How to Get out of Debt: Thoughts for the New Year

Debt Payoff

As I reflect back on 2013 and on our first year of trying to get out of debt, I feel that, through this awesome personal finance blogging community, I’ve gained SO much treasured knowledge.

For those of you who don’t know our story, I’ll give you a summary: After many, many moons of financial failure, my husband and I sat down just over a year ago and faced the fact that we were teetering on the brink of financial disaster.  We had tried for years to be better with our money, but we would always fail.  Oh, yes, sometimes we’d get all of the consumer debt paid off, but we’d end up right back in it again.  There were many reasons for this; some understandable, most not, but it was the way it was.

However, in November of 2012, our debt level, for many reasons, came to an all-time high, and something finally clicked.  We looked at the numbers and had that “Oh crap – we’re really in deep” moment.  I’m not sure what it was that made us finally understand how much of a mess we were in, but we did know and understand that if we didn’t get out know, it could mean complete and total financial destruction for our family.

We also realized that, in spite of having a strong marriage, most marriage failures are due, in large part, to money problems, and so with each item we put on our credit cards, we were increasing the possibility of straining our relationship, and that scared us too.  We also knew that we owed it to our four children to make sure our family was on solid financial footing.

So, on January 1 of this year, we went on our first ever budgeting and spend-tracking adventure.  The goal? To work toward debt freedom and financial security.  However, this would be no easy journey, considering we started the year with a debt-to-income ratio of 65%.  And although we’ve still got a long way to go, we have made some progress and learned some things about how to get out of debt.

Just Start

Is it scary?  Yeah.  Is it difficult?  Yep.  Your relationships might change.  It’s hard to get used to living on a budget – at first.  But then it’s fun.  You feel encouraged by the progress, no matter how minimal it might be.  You know what else feels great?  Having CONTROL over your financial situation, instead of letting life have control over you.  So, just start.  There are tons of resources out there made for the sole purpose of helping you get out of debt.

Don’t Give Up When Working to Get Out of Debt

This is where most people fail: they start, but then they quit!  Something happens; they screw up, they blow the budget, and then, THEY QUIT!  But, you see, what I’ve learned throughout this last year is that failure is not the endquitting is the end.  So when you fail – and you probably will – get up, dust yourself off, and move on toward your goal, but whatever you do, don’t give up!

Remember that the Journey to Debt Freedom is a Work in Progress

I’ve not met a person yet who succeeded on his or her journey to get out of debt who didn’t have to adjust/revamp/rewire/re-do their plan to get there.  Things change; you might try one thing, and find you’re better off doing another.  In our case, we started with the debt snowball approach (paying off credit cards with low balances first, then those with high balances).  We did this because we were emotionally freaked out by our debt and needed those “quick wins” that Dave Ramsey talks about.

But two months in, the amount of interest we were paying each month really started to tick me off, and I knew that if we were going to get out of debt that we had to stop giving money to the credit card and mortgage companies.  So we switched to paying down the highest interest cards first, and as Grayson from Debt Roundup says, we “took the emotion out of the equation” and focused on the numbers.  The point I’m trying to make is that you might have to work a little bit and change things up as you learn what works for you and what doesn’t, and that’s okay, as long as you’re continuing on the path to get out of debt.

Celebrate Your Victories

Even the small ones.  Celebrate your first month on a real budget.  Celebrate when you’ve taken 1k, 2k or 5k off of your credit card balance.  Pat yourself on the back for every success, and forgive yourself for every failure.  I’m not talking about celebrating by going to the Bahamas – you can do that when you’re debt free.  But do something: go out to dinner, buy yourself a little gift, or have friends over to celebrate. (Editor’s note – I could not agree more with Laurie here. Having some sort of outlet and celebrating your victories is incredibly important as you’re paying off debt).

The road to getting out of debt is different for every person and every situation.  How long it takes you to get there is not what matters: what matters is that you arrive.

Readers, what is your most important tip you can give on a successful journey to becoming debt free?  Or, are you planning to start your own journey to financial freedom in 2014?  If so, do you have any questions on how to make the journey successful?


Photo courtesy of: Wonderlane

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Laurie is a wife, mother to 4, and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom, and to a simpler, more peaceful life.


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