Do you have a budget? Do you save and make your debt a priority? Do you want to but don’t know where to start? I know exactly how you feel. We did our own research and gained our own knowledge and literally took small tasks at a time. I guess you can call it the initial chiseling of our debt. But there is a trick to it. A way to know what debt to chisel away at first and everyone’s situations are different. Here is our story and I hope you can relate in any way or gain some tips from us.
In the Beginning
9 years ago when my husband and I merged-debt that is and began dating-we had a bunch of little necessary and not-so-necessary debt.
I had a line of credit, student loan, car payment, department store debt, delinquencies and had left my ex suddenly and had to lay low a while so I had zero income for months in the beginning but a bit I had stashed in my own secret spot for gas.
My husband had a mortgage, 2 credit cards, car payments and the day to day expenses and utilities to manage. My credit score was low 500’s and Pete’s I thinks was just into the 600’s! Yikes!
Today we have zero credit card debt, 2 very low-amount car payments a mortgage and I jumped over my husband in my credit score. I was so excited a few weeks ago when our bank had sent us our scores because they recently opened us a better rate travel rewards card and I was 65 points higher! Take that! I am over 700-almost 800 and my husband not far behind…in 9 years! Actually I had been in the 700’s for almost 2 years now. The only cards we have are on purpose-we use travel and cash rewards to pay for bills, etc then go home-log into the bank and pay them off immediately. They are always payed off each month. We do this for the rewards-to make money off our own money from gift cards we cash out to travel credit.
How did we do this? Lot’s of conversations and discipline! First we did old-school pen and paper. Listed all current debt and interest rates. Looked at all statements to see what balances were left. From there, we could determine which to pay off or even combine. To do that also requires looking for offers that have the lowest rates as well as no fee for balance transfers. Fees are more debt, so avoid them at all costs. It is doable, just takes research. We kept every offer that came to us and spoke to more than one bank. Even played the “we have been your customer for xx years and this is all you can do for us?” Amazing how they look and begin to find a way! We had 2 high interest cards and 1 OK interest rate card and thought-“HOW?” How can we rid these ASAP. They were costing us hundreds a month in payments and to rid those would save us hundreds a month. Taxes neared and we knew just where that tax money needed to go! We payed off the smallest one that way and the offers started coming in. We found one that was $0 transfer fees and lower interest. We took the 2 remaining cards and payed them off with this new offer. This did 2 things for us: it showed 2 payoffs and we went from 2 credit payments to 1 each month and saved. So 1 less card and 2 combined put money in our pockets each month WHICH we used to save a down payment. We traded a car in for a newer car with less payment a month. We had improving credit and money down and this new car payment saved us even more. That went to the 1 credit line for a while. Got extra money-bonus check from work, extra cash…it went to this card. So offers were coming in again. We found one that allowed us to combine our 1 credit line with a car loan and combined. Again-2 monthly payments turned into one-the money saved went to this new card. Are you with me? At this point and I am guessing we are well into year 2-3 by now, we have 1 credit line, 1 student loan and 1 car payment. Manageable for a while. We began to reward ourselves..a few trips, spoiling the kids and we did this comfortably for a while. Then we had a year with a great tax return-I think I am remembering that right or maybe it was a bonus check almost totaling what was left of my student loan. This was when I made the decision to pay it off. More money a month! That money saved also went to the credit card debt. We continue to make well over minimum payments on that credit line and we have by now chiseled a great deal away. No more student loan payments and a cheaper car payment. My husband then gets promoted about 2 years ago and is given some stock shares….the stocks rose and rose and Cash Out! We payed that entire line of credit off!
At this point, my husband traded his car (in these years we had a payed off car we sold and got a newer and sold that one for a newer, but never had payments on it). My husband was going to give us a second car payment but we have eliminated so much debt and monthly payments this was ok. Now we sit credit card/line of credit debt free, 2 car payments which are very manageable, soaring credit scores, a good amount in savings and a mortgage. Now my husband has just been promoted again! Where the real benefit of all we did to stay disciplined all those years is paying off at this very moment!
My Big Payoff!
Tomorrow is my last day of work! I get to quit the 40 hour a week job and stay home with my boys! We worked hard to take control of our finances, it has made us excellent teammates together and to have my husband tell me he will be promoted and for him to look at me and say “Honey, we can afford for you to get rid of your work stress and you can stay home!” was priceless. There is that part of me that says if I do work then we have more money and I feel that as soon as the youngest is in school full time I will surely be doing something for extra income and to keep supporting our retirement although my husband and I pour extra increases into his and we are well on our way there between the 2 of us. But to relieve the stress of my job and take this time at home BECAUSE we took care of business when we did is going to be a huge relief for me.
My Advise For You Right Now
It is doable. How do you start? Grab a pen and paper and all your bills, get someone to take the kids for the night and you and your spouse start jotting and planning. It really is that simple! A conversation in a quiet setting, a plan and trust and you are now well under way. Then set time…at first it may be every few weeks…again to get rid of the kids, relax the mood and discuss where you are at. From the beginning be honest with yourselves and decide who is the most responsible of the 2 of you and make that one the bill payer. 1 of you controls the money! In my house it was me and my husband and I made agreements-I would never come to him in anger or attack mode over every little purchase and he would always ask and keep his own self knowledge about where we stood. One fun way to do this is budget an allowance and pay it out in cash! This allowance is your lunch out, coffee, a movie or ? If I ran out of cash, I would need to go to the bank or use my card and if I did this to spend more money (or vice versa) I had to pay my husband $5 each transaction from my next allowance and he got to keep that to add to his. It was fun and you know what? We never had to pay each other for going over!