Somewhere along the way, my husband and I stumbled into $23,000 of debt. The sad part is, only about $7,500 of that total is a mixture of a personal loan for equipment and a little bit of student loans. That means that in credit card debt alone, we owe over $15,000! We are sick of being in debt, of paying credit card companies hundreds of dollars in interest every month, of not having peace of mind with our finances, and being trapped by the chains of debt. So we’ve made a plan to get out of debt once and for all–in only 12 months. One year of intense pursuit to free us of our debt. And this is how we’re gonna do it:
1.) Sell the car.
I find myself extremely lucky to be included in a settlement program in which the vehicle manufacturer will buy my car back for almost $13,000 (a 2009 with 120,000 miles on it.) In preparation for this transaction to happen, I bought a car for $1,000 to drive once my car gets bought back from the company. This $13k we will receive from the deal will knock out the $5,000 we owe on my husband’s welder (my car title is securing that loan so we have to pay it first) and the other $8k will go to pay off one credit card we owe around $6,000 on (this one makes me cringe the most), and another card with a $1,000 balance. The other $1,000 will go to replenish our baby emergency fund. So in total, selling my car will automatically get rid of $12k in debt to give us a good running start!
$23,000 – $12,000 = $11,000
2.) Put the tax refund on it.
The few years that my husband and I have been married, we’ve received around $3,000 back for our tax returns. If we get another refund this year, and hopefully for around the same amount, we are pledging the whole amount to the debt snowball.
$11,000 – $3,000 = $8,000
3.) Put my bonus towards it.
At my job, we get a bonus every year in February based on the prior year’s performance of our office. I am going to shoot low and hope for $1,000 but I know some years I have heard the bonus has been pretty good, so the whole number is yet to be determined.
$8,000 – $1,000 = $7,000
Now this is where the nitty-gritty comes in. All of our big chunks of money have been received and we will have to really hustle to hit our goal of becoming debt free in 12 months. With $7,000 left of our debt, we will need to pay off close to $1,000 a month to be debt free within the year. This is how we’ll do it:
4.) Work as much overtime as is allowed.
The past few weeks my husband has been able to work up to almost 60 hours a week at his job. This translates to an increase of about $250 to his weekly paychecks thanks to overtime. While I know he is tired and working that much is no fun, I am so thankful that he is willing to do it to get us where we need to be. If he is continued to be offered this overtime, and can keep doing it for the next seven months, that’s all we will need to do to be debt free. What an incredible feeling that will be!
At my job, we aren’t really offered overtime that much, except for an hour or two here and there. While I will gladly jump at those opportunities, it’s just not a possibility for me to get overtime like he does. So I am doing other things like learning to be a better cook and keeping the house fairly clean in order to make his life better, and I’m working on this blog before and after my day job to build it into my part time business.
$7,000 – $1,000 x 7= $0!!!
Now, if my husband’s job slows down and they aren’t offered as much overtime, we are going to have to come up with other ways to find that money for our debt payoff. This is the plan:
5.) Get a part-time job.
As much as I love having my evenings and weekends free to spend with my husband and have some downtime, I am not above getting a second job if it means I will be debt free within a matter of months. If I could manage to find a job working 15 hours a week at $10 an hour, for example, that would be an extra $600 a month I could throw at the debt snowball!
6.) Budget like crazy.
Even on the months I feel I’ve been pretty successful at saving money, I know there are areas that I am still weak in. One thing I could save more money on every single month is food–eating out especially. If I could have the discipline to pack my lunch for work every single day, I could easily add an extra $50-$100 to the snowball every month. I will also give up pleasures like getting my hair colored every few months and buying random things online.
- A great resource I found on ideas for saving money is 31 Days to Radically Reduce Your Expenses by Kalyn from CreativeSavingsBlog.com. In her book, she teaches tons of different ways to save money in your everyday life, from lowering your housing expenses, to saving on your phone bill, and tons more. I am working my way through the tips and implementing as I go, and I am excited to see how much room it leaves me in my budget each month.
Do you follow a budget? If you’ve never made a budget before, check out my super simple way to get started. You might even find it a little fun!
My plan may not look exactly like yours does. You might think there’s no way you could pay off your debt in a year, or that I’m just lucky to be able to throw some big chunks of money at my debt. Before you completely write off that this could work for you, take some time to think about your situation, and how you could tweak my plan to fit yours. Do you have a vehicle or another asset such as a boat, jet ski, 4 wheeler, etc. that you could sell and jump start your snowball? Even if you don’t, it’s OK! Just because your story doesn’t look like mine does, that doesn’t mean you can’t be wildly successful at paying off your debt.
In the end, it’s pretty much the same for everyone–sacrifice, hard work, and commitment (and maybe a little luck.) This is the formula that it takes to get out of debt. I know that I can do anything for a few months, and I will do whatever it takes to be debt free this time next year! Would you please help keep me accountable?
Do you have any strategies for getting out of debt fast that you can share? Please let us know in the comments!