Are you a regular follower of or participant in the personal finance community? If so, then you are familiar with one of the eternal PF debates out there. To crush our credit card debt, we took on both approaches.
Frugality vs. Increasing Income
For those PF bloggers seeking financial independence, early retirement or the ability to establish their own businesses, there seem to be two approaches (predominantly): frugal living and increasing income.
For many PF bloggers, frugality seems to be a popular choice. If you’ve read even one Frugalwoods post, you might consider their blog the poster child for using frugality to build the wealth necessary to support financial independence. However, there are many, many more who whole-heartedly believe that frugality is the key to long-term wealth. Makes sense, right?
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Beware of little expenses. A small leak will sink a great ship. – B. Franklin
However, there is an entirely different group of folks who believe that wealth creates wealth and that frugality alone won’t create wealth. In fact, some feel that a $5 a day latte habit doesn’t really add up in the end. If you want the $5 cup of coffee, you just need to pursue a job/side hustle/business that will support such a habit.
Buying coffee saves time, and it could be one of many ways in which outsourcing parts of one’s life can lead to more profitable endeavors. Perhaps that very cup of coffee results in a chance encounter in your local Starbucks with someone who can help get your entrepreneurial endeavor off the ground. I’m sure there are a thousand other reasons to buy the coffee, especially if it means less strife in your life or relationship.
Time is more valuable than money. You can get more money, but you cannot get more time. – J. Rohn
We Try All of the Personal Finance Tips
We love a good experiment. When one considers how much debt we had during our benchmark month, March 2015, it really couldn’t get much worse for us, so why not try on some new ideas for size?
With $35k in student loans, $10k in interest-free credit card debt and a huge mortgage, we were ripe for change. (If we had more credit card debt than we could manage, we might have considered getting some help.)
How did we figure out which PF approach worked for us? We tried all of the ideas, because we LOVE continuous improvement.
Downsizing our home, optimizing our diet, prepping meals on Sundays and much, much more comprise the many frugal approaches we’ve taken in our new life in an effort to improve our spending, pay off debt and save for the future.
But the fun doesn’t stop there! We’re side hustling, too. By leveraging my digital marketing prowess, we’ve been able to generate extra income every month. Time that we might have been spent watching TV or mowing a 1/3 of an acre of (unwanted) grass is now spent helping small businesses succeed.
Related Post: Big News at the Small House
Fruits of Our Labor
With one foot firmly planted in each camp, we’re able to put the best of both worlds to work for us. How successful have we been?
April 2015 was the start. We had credit card debt, student loan debt and a huge mortgage totaling $204,971.31.
Here we are, six months later. October 2015. We have NO credit card debt and we paid off one of the six (!!!) student loans we have. Our debt total is now $188,455.59.
As a result of our frugal ways and ability to generate additional income, we’ve paid off $16,515.72 in credit card debt!
Here are our best tips for crushing your debt ASAP.
Tip #1: Know What You Owe
When you have a clear understanding of the debt you have, it makes it easier to come up with a plan to use either a debt snowball or debt avalanche to pay off that debt. Pull together your credit reports and statements to make a list of everything you owe.
Tip #2: Create a Budget
Decide what you want to spend money on — that’s the goal of the budget. If you bring home $3,000 a month and you decide to spend $2,000 on food, shelter, and other expenses, then you know you have $1,000 to dedicate to paying off debt.
Tip #3: Make More Money
If you hate debt as much as us, you might be willing to hustle it out to pay off your debt ASAP. (It’s temporary, just until you pay off that debt!) Start a side hustle, find a part-time job, put in overtime at work, etc…find ways to make extra money. If you can make an extra $1,000 a month, combine this income with the $1,000 left in your budget each month and suddenly you have $2,000 to dedicate to your debt.