First, we stopped using credit cards cold turkey. That was not easy, at all, but absolutely necessary. I went from adding $500-$1000 per month to our credit card balances to paying off $1000 per month. We borrowed from my husband's 401K and my parents to get lower interest rates and a major incentive to turn things around. We cut back on unnecessary purchases. We stopped eating out. We cancelled our newspaper and magazine subscriptions. I stopped buying every little thing for my hobbies.
And most importantly, we used the snowball effect to get our credit cards paid off. If you don't know, the snowball effect is paying more than the minimum on one card at a time until that card is paid off. Then as each card is paid off, you add that payment amount to what you pay on the next card. It's amazing how quickly the snowball works when you stick to it because you're saving sooooo much interest. The interest and late fees were killing us!
We're not completely out from under debt yet, but we did pay off all our credit cards in less than a year. We still owe $55,000 to the 401K and my parents, but the interest rates are fixed and much lower than they were with credit cards and our payments are now automatic. We will be completely out from under the debt in 2012. It's been such a stress reducer, let me tell you.
The hardest part was making that phone call to my parents to ask if I could borrow from their retirement savings. My parents are not rich; they're just closer to retirement, so their retirement savings are bigger. I know I have to pay the money back one way or another, because if I don't, I'll be supporting them when they retire. It's great incentive to stick to the budget.
Don't count the days; make the days count.
To be nobody but yourself--in a world which is doing its best, night and day, to make you everybody else-- means to fight the hardest battle which any human being can fight; and never stop fighting. - ee cummings
Take the journey of your life one adventure-filled day trip at a time!
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