It’s been a year since I started to document my long, slow climb out of debt. Looking back on the year’s posts, I’ve pulled out some of the key lessons for kicking your own debt to the curb. Let’s take a look.
1. Give yourself a financial detox period.
When you first begin to address your debt, take a time-out to assess and change your habits.
Chances are, you’ll discover that you’ve been doing a few terrible things thinking they were good ones.
For me, there were three “money-saving” practices that had actually been ruining us. I stopped them, cold turkey, for nearly the whole year. Find out about three no-no’s when you’re deep in debt:
Want to Pay Down Debt? Stop Doing Just 3 Things Now
These “Money-Saving” Habits Are Keeping You in Debt.
2. Yes, you have to budget.
Tracking my expenses and sticking to a budget were the single most important changes I made in 2019. You might have to experiment before you find the best path. Luckily, there are a lot of good models out there.
Five Ways to Budget and Beat Debt (There’s a Method for You)
All You Have to Do Is Get Started
For me, a simple spreadsheet did the trick. Now that I receive paychecks again after many years of freelancing, I found that breaking my budget down to the two-week pay period made all the difference.
If I can budget, so can you. Click the post above or right here to find more.
3. Save, even while you are paying down debt.
When I really, truly, looked at our money, I had to admit a hard truth: we’ve done okay on long-term savings, but our lack of short-term has hurt us repeatedly. I bought into the “wisdom” that you should pay down debt before saving, which is bullshit for people like you and me.
You can start from practically nothing, and work your way up. You can make it into a challenge and a game. For example, this year I have taken the 52-week saving challenge to save an extra dollar every week, starting with a dollar in the first week of January, two in the second week, and so on. By the end of it, I should have almost $1,400 saved up.
As I wrote in this post last year, you can start by saving just one percent, then slowly increase by one percent over time. Since I have very little left over to save, I’ve found that using a percentage instead of a dollar amount feels more empowering.
The Shame-Breaking Magic of Knowing Your Saving Rate
One percentage point can mean the world.
4. Face your debt and spit in its eye.
You’ll be keeping track of a lot of things in the effort to get out of debt, mostly in apps, on spreadsheets or old-fashioned pencil and paper. I found, early on, that I needed to see my debt in physical space, and reduce it in some way that was materially satisfying.
The idea to make a paper chain, which I discovered via Get Rich Slowly, has been one of the best ideas I explored in 2019. I documented the painful pleasure of making my chains here:
Try this approach with these steps:
- Start small. I started with just a few of my most vexing debts at first, then added all of them when I gained confidence.
- Choose an increment for each link. I chose $1000 for most of mine, but if that doesn’t encourage you, choose a smaller increment that feels right.
- Make it fun. Choose nice paper or interesting old magazines, gather your supplies, and enjoy the process, especially if your chain is long.
- Relish the tear-off. It’s a really special feeling to yank a link off your debt chain. You might even make ritual of it. Indulge in a celebratory moment as you acknowledge what it took to knock down your debt by $25, $50, $100, $500, or $1000.
- If tracking your debt feels too negative, try chaining your savings instead. Hey, if staring at a pile of debt is too depressing, I understand. How about adding chains to a savings visualization instead?
The point here is to empower yourself. Don’t make it a punishment or create a shame cycle out of this exercise. Let it inspire you!
5. Take baby steps, and don’t peer too far down the well.
You might be in the same boat as me: Most of our debt will be with us for at least five to seven years, and some of it will be decades in the paying down. A few debts are likely to die with us (cough cough, student loans literally do, cough cough). If I kept that fact uppermost in mind, I’d probably be too discouraged to continue. Instead, I set reasonable goals and celebrate small victories. I try to set goals in terms of behavior changes, which I can control, at least as often as outcomes, which I can only partly control. Two of my goals last year, for example, were to increase my savings rate (behavior) and to get our credit card use down from 66 percent to 50 percent. I accomplished both. This year’s goal is to increase our net worth, if only by a dollar.
Since we will take on one last parent loan for college this year, that is a pretty ambitious goal. I’m staying focused on it instead of trying for many goals this year.
Oh, and my other goal for 2020 — to have more fun — is a perfect segue to my last financial lesson:
6. Don’t be a dick to yourself.
Make no mistake: going cold turkey off credit cards and changing your spending and saving habits is really really hard. Do what you can to make the transition as pleasant as possible.
One of my favorite little hacks, which I wrote about on my old blog CheapBohemian, is to “match my shame”. If I buy a coffee (my vice), I send a micropayment of the same amount to one of my credit cards. You will need to be kind to yourself to get through this. Pat yourself on the back for getting started, and show yourself love every day.
Shout-out to Get Rich Slowly’s J.D. Roth, whose blog I followed religiously 10+ years ago and whose blog I returned to in my literally darkest hours. Thank you for saving my life twice, brother.
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