Clear Debt with a Total Money Makeover
Crushing debt is something I am unfortunately very familiar with. Even after I managed to bring it down some by selling my home in a short sale, I still had over a hundred grand in student loans and credit card debts. I realized with a sobering certainty I would most likely go bankrupt if I didn't quickly come up with a good plan to clear debt.
I had never successfully kept a budget before and had little idea of how to begin. However, I was willing to learn. I started researching on the internet and after dismissing plenty of confusing and complicated budget spreadsheets, I ran into Dave Ramsey's book: The Total Money Makeover. The book clicked with me and with growing excitement, I knew this was the right plan - simple and easy to follow.
The very first step was to create an emergency fund of $1000 as backup for those unexpected events that happen in life. Instead of pulling out a credit card, this fund is ready and available. This alone relieves a lot of stress in knowing that there is backup should the need arise.
Getting the $1000 together took several months, but in the meantime I hunkered down and created a household budget and since I really didn't know how much I spent on things (terrible, I know) there was a lot of guesswork that first month.
As I kept track of everything I spent, it became obvious where I needed to cut back: too much eating out, buying books, going to movies and spending money on dumb stuff I never used. It took another four months or so before I had a budget that worked and still allowed for some fun now and then.
It's been a couple years now on this path to clear debt and while the debt is not completely gone, it is very close. This is a reassurance for those of you in a tight spot financially that if I could do this - so can you!