’re making a little more, we have no debt, and I’m incredibly busy so I watch it close but not that close anymore. But I believe that when you’re in debt your priority has to be every dollar. Because at the end of the day, it’s not your dollar. You owe it to someone.
One of the best ways to do this is with the old fashion cash envelope system. There is something about the visual representation of the dollar that really helps keep spending more in check. Plus, when the money in the envelope is gone, there literally is no more spending in that category.
I could explain the entire cash envelope system here or you can just read this post instead. She did a great job explaining it so I’ll leave that to her.
Now, to help figure out how much you are currently spending in each category and where you can cut down on spending, fill out this spending cheat sheet using the instructions below.
- Click here to download the free cheat sheet. You may need to print multiple worksheets to fit all your expenses.
- Pull out all of last month’s bank/credit card statements.
- Write down every single thing you spent money on and put the total spent in the column it best belongs in.
- Then use the columns to quickly decide which things you spent money on last month and don’t need to next month.
- The final step is evaluating and figuring out how much you are spending in each budget category (groceries, beauty, gas, etc) and using the cash envelope system to set aside x amount for the week/month.
4. Cash Back
Chances are, you’re still going to buy stuff. It’s hard and usually unrealistic to kick spending completely to the curb. It’s important that we are spending less and spending intentionally.
Now, if there is something that you must spend your money on, for example, I ordered my sister-in-law a wedding shower gift. Shop smarter and earn cash back.
I use Ebates whenever I am ordering anything online. I check to see if the place I’m buying from is on their list of stores and then I go through their link and earn cash back. When I ordered the gift for my sister-in-law I got $4.53 cash back. When the cash back check arrives, deposit it and put it straight towards the current debt snowball you’re working on.
Signing up for Ebates is free (and get a $10 gift card to Target, Walmart, Kohl’s or Macy’s through our link).
Again, the key here is to only use it when you are anyways ordering something.
5. Start a Side Hustle
Sometimes, no matter how hard you save you just don’t have enough money to tackle your debt fast enough.
That’s when it’s time to get really serious and find a way to make some extra income. One option is to look for a new job, which isn’t always realistic, the second option is to start a side hustle.
In order to make a side hustle work, you have to be committed. You may have to “burn the midnight oil” for a few months in order to get it up and running, but once it’s running and successful you’ll be on your way to paying off your debt much faster because you have extra money coming in!
One of my favorite side hustles is starting a blog. The startup is soooo incredibly low ($2.95 a month if you go through the link on our blog). That is less than a cup of coffee a month. Or think of it like this, it’s like spending an extra $3 in gas once a month – you wouldn’t even notice if you spent an extra $3 when filling up your tank.
Depending on how hard you work on your blog, you can make anywhere from a couple hundred, to a couple thousand dollars (or more) a month. There are some bloggers making $10,000 – $100,000 a month or a more on their blogs. If you need proof that blogging can make money, you can look at our income reports. That will also give you ideas for income sources if you end up starting your own blog.
If you’re ready to start a blog, I’ve created a step-by-step tutorial.
There are of course other side hustles out there, like selling stuff on Amazon, but my personal experience is with blogging so I know it works.
In 2014 we decided to start a blog to encourage other moms on this crazy parenting journey we are all on. We had no idea the blog would also become the sole income of our family, making more than quadruple what we were before.
If you’ve been thinking about starting a blog, the answer is YES!
Think about it. Talk about it. Test the waters of what you could write about with your friends or in a journal and see what you think.
Put in the hard work now. Get out of debt quickly.
You got this!