My Debt Repayment Plan

One of my goals for the blog to help me get out of debt. I’m using it as a way to “keep me honest” and on the right path. You are all my “accountability partners” as I don’t want to disappoint you.

So here are the step’s I’m actually taking to get out of debt, and I’m counting on all of you to keep me on this path, I need as many cheerleaders as possible.

Take A True Assessment of The Current Debt

For a very long time I was like an ostrich who hid my head in the sand. I would pay minimum payments think nothing of it, even using my tax return year after year to pay off credit cards. This made me feel a sense of accomplishment, when in reality I had just fixed a symptom.

So the first step was taking an honest assessment of my debt. In looking at my debts as of today I have $19,652 in consumer (aka credit cards) debt.

That number is years of doing the wrong thing for the right reasons, and is not future me (more on that later) style. With that number in mind the goal simply to pay it off but, to make sure it doesn’t continue to grow.

Find The Root Cause of The Problem

If you are in debt, think for a moment if someone were to pay all your debt off. What would the next thing you do be? For most, it would be going out to celebrate, maybe even using. Most people though, would get back into debt because they haven’t taken the time to figure out the root cause of their debt.

Why is it that you got into debt? I don’t know, I do know that I got into debt for several reasons. First, my wife had lost her job when we first got married. Knowing now what I do I should have had an emergency fund for just such a situation.

Second,  we believed we deserved a certain lifestyle. Nothing to outlandish, just matching sets of everything. Nothing from a family member or friend, new glasses for the kitchen, new silverware, new coffee maker, new new new. This led to never putting money aside with two incomes.

The most important part of paying off your debt is finding the root cause. If this isn’t taken care of first you won’t get out of debt permanently.

Decrease Spending

I know that this is something everyone says, and is so obvious but it is what I need to do in order to get out of debt. To do this I take into account all of the things that I spend money on (keeping track of it all on Mint.com) and find where I can cut and still enjoy life.

A major area I was able to cut costs was eating out, I’m not talking about going out to a dinner or out to lunch but more getting a coffee on my way to work, eating at work, getting drink after drink after drink at work. I used to get three to four drinks a day at work and now I bought a refillable bottle that I can just refill over and over again and not have to pay for it saving me money every day. I was spending 5 to 7 dollars a day on drinks and now I spent $5 on this bottle a year ago and have used it for the most part (I still occasionally get a drink on my way to work through the local coffee shop) but for the most part I use the bottle I have and it saves hundreds of dollars a year.

Taking lunch to work saves me roughly 50 dollars a week, or $2,600 a year (one whole credit card paid off). I also love cooking so I get to experiment with that and do something I enjoy that saves me money a win win.

Increase My Income

Cutting costs is great, and most certainly something that you need to do in order to get out of debt. But there is a limit to how much you can cut.True I could live in my car with my wife and shower at the gym everyday and eat noodles that are 6/$1 and get out of debt in no time. However, that is no way to live I wouldn’t enjoy life and it’s important to me that I enjoy life.

That being said I spend a lot of time finding ways to increase my income. At first I wanted to start a second job but the truth  is I am already really busy with work and life so I didn’t want something that had a set schedule. With that in mind I started working as a rideshare driver for Lyft. This makes me so far $300 to $400 extra  a month with only around 5 to 20 hours a week all only when I want to work. I’m hoping to grow that income and have made some changes in how I do it and will be taking a different view of driving starting in the new year.

Conclusion

My plan is to get out of debt next year, something that seems right now impossible. But I make the statement here and now that by December 31st 2016 I will have no more credit card debt. Through cutting costs and making more money this is going to be attainable but it’s going to take a lot of work and a lot of support from my friends and family and from readers like you.

Are you currently in debt? How do you plan on getting out? If not, have you ever been? How did you get out of debt successfully?

Image courtesy of adamr at FreeDigitalPhotos.net

Disease Called Debt

15 thoughts on “My Debt Repayment Plan”

  1. I think this is a great goal and you have identified all the key elements that will allow you to become debt free. The biggest step in becoming debt free is the change in mindset (and knowing what the issues are) and it seems you are already making great progress in the right direction. Best of luck with the journey, it can be tough but the reward at the end is truly amazing.

    1. Thanks Rebecca, it’s my hope that by making my journey more public that it will make it easier to keep me on tract. Discovering the problems is a huge deal but without fixing the problems it will all be for nothing. Thanks

    1. Writing all of this is easy in comparison to actually following through with it. I’m hoping that in time though I’ll be the “future me” and have the debt paid off.

    1. I will definitely write about driving for Lyft, the negatives and positives. Let me know if you want to sign up I’ll give you a sign up code that will give us both a little extra money. Also, if you want some information on it sooner than what I’m going to write go check out Harry at http://www.therideshareguy.com

  2. We just finished paying off our student loans this year and 1 out of 2 car loans. Luckily, we have never been tempted to go into credit card debt (it actually took some convincing to even get my wife to agree to have a credit card!). As you discussed above, paying off the debt doesn’t necessarily correct the problem. If you don’t figure out why you are spending so much and needing to rely on credit cards, you will just end up right back there when the cards are paid off.

    Luckily, it seems like you have figured out where your issues are and working towards correcting them! Good luck on getting the debt paid off. The feeling of hitting a big debt payoff goal is pretty amazing and I look forward to watching your journey to achieving it!

    1. Thanks Thias, and I can only imagine at this point how great it feels to be out of debt. I look forward to sharing my journey with you and everyone else.

  3. You’re absolutely right about finding and dealing with that underlying root cause as to why the debt has occured in the first place. Without tackling that, the problem can easily repeat itself. I hope you achieve your goal of becoming debt free by the end of 2016, I’ll be rooting for you and will check on your progress!

    My advice is to make a plan of how you’ll achieve your goal month by month so you know whether you’re on track or not. Just keep chipping away at it and earning more money if you can, when you have time. Once results start happening, that’s the best motivation in the world.

    1. Great idea Hayley I’ll probably work that out within the next few days as my “New Year” post comes live in the first week of the year. I have a lot of goals I want to reach.

  4. Changing your behavior towards debt is a big step to becoming completely debt free very quickly! Track your progress in a visual manner, so you can see how much you have accomplished by cutting costs or bringing in extra money. I was surprised at how much I was able to put towards my goal over this past year. I’m looking forward to seeing how you accomplish your goal.

    1. I’ll try to become more software knowledgeable and create a chart that I’ll put on a page about my debt repayment journey. Great Idea to have a visual representation.

  5. Hi Tyler,

    Thanks for sharing your journey! I’m in debt and doing the same thing.

    The best thing I’ve tried after all these years is Dave Ramsey’s Snowball debt plan, and I use his Everydollar online budget tool (Everydollar.com). His plan is the fastest and most actionable way to get out of debt, and he’ll change the way you think about debt.

    Good luck! I look forward to hearing about your progress. 🙂

    1. I love Dave Ramsey’s Book, I’ll probably read it again soon. I’m taking KIND of his approach to things in paying down my debt but adding my own twists to things. The great thing about personal finance is how you can personalize it. Thanks for stopping by and have fun with getting out of debt yourself.

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