Getting out of debt is one of the primary focuses of Cleared For Success. The reason for this is simple; you can’t be bogged down and stressed out over money and feel successful. According to a survey performed by the American Psychological Association, money is one of the leading causes of stress among Americans.
Living paycheck to paycheck is not fun, especially when you begin to wonder each month how you are going to pay the bills and be able to put food on the table for your family.
When Yesy and I realized we had a baby on the way, we were living on the 3rd floor of a small apartment and basically living paycheck to paycheck.
Both of us really wanted to be able to raise our baby girl in a house instead of an apartment, but after checking into several mortgage lenders, we were told our debt to income ratio was too high and we could not get a loan. We had to cut down the debt!
Not only that, but we would also need a decent amount of money for a down payment for a house. With Yesy’s due date only about 5 months away, the clock was ticking! So here is what we did.
Sell What You Don't Need For Extra Money
The first thing we did was sit down and take a hard look at where our money was going every month. We made a list of all of our expenditures and figured out what items were necessary and what items we could do without.
At that time, Yesy and I both had motorcycles in addition to our cars. So selling the bikes was kind of a no brainer. We hated to sell them because we both enjoyed going for a ride. It was kind of our stress relief. But with a baby on the way, we knew the chances of us being able to ride together was slim to none.
Luckily the bikes sold pretty quickly, so we were able to take the money that usually went towards the bike payments and put it towards some of our other debts.
If you have things that you are not using, there are numerous online shops that will allow you to list items for sale. For example, you can create an eBay account and let people place bids for them, or settle on a “buy now” price.
Other sites like Facebook marketplace and Craigslist are also popular ways to sell previously used items. However, if you do decide to use one of these platforms, please use caution and always make sure that you meet potential buyers in public places and take someone with you for safety.
If you don't have anything else to sell, but have some free time, there are survey companies that want to pay you for your opinions by answering online surveys and testing their products. Best of all, they are FREE to join. Some of my favorite survey companies are PineCone Reasearch, Harris Poll Online, MySurvey, Inbox Dollars, and American Consumer Opinion.
These companies will send you surveys based upon your answers to screening questions. The screening questions help the companies determine which surveys would be a good fit for you. With this in mind, you may not be selected for one of their surveys everyday. That’s why it’s a good idea to sign up for several survey companies so you have a greater opportunity to make money to put towards your debt.
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We Stopped Going Out To Eat
The next thing we did was to look for ways to cut back on other expenses.
One of the bigger expenses we had per month was going out to eat. Even though we only went out maybe once a week it still was additional money we didn’t need to be spending. So we determined we could cut back on that.
You may not realize how quickly a restaurant bill can add up between the appetizers, drinks, main course, and desserts. But it adds up fast.
A standard non-alcoholic drink at most restaurants starts out at about $3 and drinks with alcohol are anywhere from $6 to $10 or more. Appetizers and desserts can cost about $7 a piece. And main courses usually start at about $12 and up.
So even if you just go out to eat once a week, 2 people spend around $50 per visit and a family of 4 might spend around $75 a visit. That’s almost $200 a month for 2 people or $300 for 4 people. And that is just going out once a week.
But, even though we didn’t want to go to the restaurant every time we wanted a fancy meal, we did order a meal to go once in a while. However, we did not order appetizers, drinks, or desserts, which cut down the cost significantly.
I know it can get boring and frustrating trying to figure out what do to for dinner every night, when going out is not an option. That's one reason I think $5 Meal Plan is so helpful. They send you breakfast, lunch and dinner recipes for the week, so you don't have to figure it out. They also give you tips and strategies that can reduce your cooking time and save you money at the grocery store.
Shop at Places That Offer Discounts
Since we were looking for every possible way to save money, Yesy started watching the local adds for the best deal on some of our grocery items. She would particularly pay attention to advertisements for buy-one-get-one (BOGO) deals. These were usually great finds because the items were often priced about $3 to $5 apiece.
So after finding several of these great deals, the savings really started to add up. Even just finding 3 BOGO deals per week on average saved us about $60 a month.
You can also look for places that offer cash back deals. Ebates is an online marketplace that works with stores offering women and men's clothing, health and beauty products, electronics, office supplies and much, much more. You can get up to 40% cash back at over 2,500 different stores! If you do decide to join Ebates, you'll automatically get a $10 bonus.
Lastly, look for places that offer special discounts if you meet certain criteria such as military or student discounts. You might be surprised how many places offer some kind of discount but just don’t really advertise it. So don't be afraid to ask.
Plan Your Trips and Save Gas
Our fuel expenses for the cars was another one of our bigger expenses. Unfortunately, we were not able to car pool everyday because our jobs were in different directions. So this was one expense that was not easy to reduce.
However, every time we thought about going somewhere, other than work, we began to decide if it was a place we really needed to go. Also was there any other destination nearby that we also needed to visit. We tried to maximize our trips as much as possible to reduce the amount of gas that we used.
If you can plan your trips and take care of several things while you’re out, that can help stretch your fuel budget a little further.
Pay Down Credit Card Debt
Now that we were starting to save some extra money we had to decide what to do with it. Since we knew we had to improve our debt to income ratio, rather than directly saving the additional money, we put it towards paying down credit cards.
After one credit card was paid down, or paid off, we put the money that previously went towards that credit card and added it to the payment on a different card. This allowed us to pay well above the required minimum payments and reduced the debt faster.
By using this method, we accomplished several things:
- We reduced the amount of debt we owed and improved our debt to income ratio
- A better debt to income ratio improved our credit scores
- We saved more money in the long run because less money went towards interest payments
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Did it work?
Yes it did! After taking the actions mentioned above Yesy and I were able to pay off nearly $21,000 worth of debt in about 5 months. By reducing the amount of money we owed, our credit scores increased and we were able to save up enough money for a down payment on a house.
Luckily we found a great home just in time. We literally thought Yesy might go into labor while we signed for the house! But we were able to move into our new home and our daughter waited to be born for a few more weeks. Talk about cutting it close!
So, was it easy? Not always, but it was definitely worth it. If we could do it, you can too! All it takes is a little planning, focus, and dedication to staying the course.