When you're proactively paying off your debt, there are a few things Kevin and I have decided you absolutely must have to be successful. Today we are sharing our list!
Money Tracker. We use Quicken. I really love it, but it does take a little time to input all our data every month or so. Its totally worth it. I can see how much we are spending at target, I can go back through and look at old payments etc. I use it when I need to figure out deductions on our taxes...super helpful. You have to have a way to track your spending so you know where you need help.
Shoebox for Receipts. Nothing fancy, just a place to keep every piece of paper in case you need it. Label it with the year and if you even need to go back, you've got it. This has come in handy multiple times whether its getting insurance to reimburse for glasses/contacts, showing the dentist office what they actually quoted us on a procedure, going back to the car repair place to get a something fixed again (that they charged us for fixing on our last trip, that we found out wasn't fixed 6 months later.)
Progress Chart. Kevin and I are so thrilled at how far we've come, and we are able to recognize and see that by charting our progress. $37,000 is still a lot of debt, but its a lot less than $100,000. You can keep it on the inside of your bathroom mirror, or a giant chart in the middle of fridge.
A System. How are you going to pay off debt? Are you going to go to cash-only? Work a second job that goes 100% to your debt? Live off of less? To me, this hits home when I think of weight loss. Saying "I want to lose weight" and doing it are totally different things. Just wanting it won't get you very far, you need to create a system that works for you that allows you to get the debt gone. And you have to work at it, and stick with it.
Old Stuff. If everything you own is new, a new car, new house, new clothes....you aren't paying off debt. If you're really going to be doing this...your stuff has to be old. If it's not old, you're not doing it right. Your clothes should be from last season, your car should be somewhere between total junker and slightly embarrassing, and your house should be something small enough and/or old enough that you can easily afford the mortgage. If your life is full of new things, you're likely not committed to paying down your debt.
Automatic payments. You should have an automatic payment set up to pay off your debt. The best thing we did to help our progress is to not let part of our money even touch our bank account. If I don't see it, I don't think of it being there, and I don't spend it. If you can set up a special account to pay your loans through, or take out a certain amount automatically from each pay check...do it. Automatic payments should be set up for your bills and other debts.
Someone to Get Excited with You. Every now and then I'll turn and tell Kevin....only $37,000 to go! Talking about it keeps us motivated. I have a few friends I do this with too (and the blog has helped keep us accountable as well). It helps us stay accountable, and keeps us motivated!
Significant Other On Board. If you're paying off debt with your spouse, family, or significant other, you all have to be ready to get on board with paying off your debt. I think of when I was a kid and would ride the tandem bike with my dad. He could be as motivated as he wanted to be, but if I wasn't helping pedal the bike, he would get burnt out pretty fast. (you've probably heard me joke before about how I was a chunky kid) Either that, or he would turn around and tell me to pedal harder (or more likely to stop resting my feet on the bike and put them back on the pedals). You'll get burnt out doing it on your own, and even if you don't, it will create plenty of tension in the relationship that isn't good for getting you where you want to go.
So there are our must-haves for paying off debt! Do you have any must-haves? Feel free to share!
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