Woman’s World magazine featured my family’s story of how we got out of $50,000 in debt in less than three years in their March 22 issue, which is pictured above. The vignette about our family (page 12) includes three things we did that changed our financial situation:
Opened an account at a credit union. I was notorious for moving money into savings to set aside for things like car repair and Christmas gifts, just to move it right back out into our checking. To combat my impulsiveness, we opened a new checking account at a different financial institution. We made it difficult for us to access the money, but auto-transferred into it every month. It felt good to start saving for those non-routine expenses. (Side note, this was in addition to the auto-savings we did in an ING account for our 3-6 month emergency fund).
Planned for surprise expenses. If you’re like me, you often flounder in your financial planning because of the unexpected things that pop up in a month. That could be new shoes for your kids, a worn out air conditioner and new brakes. Let’s be honest. Is it really a surprise that your kid’s feet grow? Is it a surprise that your 15-year old air conditioner needs maintenance? Is it a surprise that your brakes eventually wear out? Of course not. These aren’t true surprises. They come as one though, because we pretend they won’t happen and don’t set aside money in advance to pay for them when the time comes. Denying that Christmas won’t come is not going to change the fact that it comes 365 days after the last Christmas. You can count on it. When Marco and I began to set aside a prorated amount of money every single month for these non-routine expenses, we could buffer life without running to the credit card.
I’ll give you a warning. The first time you sit down to include a prorated monthly amount for all of life’s “surprise” expenses into your budget, expect a surprise. You’re bottom line will probably be in the red and much further in the red than you would have believed. Instead of getting depressed about it, realize that not planning for these expenses is a huge part of how you got into and why you stay in debt. Your life costs more than what you make. Move forward by reducing expense (and Pocket Your Dollars will help with that) and/or increasing income.
Gave up one luxury for a month. After realizing that we got into debt and were staying in debt because our life cost too much (it was a “duh” moment that changed our life) we got radical about reducing expense. We looked across every area of our expenditures. We found ways to continue enjoying life while paying less. One area was really hard for us to get under control, though - eating out. As two people without kids we were spending $300, $400, and sometimes $500 per month eating out. The worse part, we could not seem to get it under control no matter what we did. That led us to something radical that nipped our eating out addiction in the bud.
For one month my husband and I gave up eating out (except for work-required functions). We put a firm boundary in place since soft boundaries, like “we’ll only go out to eat once per week” didn’t get the job done. In that one month we learned where our pressure points were, how to overcome them and really rooted out the underlying issues that caused us to excessively eat out. When the month was up we went back to eating out in moderation and have done so ever since. The point is simple. If something is controlling you, then get radical and figure out how to get control of it.
I’d encourage you to pick up a copy of the magazine to read the piece yourself, but it isn’t on newsstands anymore. *insert sheepish smile* It was on the newsstand last week and I didn’t make time to write this post until it was too late. Whoops! You’ll need to get it from the library if you’d like to read it yourself.
Your turn: What is thing change your family has made, whether in attitude or action, that has made a positive impact on your financial situation?
That’s so awesome that you were in the magazine! Congratulations! And those are great tips that you share.
Honestly, though, you admitting that you spent $300-$500 a month on eating out as a couple just BLEW my mind! I love to eat out and would do so often if it weren’t so bad on my waistline and the budget, but I don’t think I could come close to that number, even with 4 kids! Our eating out budget is $75 a month for the 6 of us! Granted, I don’t get to go out to eat as much as I would like to, and we have to pick and choose how often and which restaurants we can include, but looking for coupons and deals for our favorite spots helps stretch things a lot. And apparently my savings is substantial!
Jessica I really need to know how in the heck you feed 6 people with $75 a month? I just do not even think that is possible unless you are all eating Ramen Noodles for all your meals and this is just unhealthy or you live on a farm and raise and grow your own food. $75 a day leaves you with $2.50 a day for the whole family. Please explain this to me, because I am really curious as to how you do it or if that number was wrong. I have only three people in our family and we eat really healthy. We eat a lot of home cooked meals and a lot of fruit and vegetables from the farmers market or on special at Cub. We are struggling to keep it around $400 a month and we never really eat out at all. We buy generic stuff too. Please enlighten me with your knowledge, because I could really use the savings.
Thank you.
Jesse
Jesse, wasn’t sure if you’d see this or not…but Jessica was referring to her eating out budget as $75 per month…not her grocery budget.
I just read the article and think it was great and just bookmarked your site.
I hope you will drop over to mine-
Stretching the One Income Dollar
One thing I cut out to save was magazines. I was addicted to them. So yes, go to the library. It is a fantastic place!
I usually get alot of free magazines, as my daughter works at a convenience store and once they are done with the mags, they rip the covers off and get their credit for the unsold.The mags are without covers but that is still ok with me.
I also do alot of those trial subscriptions, where you can get the first copy free, then cancel on the bill when you get it- you are only paying the cost of the stamp to cancel and get a $3-$6 magazine for free.
Check out more great tips on my site:
oneincomedollar.com
Sheepy – Do you ever sign up for free magazine subscriptions? I get SO many free magazines every month that I barely (if ever) have time to read them all!
Sometimes I do sign up for free magazines, but in an effort to kick the habit I started taking out more books from the library. I do still look at them, though. The hardest one to resist is Real Simple.
We live almost completely no frills, but we don’t even notice! We ditched the big house for a smaller one, cook all our meals at home (I love to cook), drive paid for vehicles, buy nothing on credit, try to buy as much as we can second-hand (clothes, household items etc), have no cable, use dial-up internet, use the library, do all our own renovations and car repairs…well, you get the picture!
When we feel we would like to go out to eat, we go to IKEA and have breakfast on Saturdays. For just over $5, we can each have breakfast, coffee, and split a cinnamon roll! Then we browse around the store and maybe buy a kitchen gadget, some wrapping paper or something inexpensive. It feels like we had a little “luxury,” and it’s always fun!
Please tell me the steps you took to get out of $50,000 worth of debt that quickly?
I would also like to know what steps you took to get out of $50,000 in debt within 3 years? I missed the magazine article and just ran across your website today. My husband and I are looking for ways to pay off our debt and cut our expenses each month. Our last child is graduating this year and we have decided to downsize our home (size and price), so we have put it on the market. I would love to find out ways to get coupons to reduce the grocery/necessity expense each month.
getting out of debt without children is a lot different than getting out of debt with a family to raise. I would love to hear how people got out of $25,000 or more of debt with a family to raise when your income covers about 1/2-2/3 the amount needed for just minimum payments. Any suggestions?