How I paid down my debt

[ReadingLearner]

Hello,

I just felt like sharing my strategy on how I got out of debt since this seems to be the forum to share that type of information. I had about 23K in debt and paid it off in 2 years. I had the anti-mustachian habit if putting everything on credit card and would eat out impulsively (emotional eater here!) and acted like a millionaire after getting my first job. After feeling the stress of my debt, I made a resolution to pay of my debt. Here is how I did it:

1. I had my debt consolitated first.
2. I got rid 1 of my 2 credit cards. I would only use debit or cash even though I had rewards on my card since it was too easy to go over my budget.
3. I started to keep track of my spending. I would have a separate coin purse that I would use to put all my receipts in and then I would log it all in an excel spread sheet. At the end of the month I would see how much I spent in each category.
4. Any extra money I had, I would put it towards my debt or I would just keep it as cash flow so I wouldn't have to touch my  credit cards.

I think it was mostly re-wiring of my habits that got me out of debt, because I noticed alot of my anti-mustachian ways were very auto-pilot. I think you just need to do it long enough so that your habits become re-wired.

Anyhoo, I am now debt free as of November 2013. I use my credit card again to take advantage of the points but I make sure that I have cash. Also, I made sure that my credit limit was less that what I make in a month, so that I am not able to over spend more than I make.

[jbcivics]

Thanks for sharing your strategy! Very inspiring. My wife just finished grad school, so our mission the next 2-3 years is to wipe out her grad school debt and my lingering debt from undergrad and grad school, about $50k in total. It's great to hear about your success as we begin.

We've been able to manage our budget down to very low levels (no car, walk/bike to work, cheap phones and internet, no starbucks habit), which was helpful for the grad school years, and we are happy to maintain it now that we are both generating income.

The one thing you mentioned that really resonated with me was #2. I use credit cards for everything and then pay it off at the end of the month, which generates a good deal of rewards (primarily cash back). However, I always feel like I'm kind of surprised by how everything adds up (mostly groceries and beer/wine - especially since we do a lot of hosting friends).

I think I will forgo the credit card rewards for the next year and focus on having better real-time control of my budget. I'm halfway through "Your Money or Your Life", so this approach will mesh well with tracking every dollar in and out.

Anyone else have comments on credit card pros/cons (assuming you are paying it off every month, or else it's just a con in every sense of the word!).

-JBC

[Greg]

Congratulations!  It's the best feeling to pay it off.

[Exflyboy]

Reminds me of the feeling that last house payment... It feels like you just broke through a wall or something..:)

Great job!.. Now keep saving, your surfing ahead of the wave now and compound interest is a positive life force instead of a drag.

Frank

[2527]

Congrats!  What do you plan to do next?

[ReadingLearner]

Thanks for sharing your strategy! Very inspiring. My wife just finished grad school, so our mission the next 2-3 years is to wipe out her grad school debt and my lingering debt from undergrad and grad school, about $50k in total. It's great to hear about your success as we begin.

We've been able to manage our budget down to very low levels (no car, walk/bike to work, cheap phones and internet, no starbucks habit), which was helpful for the grad school years, and we are happy to maintain it now that we are both generating income.

The one thing you mentioned that really resonated with me was #2. I use credit cards for everything and then pay it off at the end of the month, which generates a good deal of rewards (primarily cash back). However, I always feel like I'm kind of surprised by how everything adds up (mostly groceries and beer/wine - especially since we do a lot of hosting friends).

I think I will forgo the credit card rewards for the next year and focus on having better real-time control of my budget. I'm halfway through "Your Money or Your Life", so this approach will mesh well with tracking every dollar in and out.

Anyone else have comments on credit card pros/cons (assuming you are paying it off every month, or else it's just a con in every sense of the word!).

-JBC

Thanks Everyone :)

And I'm excited to hear that you are starting on your debt free endevour JBC :) I agree with what everyone else has stated - it will feel very nice once you are there. For your credit card question, I do find that the only thing that is keeping me from using it are the points, but that is it. Although, I am re-thinking that, because I do find that I tend to over spend when I am using credit ccard. I think using cash is the easiest way to keep on track of spending. For instance, lately we've noticed we've been spending alot on groceries but would like to bring it down to $400 a month, so we started to take out cash and use only that. Cash is good if you are working on getting habits solidified and for being more stringent on staying within set budgets.

Now that we're debt free, I still do "re-lapse" into anti-mustachian ways like spending alot on groceries. I think I'll go back to cash spending though, just to solidify the mustachian habits. To answer 2527's question, my next goal then, would be to make mustachian habits more automatic. Mr. Money Mustache's recent post on clutter is a great reminder - avoid buying unnecessary items (this includes snack items in my case!)