Setting goals is essential to living a successful life, and this is especially true when it comes to paying down your debt! If you want to find financial freedom, you have to define (and refine) your budget.
It’s not enough to make broad goals like “I want to lose weight” or “I will be financially independent”. It’s great to use these as a part of your affirmations but as goals? No.
You must be specific, B-E specific!
You should create and define clear goals that will build towards that momentous success of living a better life on a budget.
Instead of “I will stop using my credit card and pay it off!” Come up with a concrete plan to pay off that card in X number of months. Figure out exactly what’s causing you to use the card now and how you’re going to stop those behaviors.
If physically cutting up the card gives you anxiety, consider freezing it – literally. Put it in a bowl of water and stick it in the freezer. It won’t eliminate your access to it but it’ll certainly give you time to think about whether or not you really need it to make that purchase.
Once you’ve set your goals, take a look at your budget and figure out your plan of action. I recommend starting by immediately cutting your budget by 5%.
Define Your Budget
Find Your Starting Point
Does all this seem a little impossible? Perhaps it’s time to hire a financial coach!
The cuts can be made without pain, but you have to be willing to put in the work.
When I started this journey in January, I was able to take our $2,500/month income and trim it up by an additional 8%. I too thought it impossible at first until I took the time to develop an action plan.
Mind Your Time
After evaluating your financial budget, take an honest look at how you’re spending your time. Just as small purchases add up – a $3 cup of coffee doesn’t seem so bad…until you realize a canister of coffee at home would only cost you $10 for at least two weeks of coffee… – so do the “time sucks.”
Sure, maybe you only spend an hour watching TV each night but what if in that hour you could be earning $20? That’s over $7,000/year (nearly $9,000 if that $7k is on an unpaid credit card with 22% APR!)
Kinda crazy to think about, eh?
I’m not suggesting you use every minute of every day to work towards paying down your debt. You must take the time for self-care in more than one way and if that means watching a bit of TV, then go for it! The important part is making sure you’re not wasting hours now that you may not have later.
So there you have it.
In two months, I was able to pay down my debt by over $10,000.
The specific steps I took are outlined as follows:
- Paying based on interest rates
- Putting my tax return to use
- Developing additional income streams
- Making credit work for me instead of against me
- Identifying why you buy
- Redefining the way I budget my life
Our debt, while still quite high, now looks like this:
- Lowes Credit Card: $0
- Furniture Row Credit Card: $0
- Student Loans: $137,687.82
- House: $42,800
- Car: $17,816
Difference of $10,588.67 in only two months!
I can’t say this has been an easy road, nor will it get any easier any time soon, but there is not a doubt in my mind that this is the best path towards a better, healthier, happier life.
Before we wrap up, I’d love for you to tell me:
what is your biggest struggle when it comes to budgeting your life?
It’s wonderful that you’ve been able to do this all on your own. Well done!
Well I do have a very supportive partner who helps me, which makes a world of difference, but thank you! 🙂
No more credit card debt! Congrats! I am a bit jealous of your mortgage balance. I still have $130k and am aggressively paying it down!
Haha don’t be jealous of the mortgage, our house is 130 years old and a HUGE fixer-upper. Fortunately it’s most cosmetic work but still…
That’s awesome! I need to get out of credit card debt ASAP!
Well please let me know if you need any help coming up with a game plan!