Did you make a goal to pay off debt this year?
For many years, we made a yearly goal to chip away at our six figures of non-mortgage debt. It took us years to pay it all off, but we achieved it in 2019. I celebrated my 50th birthday month by sending in the very last payment.
Our journey to debt freedom started back in 2013 when we found ourselves saddled with business and student loans. I couldn’t imagine making the monthly payments for the full term of the loans, so I concocted an idea to pay them off early and wrote our Debt Freedom Plan.
I have written a lot about our Debt Freedom Plan because it was so instrumental in keeping us focused and on track. It took us six years to pay off our non-mortgage debts once it became a priority. It was not easy, and when we finally made that last payment, I cried for two days. The sense of relief and freedom from not having that debt burden was incredible.
If debt freedom is your goal, what can you accomplish THIS year?
Here are the steps we took to pay off that pesky non-mortgage debt.
1 – Calculate your debt.
This is a crucial first step. How much debt do you have? It can be a hard number to come to terms with, but sticking your head in the sand won’t get you to debt freedom.
Your first assignment: Take the first step and calculate your debts by using my FREE Family Balance Sheet. The link will give you all of the information you need to complete the sheet.
2 – Create your Debt Freedom Plan.
After reading Dave Ramsey’s book, The Total Money Makeover, I realized that we were spreading ourselves too thin and our finances were not as great as I thought they were. Also the stress and burden of having that debt load was overwhelming and constantly on my mind.
The worry consumed me, so in a brain dump session, I made a list of everything we needed to accomplish. We prioritized our list of needs and wants and put them in a step-by-step order. This list became our personal Debt Freedom Plan.
To be honest, our first step in our plan wasn’t even paying off debt. Being self-employed, we felt we needed more than Dave’s recommended $1000 starter emergency fund that he outlines in his book, so our first step was to save a bit more for our home and office. Also, we needed to make some much-needed repairs to our home and office that really couldn’t wait until we paid off six figures. A leaky roof was one of the priorities to give you an idea.
Your assignment: Read How To Create your Own Debt Freedom Plan and get started on it today!
3 – Set your guidelines for the year.
To eliminate debts, you will have to make some short-term sacrifices. During our debt payoff journey, we kept reminding ourselves that this season of life was temporary, but there were things that we needed to eliminate or cut back. We said NO to a lot, and that isn’t fun.
However, there were also things that we didn’t give up. I had no problem shopping at a thrift store, avoiding restaurants, and not having cable TV, but I didn’t want to give up camping and watching my daughters’ swim meets.
What are YOUR non-negotiables in life? For us, we valued camping and our daughters’ activities. What do you value most in life, and what are you ok with temporarily cutting out of your budget?
Your assignment: Figure out what you’re willing to cut out of your budget and what your non-negotiables are during this time.
Related Reading: How We Paid off Six Figures of Debt
4 – Break your debt-crushing goals down into timely steps.
What can you realistically pay off, while still stretching yourself this year? On our journey, our debt felt insurmountable and our motto became, “how do you eat an elephant? One bite at a time”
The total number was mind-numbing, so at the beginning of each year, we gave ourselves a goal of what we could realistically pay off by the end of the year. Looking at the debt in smaller chunks rather than the total number helped us not feel so overwhelmed.
I found it easier to break our large goal of, “paying off six figures of non-mortgage debt” into smaller chunks. While we used the snowball method and knocked out our first 2 small loans, the next three loans felt behemoth, so we broke them down even further to, “what can we realistically pay off this year.”
Throughout our journey, my husband requested a visual reminder of our progress, especially when we had to say no to some fun stuff. So I created the above goal tracker, it’s included in the freebies that I offer to email subscribers. It’s in excel so you can modify it to meet your needs. We kept ours on the refrigerator and it was so stinkin’ fun to color in the blocks as we make payments.
5 – Celebrate your wins.
Paying off debt is not fun, in fact, it sucks! I can think of many fun things to do with the money instead of sending it to the creditors every month. We built in small celebrations into our Debt Freedom Plan. We needed mental breaks from the constant talk of paying off so much debt. Blah, Blah, Blah!
These mini celebrations usually came after we would complete a tracker and would be weekend camping trips.
However, when we paid off our very last non-mortgage debt, we planned a cruise to celebrate. The entire week on the cruise, my husband and I looked at each other in disbelief at what we accomplished.
We ate an elephant!