Tips for Keeping Gazelle Intense on the Debt Snowball
Over the last few weeks I’ve been asked by several people (friends, family, friends of friends, etc.) how in the world Rebekah and I have paid off so much of our debt and just keep killing it day after day. The short answer is with a lot of hard work and sacrifice. The long answer could really be broken down into the following tips.
1. Do a Budget
ACK!!! The dreaded “”B” word! In my opinion, as well as Dave Ramsey’s, the written (or electronic in our case) budget is the absolute best thing Rebekah and I have ever done with our finances. We literally sit down each month and plan our expenses. We put our income in and then assign dollar amounts to each category until the money runs out. Once the money is gone, we STOP!
Since I’m a total nerd and fairly tech savvy (understatement…), we use budgeting software called YNAB. It approaches finances differently from Quicken or QuickBooks or any other financial software I’ve ever used. Those other ones are great at telling you where your money went (past tense), YNAB lets you tell your money where to go (present/future tense). To quote Dave Ramsey: “a budget is telling your money where to go, not wondering where it all went.”
Cool feature #2 about YNAB is the mobile app. Rebekah and I both have it on our mobile devices (her iPhone, my iPod touch) so we always have our budget in our pocket. The newest version even has mobile sync so you are always up-to-date. Just put in your purchase on your phone as soon as you make it and BAM! it’s sent through the cloud to your home computer and updates your budget.
Whether you do it with software or manually with pen and paper, just do it. It’s tough the first few months as it usually crashes and burns. But it’s like riding a bike, you crash a few times, but you eventually get the hang of it and it gets easier and easier. The budget is hands down our best tool against our Debt Snowball.
2. Learn to say “NO”.
The budget you make in tip 1 does you absolutely no good if you don’t follow it. We’ve had months where the money in a budget category just ran out half way through the month. Guess what? We stopped spending in that category! Did it suck? YEP. Did it kill me? NOPE.
We said no to the “fluff” when we started. That $130 per month cable package…GONE! Did that suck? Yeah, pretty much. But having $130 extra each month sucked a whole lot less. I honestly don’t even miss it now. I can get everything I “need” to watch online/Netflix, etc. I do have an antenna so I can at least get the local stations for local news/weather, etc.
So, what about “emergencies”? I put emergencies in quotes because there are two different types of emergencies: real emergencies like my refrigerator died or my pipes burst in my home, and perceived emergencies like I forgot to plan for dinner tonight, we’re out, and no money left in the dining out budget.
For real emergencies, that’s what the emergency fund is for. Before even starting on the debt snowball, you should have $1,000 in a savings account that you don’t touch unless a real emergency happens (i.e. broken pipes).
For those “emergencies”, you simply have a quick budget meeting. If you have extra money in another budget category and all parties are on board, you can move money from one category to another. As in the example above, we’ve had that happen before where we were out later than expected and everyone was getting hungry. Rebekah and I just had a quick budget discussion and saw we had extra in our grocery budget that month. We both agreed to move some funds from groceries to dining out to cover a meal out. The key here is all parties involved in the budget must agree to make the move. If anyone disagrees, it doesn’t happen.
3. Motivation / Set a Goal
For us, having twins was enough of a goal for us to start working on our debt. We quickly realized we were not on the best financial footing when looking at determining whether Rebekah could be a stay-at-home-mom. Losing her income was going to make things really tight – especially with two little mouths to feed at once.
Our goal has been to pay off our debts so that we can begin saving for our retirement as well as the girls college fund. I am shooting to be able to pay for the kids college 100% so they don’t have the same stupid student loan debt hanging over them when they graduate like we did. Giving them the best footing possible is my driving motivation behind all of this. I can go without the cable package so they don’t owe Sallie Mae their first-born.
4. Find Support
People are going to think you are crazy. Seriously – not kidding on this one. When guys at work talk about some show on TV, or this new car they got and the great financing deal they got, or how their new BMW on a lease…the list can go on….and I reply that “Oh, I didn’t see that show, I don’t have cable.”, or “Wow, that’s a nice car!” (but thinking to myself “Wonder what the payment is? Glad mine is paid for.”) They will honestly think you are crazy.
I pack my lunch almost every day I work in the office. Occasionally I’ll buy lunch, but 95% of the time I’m brown bagging it. I get some odd comments about that too, but my 50 cent peanut butter sandwich tastes pretty good compared to the $7 Subway Combo everyone else is eating.
There are a few of us weird people out there to help give support to one another. Find folks on Facebook, YouTube, blogs, forums, etc. for additional support and motivation. There are a bunch of great resources out there for tips on saving money and paying down debt.
5. Keep Track of Progress
Find some method of keeping track of your progress. It can be a journal, a spreadsheet or whatever you choose. We use a spreadsheet for tracking ours. When we started our snowball, I put all our debts in with their current balances to get a starting point. In another column I put the current balance that I update each time I pay on it.
By keeping track of progress, it’s easy to see just how far you’ve paid the debt down. I’m a total nerd, so I have all kinds of extra stuff in our spreadsheet that keeps track of total debt paid, total debt remaining, percentage of debt snowball paid down and number of years/months/days we’ve been working on the debt. How much detail you keep is entirely up to you, but keeping track of progress is a great motivator when feeling like progress is slowing down!