If you’ve been following us or the podcast for awhile, you may know that we are debt-free… but it wasn’t always this way!
Just a few years ago, we were living with Erika’s parents, unable to afford a wedding, and we even financed a couch from Raymour and Flanigan because we couldn’t afford it outright.
Today, though, we are happily debt free, building our dream home on our land, and making investments in our financial future… and you can too!
If you’re in debt, living paycheck to paycheck, and dreaming of the days when you don’t have to make as many sacrifices, this episode is designed to help you get there.
We’re going to share our own experience with becoming debt free and the financial lessons we’ve learned over the years to help you live the life you deserve without monetary stress. So without further ado, let’s dive in!
Understanding Your Debt
The first step we took was having an honest conversation about our debt. We sat down and wrote out all of our accounts, listing every single thing we owed. It was a daunting task, but we knew that we couldn’t fix what we didn’t know. This step helped us gain clarity and understand the full extent of our debt.Creating a Budget vs. Creating more income
Once we had a clear picture of our debt, we knew we needed a plan. We followed the snowball effect method popularized by Dave Ramsey. The debt snowball method is a debt-reduction strategy where you pay off debt in order of smallest to largest, gaining momentum as you knock out each remaining balance. When the smallest debt is paid in full, you roll the minimum payment you were making on that debt into the next-smallest debt payment. Here’s how it works:- Step 1: List your debts from smallest to largest regardless of interest rate.
- Step 2: Make minimum payments on all your debts except the smallest.
- Step 3: Pay as much as possible on your smallest debt.
- Step 4: Repeat until each debt is paid in full.
