Monday, January 21, 2013

Frugal Living: Eliminating Debt Part II

After being inspired by the stories of others {read about this in Part I) my family moved forward with our own plan to slowly eliminate debt from our financial life. And I'm writing a bit more on it today to inspire others. It isn't a big deal plan. We aren't getting too crazy with it...

we have decided to limit some of our "fun spending money". The typical, let's eat at home even more than before, create handmade gifts for birthdays, limit clothing purchases, be mindful of new to us items for our home. {for the most part, we were already doing many of these ideas.} We are also trying to come up with new ways to save a little extra money. Just little changes that if they don't work it isn't a big deal. We still want to have fun, we like good, quality food, and we're not skimping on spending that is important to us.

Something that we weren't already doing was paying off higher amounts of money to one specific bill until it is gone. (shocking right? I swear we are intelligent people.)

For example we would randomly pay extra money to a credit card one month and the next month leave the extra money in a savings account. No real method. We always stash a bit away for "unexpected spending" and each month we pay a bit extra on our house payment - it is amazing how quickly that can add up! (If you have a 30 year loan, and you make one extra payment a year you already knock like 10 years off your payment plan! That is money working hard for you right there!)

So we made the plan. We have prioritized which bills should get our extra cash each month according to our highest interest rates. And our two highest rates should be paid off by the end of next month! Easy way to save money.

I have no idea how long it will take to finish off more of our bills. But I think it can happen. It might just take some trial, error, and flexibility.

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