When we decided to pay off our student debt, I had no idea where to begin. I even Googled, "How to pay off debt". Then I realized, there is no secret to pay off debt. Here's some quick tips to get you started.
1. Create a Mint.com account and pull together all of your accounts. This is the easiest way to track your spending, and it will give you a head start by importing up to three months of history from your checking and savings account so you'll be able to have to clear picture the day you start. It's free and it's easy. I've written about it further here.
2. Document what you bring in each month. Whether it's just you or if you have a partner and a joint income, know how much you're really bringing home each month. I never really thought about this before, but it's an obvious driver in what you can do with your money. You have to know what your take home pay is. Again, Mint.com easily has a way to track this.
3. Start creating or documenting ALL of your monthly expenses. To give you an idea, I have the following categories that magically repopulate at the start of each month using (yep, you guessed it!) MINT.COM.
- Auto payment (two car loans... yuck!)
- EZTag tolls (I use the tollway for my daily commute)
- Gas & Fuel
- Mobile Phone
- Roth IRA Contributions
- Convenience Store (I blog about this, but it's my husband's splurge budget)
- Shopping (usually clothing)
- Transfer to Savings (this includes saving for a down payment on a house
4. Proceed to watch every transaction. Like a hawk. I'm not even kidding. Once you really start to pay attention to what you're spending, you'll be more likely to challenge yourself. Ask yourself the following questions:
- Do I really need this?
- Is this a necessity or a want?
- Do I have a budget for this?
- Can I wait to buy it later?
5. When it comes to big purchases, sleep on it. Not just for a night, but for weeks, if possible. My husband had been wanting a new camera for quite time (he jokes that it was five years), but the reality is, we talked about the purchase for weeks. Once we were finally ready to take a week's worth of pay and put it toward his camera, it wasn't a big deal at all. We knew we had planned for the purchase, and we had the money. Done!
Those are some quick tips, but feel free to comment below and share your own tips. Or, if you have a specific question, contact me via email using the button at the top right of the page!
Looking for more info on debt? Check out the following posts:
Why I Had to Trade in The Stratus for Kia Rio
Progress on Our Student Loans & How We'll be Debt-Free in 2014
Knocking Out Our Student Loans One at a Time
The Chair That Almost Blew Our Budget For The Month
Keeping Our Eyes on the [Financial] Prize
Finance 101: 7 Reasons Why I Love Mint.com
Sell your crap. Pay off your debt. Do what you love.