It’s no secret, I am fascinated, encouraged, and border-line obsessed with debt freedom. The idea of becoming debt free makes me downright giddy.
So I love to hear the success stories of others who have found debt freedom. But selfishly, I wanted to know their secret.
How did they make it happen? What did they specifically do to become debt free? How hard was it? And is it possible for anyone and everyone?
I wanted the nitty, gritty details. From the comments and emails that I have received, I knew that the FBS readers wanted to know those answers too.
So back in August of 2014, I scoured the internet to look for sources for a new series, Debt Free Stories.
I have since interviewed 16 families who have collectively paid off over ONE MILLION DOLLARS in debt.
With that much success, these people are a wealth of information, so I poured over their content and realized that there was no magic pill, or snap of the fingers, just HARD WORK.
Everyone had unique motivation for working towards debt freedom:
- Jackie and her husband were sick of the stress that goes along with money issues.
- Amanda and Daniel wanted to travel and they realized that their debt was preventing them from seeing the world.
- Carrie was starting over after her first marriage ended.
- Jen and her husband were reeling after their son was diagnosed with a lifetime medical condition that would implode their finances.
- Olivia wanted to stay home with her children on her husband’s teacher salary. She also didn’t want to waste money that is spent on mortgage interest.
- Acadia and her husband felt trapped. They felt like they couldn’t do a lot of the things in life because there was always the debt and the loan payments.
While every interviewee’s story was different, many of their answers were similar and all of them were actionable for everyone to do. (At the bottom of the post, you’ll find links to all of the interviews.)
10 Smart Ways to Become Debt Free
1. They Earned Extra Money
When you have tracked, analyzed, and cut your budget to bare bones, there is only one other way to find extra money to put towards debt and that is to make more money. Acadia’s advice is to be creative and think about your talents and gifts and how you could use them to make extra money.
Here are some ideas from the Debt Free Stories interviewees:
- Olivia’s husband reffed basketball.
- Shannon made crafts and sold them on Etsy. She also started a blog. They also put an unexpected tax return and bonus towards their debt.
- Stacey taught frugal living/coupon workshops and her husband took on extra side carpentry jobs.
- Carrie worked at H&R Block during tax season and flipped yard sale finds for a profit on eBay.
- Daniel took on an extra job doing support work for an online company that he could do from home. He also sold rights to software that he developed.
- Tracy put her sales commissions and tax returns towards debt.
- Krista took on babysitting jobs.
- Brian’s wife took on a part-time job to increase their income to throw at their debt.
- Acadia’s husband used his handy skills to fix up their home that they eventually sold for a profit. The profit went towards their student loan debt.
ACTION STEP: How can you make some extra cash? What skills or talents do you have that you can earn extra money from?
2. They Sold Their Excess
I have made hundreds of dollars at yard sales and usually use the money to pay for our vacation spending. These interviewees sold their stuff and put it towards their debt.
- Jenn and her husband sold stuff they were no longer using and put it towards debt.
- Carrie downsized and sold her excess on Craigslist and put it towards debt.
- Amanda & Daniel had yard sales and sold items on Craigslist and put it towards debt.
- Krista & Jon also sold their excess and put it towards debt.
- Stacy and her husband sold anything that they didn’t need or love. Her advice, “live junk and debt free!”
ACTION STEP: What can you sell to raise extra money to apply towards your debt? Kill two birds with one stone: declutter and reduce your debts.
3. They Asked for a Raise.
According to U.S. News, 60% of people do not ask for raises.
- Jackie and Krista & Jon were successful when they asked for raises and put the extra money towards their debts.
ACTION STEP: If you think you’re leaving money on the table, this article offers tips on how to ask for a raise.
4. They Defined Wants vs. Needs
Almost all of the interviewees in some way reinforced that a need is an essential and a want is a luxury. A good question to ask yourself before larger purchases, “is this worth more to me than getting out of debt?”
- Maureen asked herself before purchases if she needed what she was about to purchase. If she couldn’t honestly answer yes to that question, she didn’t buy.
- Shannon and her husband cut everything they realistically could, and got very real about what their wants vs. needs were.
- Jen and her husband really changed their language by being intentional about how they used the words “want” and “need.”
ACTION STEP: Ask yourself before every purchase, “is this something that I NEED or something that I WANT? Pay cash for your needs, and put back your wants. If you’re unsure, wait two days before making larger purchases.
5. They Tracked & Analyzed their Spending
If you’re not a numbers nerd, you need to become one. There is so much valuable information in the numbers, especially when you analyze your income and expenses.
- Maureen saved hundreds by tracking her spending to see where she was blowing money. She cut her cable bill in half, rewrote her car and house insurance saving her $300, stopped the coffee runs, eliminated her dry cleaning bill. Every penny she saved went to paying down debt.
- Brian suggests you track your spending for 2-3 months so you get an idea of where every dollar is going.
- Jen recommends tracking every penny coming OUT and every penny coming IN.
ACTION STEP: If you use financial software, such as Quicken or another form, you’re in luck, you can simply print a monthly recap. But if you currently do not have a system, read my tips on how to track your current spending.
6. Budget. Budget. Budget.
Dave Ramsey says, “a budget is telling your money where to go, instead of wondering where it went.” Almost all of the interviewees mentioned their budget in their answers.
- Doug stresses that if you’re going to get serious about becoming debt free, you have to prioritize making a budget.
- Aja’s advice is to tell your money where to go by setting up a budget. “If there is no direction to the money, it can go anywhere! So direct the money often and early.”
- Olivia and her husband plan their budget every month and write down the anticipated expenses. During the month, they write down their daily expenses so they know where they are in the month.
- Jackie’s advice is to only spend money you already have, not money you “know” you’ll be getting next week when you get paid.
- Brian and his wife used excel to create a budget spreadsheet. They evaluated their spending and by prioritizing their needs vs. their wants, they were able to free up cash to put towards their debt.
ACTION STEP: Create your own monthly budget or spending plan.
7. They Changed their Habits
- Maureen’s advice is to ask yourself before you make a purchase.
- She also stopped going to the local coffee shop each day and dropping close to $6 for a coffee and breakfast sandwich. Instead she started making her own coffee and ate breakfast at home. This one simple move helped her save over $1200 a year.
- Tracy used cash for her spending categories. When her grocery envelop was empty, it was empty until pay day. That would keep you on budget!
- Carrie bartered for extra services that she needed. She offered to do people’s taxes, or get their bookkeeping organized in exchange for a discount on her rent, or car repairs. She says, bartering is a fun and creative way to get what she needed without spending money.
- Stacy and her family stayed home. She says, “it’s so much easier to save money when you’re not gallivanting across the countryside. And it saves on gas too.”
- Brian’s family packed their lunches, cooked meals at home, and shopped with a list to avoid overspending and wasting money.
- When dining out, Olivia always used a coupon and/or went to places where kids dine free.
ACTION STEP: After you analyze your spending, what habits are you willing to give up. Sometimes you don’t have to give things up, instead you need to be creative. Read my 5 Easiest Budget Categories to Reduce for some ideas.
8. They Managed their Grocery Spending
I have always stressed that groceries is one of the easiest budget categories to reduce. The interviewees also found that cutting their food spending freed up quite a bit of money to apply towards debt.
- Maureen used coupons and money-saving apps, like Checkout 51 and Snap, to save money at the grocery store.
- Ruth held monthly pantry challenges.
- Lydia stresses meal planning to cut down on your grocery bill.
- Olivia shops the ads and sales at affordable stores to plan her menu.
- Tracy cooked meals ahead of time to freeze. She also prepared extra food to freeze for late days. This helped her not blow the budget on dining out.
ACTION STEP: If you would like to lower your food bill, here are my best tips:
- 11 Simple Meal Planning Tips
- How I Use Pinterest for Meal Planning
- 8 Freezer Meal Recipes
- 10 Paper Products to Avoid
9. They were Willing to Sacrifice (pssst…it’s only temporary)
- Aja says, “be willing to sacrifice. There are things we had to do that made us look weird: home school, skip eating out as much with family, doing my own hair & nails, getting a wardrobe from the thrift store and forgoing paper towels. These little inconveniences will add up to victory sooner than you think!”
- Stacy and her husband were willing to stop vacations while they were working on paying off their debt.
- Stacy also advised to pack your lunch. Eating out daily will add up.
- Lydia and her family lived in a really cheap rental for three years to save money to put towards debt.
- Acadia and her family sold their house and moved into an apartment that they can pay for out of one paycheck with money leftover.
- Brian and his family understood that the short term sacrifices were for the long term goal of being debt free.
- Carrie decided that she didn’t need extra luxuries like her gym membership and cable TV.
ACTION STEP: SUCK.IT.UP….it’s not forever!
10. They Communicated with the Members of their Household
Ruth says working towards becoming debt free and finally getting on the same page with the finances was actually great for her marriage. She and her husband worked together towards a common goal so they fought much LESS than when they were going in different directions.
- Ruth also stresses the importance of spouses working together. Unless the two of you are working together, you will never get ahead. But once you become a joint force, you become unstoppable!
- Brian used to be the sole person to handle the finances, but now it is a joint discussion with his wife and they now discuss their money daily. They also included their three children in the discussions so they understood why the kids were hearing “no” more often.
- Jen and her husband were on opposite ends of the spectrum when it came to becoming debt-free
ACTION STEP: If you’re married, please read 5 Tips to Reduce the Money Arguments. Over the course of our marriage, my husband and I have figured out a way to compromise, agree, and join forces when it comes to our money. We’re not perfect, but we don’t fight over money and haven’t for years.
If debt freedom is your goal too, these 16 people and their families prove that it is completely possible. It takes an incredible amount of work, planning, hustle, and intensity. The sacrifice is temporary, but the outcome will be extraordinary.
Want more debt free advice? Read the stories from 16 families who’ve gotten there:
Thank you to all of the bloggers who participated in the series. I appreciate your honesty and openness, and helping me with my mission of inspiring all of us to become debt free.
- Krista and Jon paid off $36,000 in debt and cash flowed graduate school.
- Tracy, a single mom, paid off $41,587 in debt in 14 months.
- Jackie & her husband paid off $147,000 in debt.
- Doug and Laura paid off $23,000 in debt in 16 months.
- Amanda & Daniel paid off $68,000 in 8 months.
- Carrie paid off $14,000 in 14 months.
- Stacy and her husband paid off $20,000 in 8 months.
- Aja & her husband paid off $110,000 in debt.
- Shannon and her husband paid off $22,000 in 9 months.
- Jen & her husband paid off $212,000 in debt and medical bills in 48 months.
- Maureen paid off $79,540 in credit card and student loan debt.
- Ruth and her husband paid off their mortgage.
- Brian and his wife paid off $109,000 in credit card debt.
- Olivia and her husband paid off $118,000 in mortgage & car debt.
- Lydia and her husband paid off $36,000 in debt in 2 years.
- Acadia & her husband paid off $97,000 in student loan debt.