Question: I’m writing out a financial plan to be completely debt free in seven years (this includes my mortgage and car loan). Does anyone have any tried an true suggestions as I chop away at my debt?
Thanks
Answer: Seriously, though, although our debt load was (and is) probably much smaller than what you’re up against (we are carfree and housefree), the basic concepts should be similar.
In my estimation, the most crucial thing we did was sit down and say “How much are we bringing in? How much of it MUST go for necessities? How much of it SHOULD we use for other things?” We were astounded to see how much was left for debt reduction, once we established and documented a budget for the other things.
Once you’ve got a good budget defined, do your best to stick to it – and if you can, undercut it. If you’re budgeting for $200 a month in food, try to come in at $190, or $180… you’ll be that much closer to being out of debt. And if that doesn’t seem like a big step, extrapolate it over a year – you’ll wipe out debt $120-240 a year faster if you send an extra $10-20 a month into debt reduction.
In our case, our “official” allocation to reduce debt is $955 a month, but that’s based solely on my salary. Since we come in “under budget” on other things most of the time, and Maisha does some work from home, we’ve been fortunate enough to send $1,100 or more to debt reduction some months.
I guess my other advice would be to not have any “sacred cows” at all. The more things you “can’t give up,” or aren’t willing to accept less of, or a lower quality of, the longer it takes to get out of debt. Buy the store brands. Garden. Walk or bike anywhere close enough. Wait for the movie to come on TV. And so forth, and so on. 
Why would anybody want to get out of a 6.7% APR mortgage? It almost like free money considering that even very safe mutual funds give over 10% these days.
As for suggestion: work like hell, take on 2 (or 3) jobs. Sleep is for the weak. When the going gets tough, the more you want to work. Before you know it, you’ll be swimming in money that may be used to pay off your debt. (This probably doesn’t apply if your other jobs are 10$/hr burger flipping jobs.)
I personally tried the above and made lots of money. I took on contracts in additional to my regular job. Initially, I wanted to make a lot of money, so I sometimes don’t bother sleeping. After a while, I decided that this isn’t how I wanted to enjoy life, so I eased off a bit on the contracts.
There were also other advises people have already discussed, check deja news (too bad I didn’t come up w/ a service like deja news, then I probably wouldn’t even need to work.)
Related posts:
- A seven year plan
- Which mortage refinance: the 20 year or 15 year?
- Please help: How much should a 3-year warranty cost on a ‘91 Accord?
- Getting a home loan
- Help! I want to stay home with my daughter but can’t afford to..
- Desperate Single Mom – PLEASE READ!
- Desperate Single Mom – PLEASE READ!
- Gas guzzlers rejoice!
- I have seen such programs
- Buying a home: Use “hardship” to get full 401K Plan $$$ or no?
- Credit counselors help
- Easiest way to pay for a new roof