Mission Impossible: Getting out of Debt in Seemingly Impossible Circumstances
The following is a contribution from my good friend Laurie at The Frugal Farmer. If you’re interested in contributing to Frugal Rules, please consult our guidelines and contact us.
My husband and I are on a mission: a mission to be debt free. Many, if they saw our numbers, would consider the mission an impossible one. We’re standing right now at a 63% debt-to-income ratio (DTI). To put this in perspective, that means that roughly 75% of our net income goes toward paying the monthly minimums on our Discover card and our mortgage.
That would be all fine and dandy if we made 6 digits a year, but we don’t. Not even close. We’re a one-income family, as we’ve made a decision that I’ll stay at home while our four children are young. And it’s not that my husband isn’t a hard-worker – Rick works very hard. In fact, he’s one of the hardest working people I’ve ever met. He just happens to work in a field that doesn’t pay much.
One of the reasons we decided to go “public” with our journey to be debt free over at our blog, The Frugal Farmer, is to show people that, no matter how deeply you’re in debt, you can work your way out. We hope that by sharing our experience, we can give others tools and tips to help them dig their way out of debt, no matter how impossible it might seem.
Here are some of the principles that we use that you may find helpful if you’re working yourself out of an “impossible” situation:
1. Get Extreme. If you’re deep in debt like we are right now, you’re going to have to get real serious about cutting expenses. This is no time for half-hearted attempts. Create a budget, track every dime of your spending, and scrutinize every single expense, getting rid of everything that’s unnecessary. Another wise move would be to look for ways to increase your income. Sell things. Get a second job. Pick up some overtime. Every single dime makes a difference in the long run as you’re paying off credit cards, like your Arrival World Mastercard.
2. No Pity Parties. This is no time to be feeling sorry for yourself. Not only does it not help, self-pity can quickly lead you to simply give up. We’ve become conditioned as a society to think that if we don’t have discretionary spending, we’re deprived. But all that really matters money-wise is that you’ve got a safe place to live and food to eat. 100+ years ago, living a super-frugal lifestyle was the norm. It’s time to get back to basics.
3. One Day at a Time. Try not to focus on all that you have to do in terms of debt reduction. This can lead to discouragement and the breaking of Rule #2. Instead, focus on “today”. Celebrate that you stuck to your budget this week, that you spent less on groceries, or that you made dinner at home instead of picking up takeout. Give yourself a pat on the back for every step in the right direction, and be proud of even the smallest victories.
4. Keep Your Eyes on the Prize. I know: this sounds contradictory to #3, but keeping your finish line in your sights will help you to remember why you decided to go down this road in the first place. Make charts, graphs and pictures to show yourself how far you’ve come, and what you’ll do after you win the race. Imagine what life will be like when you’re debt free. How will you feel? What will you do? Where will you go?
5. Play Defense. One of the most crucial guidelines to completing an impossible mission is to make sure you’re playing defense. Fight discouragement with visualization of yourself debt free. Surround yourself with those who support your goals, and minimize time with those who try to sabotage them. Have a list of things you can do when fear or discouragement comes, like going for a hike or watching an inspiring movie. Or call a friend who supports your goal and has an attitude of optimism. Personally, I’ve got a few very good friends that I can call on during the tough times who I know will:
- Be my cheerleaders and my encouragers
- Give me a good kick in the pants when I’m feeling sorry for myself
Find friends like this and make a commitment to call on them when necessary.
No matter what your debt situation looks like, there is a way out. Educate yourselves through blogs like Frugal Rules (see the Blogroll for a list of more great personal finance blogs). Get yourself a good support system, and get it done. Change your definition of “impossible”. It’s no longer impossible for you to get out of debt, it’s impossible for anything to stop you!
Have you ever been in debt? What was it that helped you turn your situation around and knock it out?
Editors Note: I love Laurie’s thoughts here. As someone who was in serious credit card debt myself, I know first hand the challenge it can be. I believe a lot of what goes into debt repayment is the attitude and keeping in front of you why you’re doing it. It’s obvious that Laurie and her husband have this attitude and think they’re taking the right approach the knocking that debt out.
Photo courtesy of: Jason Rogers
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